NOTE

— GENERAL AND BASIS OF PRESENTATION

These unaudited condensed consolidated interim financial statements of Ormat Technologies, Inc. and its subsidiaries (collectively, the “Company”) have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”) for interim financial statements. Accordingly, they do

not

contain all information and notes required by U.S. GAAP for annual financial statements. In the opinion of management, these unaudited condensed consolidated interim financial statements reflect all adjustments, which include normal recurring adjustments, necessary for a fair statement of the Company’s consolidated financial position as of

June 30, 2017,

the consolidated results of operations and comprehensive income (loss) for the

three

and

six

months ended

June 30, 2017

and

2016

and the consolidated cash flows for the

six

months ended

June 30, 2017

and

2016.

The financial data and other information disclosed in the notes to the condensed consolidated financial statements related to these periods are unaudited. The results for the

three

and

six

months ended

June 30, 2017

are

not

necessarily indicative of the results to be expected for the year ending

December

31,

2017.

These unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form

-K for the year ended

December

31,

2016.

The condensed consolidated balance sheet data as of

December

31,

2016

was derived from the Company’s audited consolidated financial statements for the year ended

December

31,

2016,

but does

not

include all disclosures required by U.S. GAAP. As discussed in the Explanatory Note to this amended Form

-Q, the

2016

financial statements will be revised, which revision is being effected through the Company’s filing of an amendment on Form

-K/A for the year ended

December 31, 2017.

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest

$1,000.

Restatement of p

eviously is

condensed consolidated

financ

l statements

As described further in Note

11,

in the

second

quarter of

2017,

the Company partially released its valuation allowance against the U.S. deferred tax assets. During the

first

quarter of

2018,

the Company concluded that there were material tax provision and related balance sheet errors in its previously issued financial statements as of and for the

three

and

six

months ended

June 30, 2017,

primarily relating to the Company’s ability to utilize Federal tax credits in the U.S. prior to their expiration starting in

2027,

and the resulting impact on the Company’s deferred tax asset valuation allowance. Specifically, the error in the deferred tax asset valuation allowance resulted in an understatement of the income tax provision and an overstatement of net income of

$26.4

million and

$26.5

million for the

three

and

six

months ended

June 30, 2017,

respectively. As a result of such errors, the Company concluded that the previously issued unaudited condensed consolidated financial statements as of and for the

three

and

six

months ended

June 30, 2017

were materially misstated, and, accordingly, has restated these financial statements. Included in such restatement is also the correction of other immaterial tax errors, including an out-of-period adjustment that had been previously recorded for the correction of an understated liability for unrecognized tax benefits related to intercompany interest.

Revis

of p

eviously is

condensed consolidated

financ

l statements

The Company had previously identified certain other tax errors, including a prior period error related to the translation of deferred tax liabilities in the Company’s Kenyan subsidiary and an error in the effective tax rate calculation in the

first

quarter of

2016,

which were previously determined to be immaterial and were previously corrected for as out-of-period adjustments in the period of identification.

The Company assessed the materiality of these errors in accordance with the SEC’s Staff Accounting Bulletin (“SAB”) Topic

1.M,

Materiality, codified in ASC Topic

250,

Presentation of Financial Statements (“ASC

250”

), and concluded that the previously issued unaudited condensed consolidated interim financial statements for the

three

months ended

March 31, 2017

and

2016

and the

three

and

six

months ended

June 30, 2016

were

not

materially misstated; however, in order to correctly reflect the immaterial adjustments as described above in the appropriate period, management has elected to revise the affected previously issued financial statements in this Form

-Q/A filing. As a result, the revised condensed consolidated financial statements for the

three

and

six

months ended

June 30, 2016

reflect a

$0.6

million and

$0.2

million increase, respectively, in the tax provision, with a corresponding decrease in net income and comprehensive income. In addition, the revised condensed consolidated financial statements for the

three

months ended

March 31, 2017

and

2016

reflect a

$0.1

million increase and a

$0.4

million decrease, respectively, in the tax provision, with a corresponding impact to net income and comprehensive income. The impact of the revision as of

January 1

and

December 31, 2016

was an increase of

$3.9

million and decrease of

$1.3

million, respectively, to retained earnings, as a result of certain tax errors originating in periods prior to

2016,

primarily related to the error in the determination of the exchange rate used in the translation of deferred tax liabilities in the Company’s Kenyan subsidiary.

