Note 7 - Property, Plant and Equipment and Construction-in-Process

12 Months Ended

Dec. 31, 2014

Property, Plant and Equipment [Abstract]

Property, Plant and Equipment Disclosure [Text Block]

NOTE 7 — PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION-IN-PROCESS

Property, plant and equipment

Property, plant and equipment, net, consist of the following:

	December 31,
	2014			2013
	(Dollars in thousands)
Land owned by the Company where the geothermal resource is located	$	31,465		$	30,336
Leasehold improvements		3,420			3,386
Machinery and equipment		123,807			101,104
Office equipment		17,150			17,492
Automobiles		6,495			5,745
Geothermal and recovered energy generation power plants, including geothermal wells and exploration and resource development costs:
United States of America, net of cash grants and impairment charges		1,463,291			1,439,374
Foreign countries		473,481			448,161
Asset retirement cost		7,444			7,803
		2,126,553			2,053,401
Less accumulated depreciation		(688,916	)		(601,065	)
Property, plant and equipment, net	$	1,437,637		$	1,452,336

Depreciation expense for the years ended December 31, 2014, 2013, and 2012 amounted to $87,851,000, $91,791,000, and $89,876,000, respectively. Depreciation expense for the years ended December 31, 2014 and 2013 is net of the impact of the cash grant in the amount of $5,318,000 and $4,330,000, respectively. As of December 31, 2013 accumulated depreciation balance does not include MPC balance of $35,396,000.

U.S. Operations

The net book value of the property, plant and equipment, including construction-in-process, located in the United States was approximately $1,327,356,000 and $1,316,597,000 as of December 31, 2014 and 2013, respectively. These amounts as of December 31, 2014 and 2013 are net of cash grants in the amount of $149,785,000 and $127,675,000, respectively.

Impairment tests of the North Brawley and OREG 4 plants performed during the year ended December 31, 2012 resulted in impairment charges.

Foreign Operations

The net book value of property, plant and equipment, including construction-in-process, located outside of the United States was approximately $407,003,000 and $424,567,000 as of December 31, 2014 and 2013, respectively.

The Company, through its wholly owned subsidiary, OrPower 4, Inc. (“OrPower 4”) owns and operates geothermal power plants in Kenya. The net book value of assets associated with the power plants was $305,129,000 and $338,517,000 as of December 31, 2014 and 2013, respectively. The Company sells the electricity produced by the power plants to Kenya Power and Lighting Co. Ltd. (“KPLC”) under a 20-year PPA.

In May 2013 the Company sold the Momotombo Power Company, which operates the Momotombo power plant located in Nicaragua (see Note 16).

The Company, through its wholly owned subsidiary, Orzunil I de Electricidad, Limitada (“Orzunil”), owns a power plant in Guatemala. On January 22, 2014, Orzunil signed an amendment to the PPA with Instituto Nacional de Electrificacion (“INDE”) a Guatemalan power utility for its Zunil geothermal power plant in Guatemala. The amendment extends the term of the PPA from 2019 to 2034. Capacity revenues are calculated based on Zunil capacity until 2019 unrelated to actual performance. The PPA amendment also transfers operation and management responsibilities of the Zunil geothermal field from INDE to the Company for the term of the amended PPA in exchange for a tariff increase. Additionally, INDE exercised its right under the PPA to become a partner in the Zunil power plant with 3% equity interest. The net book value of the assets related to the power plant was $19,141,000 and $18,846,000 at December 31, 2014 and 2013, respectively.

The Company, through its wholly owned subsidiary, Ortitlan, Limitada (“Ortitlan”), owns a power plant in Guatemala. The net book value of the assets related to the power plant was $45,624,000 and $52,272,000 at December 31, 2014 and 2013, respectively.

On December 2, 2013, the Company’s wholly-owned subsidiary, Ormat International obtained control over the assets of Honduran GeoPlanares, including a PPA with ENEE, and a 30-year concession to use the geothermal resource in exchange for annual royalty payments of 12% of revenue if the project is successful, and return of the project to the seller after a 15 year operating period. The development of the project depends on the appraisal stage. Ormat has an option to abandon the project if the geothermal resource does not meet certain criteria specified in the agreement. The net book value of assets was $12.3 million at December 31, 2014.

Construction-in-process

Construction-in-process consists of the following:

	December 31,
	2014		2013
	(Dollars in thousands)
Projects under exploration and development:
Up-front bonus lease costs	$	26,618	$	30,141
Exploration and development costs		45,977		38,220
Interest capitalized		836		1,278
		73,431		69,639
Projects under construction:
Up-front bonus lease costs		27,473		27,473
Drilling and construction costs		187,545		184,767
Interest capitalized		8,273		6,948
		223,291		219,188
Total	$	296,722	$	288,827

On March 26, 2014, the Company signed an agreement with RET Holdings, LLC to sell the Heber Solar project in Imperial County, California for $35.25 million. The Company received the first payment of $15.0 million during the first quarter of 2014 and the second payment for the remaining $20.25 million was paid in the second quarter of 2014. Due to certain contingencies in the sale agreement, the Company deferred the pre-tax gain of approximately $7.6 million until the contingencies were resolved in the second quarter of 2014.

	Projects under Exploration and Development
	Up-front Bonus Lease Costs			Exploration and Development Costs			Interest Capitalized			Total
	(Dollars in thousands)
Balance at December 31, 2011	$	36,832		$	40,223		$	1,598		$	78,653
Cost incurred during the year		—			3,782			420			4,203
Write off of unsuccessful exploration costs		(1,160	)		(1,479	)		—			(2,639	)
Transfer of projects under exploration and development to projects under construction		(1,687	)		(10,224	)		(740	)		(12,651	)
Balance at December 31, 2012		33,985			32,302			1,278			67,565
Cost incurred during the year		—			6,168			—			6,168
Write off of unsuccessful exploration costs		(3,844	)		(250	)		—			(4,094	)
Balance at December 31, 2013		30,141			38,220			1,278			69,639
Cost incurred during the year		—			19,231			—			19,231
Write off of unsuccessful exploration costs		(3,523	)		(11,474	)		(442	)		(15,439	)
Balance at December 31, 2014	$	26,618		$	45,977		$	836		$	73,431

	Projects under Construction
	Up-front Bonus Lease Costs			Drilling and Construction Costs			Interest Capitalized			Total
	(Dollars in thousands)
Balance at December 31, 2011	$	31,179		$	246,878		$	13,841		$	291,898
Cost incurred during the year		—			216,894			11,542			228,435
Transfer of completed projects to property, plant and equipment		1,687			10,224			740			12,651
Transfer from projects under exploration and development		(3,706	)		(190,123	)		(10,579	)		(204,408	)
Balance at December 31, 2012		29,160			283,873			15,543			328,576
Cost incurred during the year		—			203,859			7,609			211,468
Transfer from projects under exploration and development		(1,687	)		(302,966	)		(16,204	)		(320,857	)
Balance at December 31, 2013		27,473			184,766			6,948			219,187
Cost incurred during the year		—			132,597			3,206			135,803
Sale of property, plant and equipment		—			(24,692	)		(911	)		(25,603	)
Reclassification of completed projects to property, plant and equipment		—			(105,126	)		(970	)		(106,096	)
Balance at December 31, 2014	$	27,473		$	187,545		$	8,273		$	223,291