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

September 30, 2017,

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

three

and

nine

months ended

September 30, 2017

and

2016

and the consolidated cash flows for the

nine

months ended

September 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

nine

months ended

September 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

nine

months ended

September 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 overstatement of the income tax provision and an understatement of net income of

$4.8

million for the

three

months ended

September 30, 2017

and an understatement of the income tax provision and an overstatement of net income of

$21.7

million for the

nine

months ended

September 30, 2017.

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

nine

months ended

September 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.

Revision of previously issued condensed consolidated financial 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, 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

and

nine

months ended

September 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

nine

months ended

September 30, 2016

reflect a

$0.1

million and

$0.3

million increase, respectively, in the tax provision, with a corresponding decrease in 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 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

September 30, 2017

and

December 31, 2016

are as follows (in thousands):

	September 30, 2017									December 31, 2016
	As originally reported			Adjustments			As Restated			As originally reported			Adjustments			As Revised
Deferred income tax liabilities	$	54,495		$	23,419		$	77,914		$	35,382		$	1,029		$	36,411
Liability for unrecognized tax benefits		6,188			-			6,188			5,738			706			6,444
Total liabilities		1,239,812			23,419			1,263,231			1,286,790			1,735			1,288,525
Retained earnings		289,561			(23,027	)		266,534			216,644			(1,292	)		215,352
Accumulated other comprehensive loss		(5,634	)		(392	)		(6,026	)		(7,732	)		(443	)		(8,175	)
Total stockholders’ equity attributable to the Company stockholders		1,179,983			(23,419	)		1,156,564			1,078,425			(1,735	)		1,076,690
Total equity		1,257,445			(23,419	)		1,234,026			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

nine

-months ended

September 30, 2017

and

2016

are as follows (in thousands):

	Three months ended September 30, 2017								Nine months ended September 30, 2017
	As originally reported			Adjustments		As Restated			As originally reported			Adjustments			As Restated
Income tax provision	$	(11,003	)	$	4,779	$	(6,224	)	$	(28,258	)	$	(21,735	)	$	(49,993	)
Income from continuing operations		22,780			4,779		27,559			100,757			(21,735	)		79,022
Net income attributable to the Company’s stockholders		19,181			4,779		23,960			89,529			(21,735	)		67,794
Loss in respect of derivative instruments designated for cash flow hedge		20			-		20			62			51			113
Comprehensive income		24,405			4,779		29,184			103,577			(21,684	)		81,893
Comprehensive income attributable to the Company’s stockholders		20,399			4,779		25,178			91,627			(21,684	)		69,943
Net income per share attributable to the Company’s stockholders
Basic:	$	0.38		$	0.10	$	0.48		$	1.79		$	(0.43	)	$	1.36
Diluted:	$	0.38		$	0.09	$	0.47		$	1.77		$	(0.43	)	$	1.34

	Three months ended September 30, 2016									Nine months ended September 30, 2016
	As originally reported			Adjustments			As Revised			As originally reported			Adjustments			As Revised
Income tax provision	$	(11,988	)	$	(121	)	$	(12,109	)	$	(29,387	)	$	(316	)	$	(29,703	)
Income from continuing operations		14,406			(121	)		14,285			70,284			(316	)		69,968
Net income attributable to the Company’s stockholders		12,080			(121	)		11,959			65,700			(316	)		65,384
Loss in respect of derivative instruments designated for cash flow hedge		22			13			35			65			40			105
Comprehensive income		15,741			(108	)		15,633			66,448			(276	)		66,172
Comprehensive income attributable to the Company’s stockholders		13,415			(108	)		13,307			61,864			(276	)		61,588
Net income per share attributable to the Company’s stockholders
Basic:	$	0.24		$	-		$	0.24		$	1.33		$	(0.01	)	$	1.32
Diluted:	$	0.24		$	-		$	0.24		$	1.31		$	-		$	1.31

The effects of the

2017

restatement and

2016

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

nine

-months ended

September 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 nine months ended September 30, 2016		70,090			(316	)		69,774
Net income attributable to the Company’s stockholders for the nine months ended September 30, 2016		65,700			(316	)		65,384
Loss in respect of derivative instruments designated for cash flow hedge for the nine months ended September 30, 2016		65			40			105
Balances as of September 30, 2016:
Retained earnings		191,627			3,614			195,241
Accumulated other comprehensive loss		(11,503	)		(457	)		(11,960	)
Total stockholders’ equity attributable to the Company’s stockholders		1,040,029			3,157			1,043,186
Total equity		1,135,942			3,157			1,139,099