The effects of the

2017

restatement and the

2016

revision on the line items within the Company's condensed consolidated balance sheets as of

June 30, 2017

and

December 31, 2016

are as follows (in thousands):

	June 30, 2017									December 31, 2016
	As originally reported			Adjustments			As Restated			As originally reported			Adjustments			As Revised
Deferred income tax liabilities	$	44,113		$	28,198		$	72,311		$	35,382		$	1,029		$	36,411
Liability for unrecognized tax benefits		6,015			-			6,015			5,738			706			6,444
Total liabilities		1,277,136			28,198			1,305,334			1,286,790			1,735			1,288,525
Retained earnings		274,566			(27,806	)		246,760			216,644			(1,292	)		215,352
Accumulated other comprehensive loss		(6,933	)		(392	)		(7,325	)		(7,732	)		(443	)		(8,175	)
Total stockholders’ equity attributable to the Company’s stockholders		1,143,274			(28,198	)		1,115,076			1,078,425			(1,735	)		1,076,690
Total equity		1,227,599			(28,198	)		1,199,401			1,170,007			(1,735	)		1,168,272

The effects of the

2017

restatement and

2016

revision on the line items within the Company's condensed consolidated statements of operations and comprehensive income for the

three

and

six

months ended

June 30, 2017

and

2016

are as follows (in thousands):

	Three months ended June 30, 2017									Six months ended June 30, 2017
	As originally reported			Adjustments			As Restated			As originally reported			Adjustments			As Restated
Income tax provision	$	(6,369	)	$	(26,396	)	$	(32,765	)	$	(17,255	)	$	(26,514	)	$	(43,769	)
Income from continuing operations		38,242			(26,396	)		11,846			77,977			(26,514	)		51,463
Net income attributable to the Company’s stockholders		35,036			(26,396	)		8,640			70,348			(26,514	)		43,834
Loss in respect of derivative instruments designated for cash flow hedge		20			25			45			42			51			93
Comprehensive income		38,792			(26,371	)		12,421			79,172			(26,463	)		52,709
Comprehensive income attributable to the Company’s stockholders		35,179			(26,371	)		8,808			71,147			(26,463	)		44,684
Net income per share attributable to the Company’s stockholders
Basic:	$	0.70		$	(0.53	)	$	0.17		$	1.41		$	(0.53	)	$	0.88
Diluted:	$	0.69		$	(0.52	)	$	0.17		$	1.39		$	(0.52	)	$	0.87

	Three months ended June 30, 2016									Six months ended June 30, 2016
	As originally reported			Adjustments			As Revised			As originally reported			Adjustments			As Revised
Income tax provision	$	(7,890	)	$	(625	)	$	(8,515	)	$	(17,399	)	$	(195	)	$	(17,594	)
Income from continuing operations		24,933			(625	)		24,308			55,878			(195	)		55,683
Net income attributable to the Company’s stockholders		24,349			(625	)		23,724			53,620			(195	)		53,425
Loss in respect of derivative instruments designated for cash flow hedge		22			13			35			43			27			70
Comprehensive income		22,944			(612	)		22,332			50,707			(168	)		50,539
Comprehensive income attributable to the Company’s stockholders		22,360			(612	)		21,748			48,449			(168	)		48,281
Net income per share attributable to the Company’s stockholders
Basic:	$	0.49		$	(0.01	)	$	0.48		$	1.09		$	(0.01	)	$	1.08
Diluted:	$	0.49		$	(0.02	)	$	0.47		$	1.07		$	-		$	1.07

The effects of the

2017

restatement and

2016

revision on the line items within the Company’s condensed consolidated statements of equity for the

six

months ended

June 30, 2017

and

2016

are as follows (in thousands):

	As originally reported			Adjustments			As Revised
Balances as of December 31, 2015:
Retained earnings	$	148,396		$	3,930		$	152,326
Accumulated other comprehensive loss		(7,667	)		(497	)		(8,164	)
Total stockholders’ equity attributable to the Company’s stockholders		990,001			3,433			993,434
Total equity		1,083,874			3,433			1,087,307
Net income for the six months ended June 30, 2016		55,878			(195	)		55,683
Net income attributable to the Company’s stockholders for the six months ended June 30, 2016		53,620			(195	)		53,425
Loss in respect of derivative instruments designated for cash flow hedge for the six months ended June 30, 2016		43			27			70
Balances as of June 30, 2016:
Retained earnings		183,018			3,735			186,753
Accumulated other comprehensive loss		(12,838	)		(470	)		(13,308	)
Total stockholders’ equity attributable to the Company’s stockholders		1,027,056			3,265			1,030,321
Total equity		1,117,435			3,265			1,120,700

	As originally reported			Adjustments			As Restated
Balances as of December 31, 2016:
Retained earnings	$	216,644		$	(1,292	)	$	215,352
Accumulated other comprehensive loss		(7,732	)		(443	)		(8,175	)
Total stockholders’ equity attributable to the Company stockholders		1,078,425			(1,735	)		1,076,690
Total equity		1,170,007			(1,735	)		1,168,272
Net income for the six months ended June 30, 2017		77,289			(26,514	)		50,775
Net income attributable to the Company’s stockholders for the six months ended June 30, 2017		70,348			(26,514	)		43,834
Loss in respect of derivative instruments designated for cash flow hedge for the six months ended June 30, 2017		42			51			93
Balances as of June 30, 2017:
Retained earnings		274,566			(27,806	)		246,760
Accumulated other comprehensive loss		(6,933	)		(392	)		(7,325	)
Total stockholders’ equity attributable to the Company’s stockholders		1,143,274			(28,198	)		1,115,076
Total equity		1,227,599			(28,198	)		1,199,401

Although there was

impact to net cash provided by operating activities, net cash used in investing activities or net cash used in financing activities, the effects of the

2017

restatement and the

2016

revision on the line items within the condensed consolidated statements of cash flows for the

six

months ended

June 30, 2017

and

2016

are as follows (in thousands):

	Six months ended June 30, 2017							Six months ended June 30, 2016
	As previously reported		Adjustments			As Restated		As previously reported			Adjustments			As Revised
Cash flows from operating activities:
Net income	$	77,977	$	(26,514	)	$	51,463	$	55,878		$	(195	)	$	55,683
Deferred income tax provision		8,375		26,396			34,771		13,254			-			13,254
Liability for unrecognized tax benefits		277		118			395		(411	)		195			(216	)
Net cash provided by operating activities		114,158		-			114,158		119,573			-			119,573

The impacts of the restatement and revision have been reflected throughout the financial statements, including the applicable footnotes, as appropriate. This resulted in changes to the deferred tax balances, valuation allowance and effective tax rate, together with other disclosures in Note

11.

SCPPA power purchase agreement

During the

second

quarter of

2017,

ONGP LLC (“ONGP”),

one

of the Company’s wholly-owned subsidiaries, entered into a Power Purchase Agreement (“PPA”) with Southern California Public Power Authority (“SCPPA”), pursuant to which ONGP will sell, and SCPPA will purchase, geothermal power generated by a portfolio of

nine

different geothermal power plants, owned by the Company and located in the US. The parties’ obligations under the PPA are based on a geothermal power generation capacity of

150

MW, and, pursuant to the PPA, ONGP is required to deliver a minimum of

135

MW and is entitled to deliver a maximum of

185

MW to SCPPA over the next

five

years. The portfolio PPA is for a term of approximately

years, expiring in

December 31, 2043

and has a fixed price of

$75.50

per MWh.

Assertion of permanent reinvestment of foreign unremitted earnings in a subsidiary

During the

second

quarter of

2017,

in conjunction with the (i) final approval of the SCPPA PPA which will require the Company to make significant capital expenditures in the U.S., (ii) the fact that the Company is currently looking for acquisitions in the U.S., and (iii) the acquisition of Viridity for a price of

$35.3

million with

two

additional earn-out payments expected to be made in

2018

and

2021,

the Company has re-evaluated its position with respect to a portion of the unrepatriated earnings of Ormat Systems (“OSL”), its fully owned Subsidiary in Israel, and after consideration of the aforementioned change in facts, determined that it can

longer maintain the permanent reinvestment position with respect to a portion of OSL's unrepatriated earnings which will be repatriated to support the Company’s capital expenditures in the U.S. Accordingly, and as further described in Note

11,

the permanent reinvestment assertion of foreign unremitted earnings of OSL was reassessed and removed and the related deferred tax assets and liabilities as well as the estimated withholding taxes on expected remittance of OSL earnings to the U.S. were recorded by the Company in the

second

quarter of

2017

Viridity transaction

March 15, 2017,

the Company completed the acquisition of substantially all of the business and assets of Viridity Energy, Inc. (“VEI”), a privately held Philadelphia-based company engaged in the provision of demand response, energy management and energy storage services. At closing, Viridity Energy Solutions Inc. (“Viridity”), a wholly owned subsidiary of the Company, paid initial consideration of

$35.3

million. Additional contingent consideration with an estimated fair value of $

12.8

million will be payable in

two

installments upon the achievement of certain performance milestones measured at the end of fiscal years

2017

and

2020.

The acquired business and assets are operated by Viridity.