	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’s stockholders		1,078,425			(1,735	)		1,076,690
Total equity		1,170,007			(1,735	)		1,168,272
Net income for the nine months ended September 30, 2017		99,683			(21,735	)		77,948
Net income attributable to the Company’s stockholders for the nine months ended September 30, 2017		89,529			(21,735	)		67,794
Loss in respect of derivative instruments designated for cash flow hedge for the nine months ended September 30, 2017		62			51			113
Balances as of September 30, 2017:
Retained earnings		289,561			(23,027	)		266,534
Accumulated other comprehensive loss		(5,634	)		(392	)		(6,026	)
Total stockholders’ equity attributable to the Company’s stockholders		1,179,983			(23,419	)		1,156,564
Total equity		1,257,445			(23,419	)		1,234,026

Although there was with

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

nine

months ended

September 30, 2017

and

2016

are as follows (in thousands):

	Nine months ended September 30, 2017							Nine months ended September 30, 2016
	As originally reported		Adjustments			As Restated		As originally reported			Adjustments			As Revised
Cash flows from operating activities:
Net income	$	100,757	$	(21,735	)	$	79,022	$	70,284		$	(316	)	$	69,968
Deferred income tax provision		16,506		21,617			38,123		20,742			-			20,742
Liability for unrecognized tax benefits		450		118			568		(125	)		316			191
Net cash provided by operating activities		166,533		-			166,533		158,027			-			158,027

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.

Platanares geothermal power plant

September 26, 2017,

the Company announced that its

MW Platanares geothermal project in Honduras commenced commercial operation. The Company constructed the Platanares geothermal project under a Build, Operate, and Transfer (BOT) contract with ELCOSA, a privately owned Honduran energy company. The Company will operate the project for

years from commercial operation date (COD). Platanares sells its power under a

-year power purchase agreement with the national utility of Honduras, ENEE. A portion of the land on which the project is located at is held by us through a lease from a local municipality. Because the term of the lease exceeds the term in office of the relevant municipal government, it remains subject to an additional approval of the Honduran Congress in order to be fully valid. The Company has commenced the necessary steps to obtain such approval but the current elections in Honduras

may

result in a delay in obtaining such approval.

OFC Senior Secured Notes prepayment

September 2017,

the Company fully prepaid all of its outstanding OFC Senior Secured Notes for

$14.3

million. As a result of the prepayment, the Company recognized a loss of

$1.5

million, including amortization of deferred financing costs of

$0.2

million, which was included in other non-operating income (expense), net in the consolidated statements of operations and comprehensive income for the

three

and

nine

months ended

September 30, 2017.

DEG Loan prepayment

September 2017,

the Company fully prepaid its DEG loan for

$11.8

million. As a result of the prepayment, the Company recognized a loss of

$0.5

million, including amortization of deferred financing costs of

$0.4

million, which was included in other non-operating income (expense), net in the consolidated statements of operations and comprehensive income for the

three

and

nine

months ended

September 30, 2017.

ORIX transaction

July 26, 2017,

the Company announced that ORIX Corporation (“ORIX”) closed its acquisition of approximately

million shares of the Company’s common stock, representing an approximately

22%

ownership stake in the Company, from FIMI ENRG Limited Partnership, FIMI ENRG, L.P., Bronicki Investments, Ltd. and certain senior members of the Company’s management team pursuant to a stock purchase agreement entered into by ORIX and the selling stockholders on

May 4, 2017.

In connection with the acquisition, on

May 4, 2017,

the Company entered into certain related agreements with ORIX, including a Governance Agreement, a Commercial Cooperation Agreement and a Registration Rights Agreement, following the unanimous recommendation of a Special Committee of the board of directors of the Company (the “Board”) that was formed to evaluate and negotiate the stockholder arrangements proposed by ORIX, and following approval by the Board. The closing of the transactions contemplated by the related agreements between ORIX and the Company also occurred on

July 26, 2017.

Under the Governance Agreement, ORIX has the right to designate

three

persons to the Board, which was expanded to

nine

directors, and also propose a

fourth

person to be mutually agreed by the Company and ORIX to serve as a new independent director on the Board. In addition, for so long as ORIX is entitled to board representation pursuant to the Governance Agreement, ORIX will be subject to certain customary standstill restrictions, including an effective

25%

cap on its voting rights. Pursuant to the Registration Rights Agreement, ORIX also has certain customary registration rights with respect to the shares of the Company’s common stock that it owns.

Under the Commercial Cooperation Agreement, the Company has exclusive rights to develop, own, operate and provide equipment for ORIX geothermal energy projects in all markets outside of Japan. In addition, the Company has certain rights to serve as technical partner and co-invest in ORIX geothermal energy projects in Japan. ORIX will also assist the Company in obtaining project financing for its geothermal energy projects from a variety of leading providers of renewable energy debt financing with which ORIX has relationships in Asia and around the world.

ORTP buyout

March 30, 2017,

the Company’s partner JPM Capital Corporation (“JPM”) achieved its target after-tax yield on its investment in ORTP, LLC (“ORTP”) and on

July 10, 2017,

Ormat Nevada Inc. (“Ormat Nevada”) purchased all of the Class B membership units in ORTP from JPM for

$2.4

million. As a result, Ormat Nevada is now the sole owner of all of the economic and voting interests in ORTP and continues to consolidate ORTP in its financial statements. The purchase of Class B membership units of ORTP was recorded in equity as a reduction to Noncontrolling Interest with the surplus charged to Additional Paid-in Capital.

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 (i) the final approval of the SCPPA PPA which will require the Company to make significant capital expenditures in the United Sates, (ii) the fact that the Company is currently exploring acquisition opportunities in the United States, and (iii) the acquisition of substantially all the assets of Viridity for

$35.3

million with

two

additional earn-out payments that

may

have 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 Ltd. (“OSL”), its wholly 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 United Sates. 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 United States 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., a privately held Philadelphia-based company formerly 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 enabled 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

September 30, 2017

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

three

and

nine

months ended

September 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

nine

months ended

September 30, 2017

and

2016,

the Company classified

$5,000

and

$7,000,

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

$9,000

and

$11,000,

respectively, were recorded to reduce interest expense and

$4,000

and

$4,000,

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

three

months ended

September 30, 2017

and

2016,

the Company classified

$2,000

and

$2,000,

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

$6,000

and

$3,000

respectively, was recorded to reduce interest expense and

$4,000

and

$1,000,

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

September 30, 2017,

$0.6

million

Write-offs of unsuccessful exploration activities

There were

write-offs of unsuccessful exploration activities for the

three

and

nine

months ended

September 30, 2017.

Write-offs of unsuccessful exploration activities for the

three

and

nine

months ended

2016

were

$1.3

million and

$2.7

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

2016

were related to the Company’s exploration activities in Nevada and Chile, after which the Company determined that the applicable sites 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 and in foreign countries. At

September 30, 2017

and

December 31, 2016,

the Company had deposits totaling

$23.9

million and

$72.5

million, respectively, in

seven

United States financial institutions that were federally insured up to

$250,000

per account. At

September 30, 2017

and

December 31, 2016,

the Company’s deposits in foreign countries amounted to approximately

$56.0

million and

$166.2

million, respectively.

September 30, 2017

and

December 31, 2016,

accounts receivable related to operations in foreign countries amounted to approximately

$67.5

million and

$53.3

million, respectively. At

September 30, 2017

and

December 31, 2016,

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

48%

and

60%

of the Company’s accounts receivable, respectively.

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

16.3%

and

14.4%

of the Company’s total revenues for the

three

months ended

September 30, 2017

and

2016,

respectively, and

17.4%

and

18.6%

for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Kenya Power and Lighting Co. Ltd. accounted for

17.6%

and

15.1%

of the Company’s total revenues for the

three

months ended

September 30, 2017

and

2016,

respectively, and

15.7%

and

16.4%

of the Company’s total revenues for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Southern California Public Power Authority (“SCPPA”) accounted for

9.1%

and

7.7%

of the Company’s total revenues for the

three

months ended

September 30, 2017

and

2016,

respectively, and

8.9%

and

9.9%

of the Company’s total revenues for the

nine

months ended

September 30, 2017

and

2016,

respectively.

Hyundai (Sarulla geothermal project) accounted for

0.9%

and

24%

of the Company’s total revenues for the

three

months ended

September 30, 2017

and

2016,

respectively, and

4.7%

and

14%

for the

nine

months ended

September 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.