Using proprietary software and solutions, Viridity serves primarily retail energy providers, utilities, and large commercial and industrial customers. Viridity’s offerings enable its customers to optimize and monetize their energy management, demand response and storage facilities potential by interacting on their behalf with regional transmission organizations and independent system operators.

The Company accounted for the transaction in accordance with Accounting Standard Codification

805,

Business Combinations, and consequently recorded intangible assets of

$34.7

million primarily relating to Viridity’s storage and non-storage activities with a weighted-average amortization period of

years, approximately

$0.4

million of working capital and fixed assets, and

$13.9

million of goodwill. Following the transaction, the Company consolidated Viridity, in accordance with Accounting Standard Codification

810,

Consolidation. The acquisition will enable the Company to enter the growing energy storage and demand response markets and expand its market presence.

The revenues of Viridity for the period from

March 15, 2017

June 30, 2017

were included in the Company’s consolidated statements of operations and comprehensive income for the

three

and

six

months ended

June 30, 2017.

Accounting guidance provides that the allocation of the purchase price

may

be modified for up to

one

year from the date of the acquisition to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date.

Other comprehensive income

For the

six

months ended

June 30, 2017

and

2016,

the Company classified

$3,000

and

$5,000,

respectively, related to derivative instruments designated as cash flow hedges, from accumulated other comprehensive income, of which

$5,000

and

$10,000,

respectively, were recorded to reduce interest expense and

$2,000

and

$5,000,

respectively, were recorded against the income tax provision, in the condensed consolidated statements of operations and comprehensive income. For the

three

months ended

June 30, 2017

and

2016,

the Company classified

$1,000

and

$2,000,

respectively, related to derivative instruments designated as cash flow hedges, from accumulated other comprehensive income, of which

$3,000

and

$6,000

respectively, was recorded to reduce interest expense and

$1,000

and

$4,000,

respectively, were recorded against the income tax provision, in the condensed consolidated statements of operations and comprehensive income. The accumulated net loss included in Other comprehensive income as of

June 30, 2017,

$0.6

million

Write-offs of unsuccessful exploration activities

There were

write-offs of unsuccessful exploration activities for the

three

and

six

months ended

June 30, 2017.

Write-offs of unsuccessful exploration activities for the

three

and

six

months ended

2016

were

$0.9

million and

$1.4

million, respectively. The write-offs of exploration costs in

2016

were related to the Company’s exploration activities in Nevada and Chile, which the Company determined would

not

support commercial operations.

Concentration of credit risk

Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of temporary cash investments and accounts receivable.

The Company places its temporary cash investments with high credit quality financial institutions located in the United States (“U.S.”) and in foreign countries. At

June 30, 2017

and

December 31, 2016,

the Company had deposits totaling

$31.3

million and

$72.5

million, respectively, in

seven

U.S. financial institutions that were federally insured up to

$250,000

per account. At

June 30, 2017

and

December 31, 2016,

the Company’s deposits in foreign countries amounted to approximately

$99.9

million and

$166.2

million, respectively.

June 30, 2017

and

December 31, 2016,

accounts receivable related to operations in foreign countries amounted to approximately

$53.5

million and

$53.3

million, respectively. At

June 30, 2017

and

December 31, 2016,

accounts receivable from the Company’s primary customers amounted to approximately

55%

and

60%

of the Company’s accounts receivable, respectively.

Sierra Pacific Power Company and Nevada Power Company (subsidiaries of NV Energy, Inc.) accounted for

16.7%

and

19.1%

of the Company’s total revenues for the

three

months ended

June 30, 2017

and

2016,

respectively, and

17.8%

and

21.1%

for the

six

months ended

June 30, 2017

and

2016,

respectively.

Kenya Power and Lighting Co. Ltd. accounted for

15.4%

and

17.1%

of the Company’s total revenues for the

three

months ended

June 30, 2017

and

2016,

respectively, and

14.8%

and

17.2%

of the Company’s total revenues for the

six

months ended

June 30, 2017

and

2016,

respectively.

SCPPA accounted for

8.7%

and

10.4%

of the Company’s total revenues for the

three

months ended

June 30, 2017

and

2016,

respectively, and

8.9%

and

11.2%

of the Company’s total revenues for the

six

months ended

June 30, 2017

and

2016,

respectively.

Hyundai (Sarulla geothermal power project) accounted for

4.9%

and

8.6%

of the Company’s total revenues for the

three

months ended

June 30, 2017

and

2016,

respectively, and

6.3%

and

9.0%

for the

six

months ended

June 30, 2017

and

2016,

respectively.

The Company has historically been able to collect on all of its receivable balances, and accordingly,

provision for doubtful accounts has been made.