Note 9 - Property, Plant and Equipment and Construction-in-process

12 Months Ended

Dec. 31, 2021

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE 9 — PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION-IN-PROCESS

Property, plant and equipment

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

	December 31,
	2021			2020
	(Dollars in thousands)
Land owned by the Company where the geothermal resource is located	$	40,545		$	40,157
Leasehold improvements		9,105			8,477
Machinery and equipment		302,367			271,981
Land, buildings and office equipment		48,275			43,555
Vehicles		10,724			8,960
Energy storage equipment		79,805			63,562
Geothermal and recovered energy generation power plants, including geothermal wells and exploration and resource development costs:
United States of America, net of cash grants		2,511,027			2,296,414
Foreign countries		800,000			732,537
Asset retirement cost		41,157			28,946
		3,843,005			3,494,589
Less accumulated depreciation		(1,548,032	)		(1,395,543	)
Property, plant and equipment, net	$	2,294,973		$	2,099,046

Depreciation expense for the years ended December 31, 2021, 2020 and 2019 amounted to $153.0 million, $133.5 million and $126.7 million, respectively. Depreciation expense for the years ended December 31, 2021, 2020, and 2019 is net of the impact of the cash grant in the amount of $7.4 million, $7.3 million and $7.3 million, respectively.

U.S. Operations

The net book value of the property, plant and equipment, including construction-in-process, located in the United States was approximately $2,502.2 million and $2,081.6 million as of December 31, 2021 and 2020, respectively. These amounts as of December 31, 2021 and 2020 are net of cash grants in the amount of $151.9 million and $155.0 million, respectively.

Foreign Operations

The net book value of property, plant and equipment, including construction-in-process, located outside of the United States was approximately $514.3 million and $496.8 million as of December 31, 2021 and 2020, 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 $297.4 million and $289.3 million as of December 31, 2021 and 2020, respectively. The Company sells the electricity produced by the power plants to Kenya Power and Lighting Co. Ltd. (“KPLC”) under a 20-year PPA ending between 2033 and 2036.

The Company, through its wholly owned subsidiary, Orzunil I de Electricidad, Limitada (Orzunil), owns a 97% interest in a geothermal power plant in Guatemala. The net book value of the assets related to the power plant was $17.2 million and $10.1 million at December 31, 2021 and 2020, respectively. The Company sells the electricity produced by the power plants to INDE, a Guatemalan power company under a PPA ending in 2034.

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 $39.8 million and $42.0 million at December 31, 2021 and 2020, respectively.

The Company, through its wholly owned subsidiary, GeoPlatanares, signed a BOT contract for the Platanares geothermal project in Honduras with ELCOSA, a privately owned Honduran energy company, for 15 years from the commercial operation date. Platanares sells the electricity produced by the power plants to ENEE, the national utility of Honduras under a 30-year PPA which expires in 2047. The net book value of the assets related to the power plant was $75.4 million and $97.2 million at December 31, 2021 and 2020, respectively.

The Company, through its subsidiary, Guadeloupe Bouillante ("GB"), owns a power plant in Guadeloupe. The net book value of the assets related to the power plant was $39.4 million and $32.0 million at December 31, 2021 and 2020, respectively. GB sells the electricity produced by the power plants to EDF, the French electric utility, under a 15-year PPA.

Construction-in-process

Construction-in-process consists of the following:

	December 31,
	2021		2020
	(Dollars in thousands)
Projects under exploration and development:
Up-front bonus costs	$	5,335	$	5,347
Exploration and development costs		44,664		45,478
Interest capitalized		703		703
		50,702		51,528
Projects under construction:
Up-front bonus costs		39,156		39,144
Drilling and construction costs		611,553		379,117
Interest capitalized		20,072		9,526
		670,781		427,787
Total	$	721,483	$	479,315

	Projects under exploration and development
	Up-front Bonus Costs			Exploration and Development Costs			Interest Capitalized		Total
	(Dollars in thousands)
Balance at December 31, 2018	$	17,018		$	53,237		$	703	$	70,958
Cost incurred during the year		—			17,215			—		17,215
Transfer of projects under exploration and development to projects under construction		—			(3,536	)		—		(3,536	)
Balance at December 31, 2019		17,018			66,916			703		84,637
Cost incurred during the year		—			5,832			—		5,832
Transfer of projects under exploration and development to projects under construction		(11,671	)		(27,270	)		—		(38,941	)
Balance at December 31, 2020		5,347			45,478			703		51,528
Cost incurred during the year		—			2,680			—		2,680
Transfer of projects under exploration and development to projects under construction		(12	)		(3,494	)		—		(3,506	)
Balance at December 31, 2021	$	5,335		$	44,664		$	703	$	50,702

	Projects under construction
	Up-front Bonus Costs		Drilling and Construction Costs			Interest Capitalized		Total
	(Dollars in thousands)
Balance at December 31, 2018	$	27,473	$	160,398		$	2,861	$	190,732
Cost incurred during the year		—		264,137			3,100		267,237
Transfer of projects under exploration and development to projects under construction		—		3,536			—		3,536
Insurance recoveries		—		(35,435	)		—		(35,435	)
Transfer of completed projects to property, plant and equipment		—		(134,152	)		—		(134,152	)
Balance at December 31, 2019		27,473		258,484			5,961		291,918
Cost incurred during the year		—		298,215			3,565		301,780
Transfer of projects under exploration and development to projects under construction		11,671		27,270			—		38,941
Transfer of completed projects to property, plant and equipment		—		(204,852	)		—		(204,852	)
Balance at December 31, 2020		39,144		379,117			9,526		427,787
Cost incurred during the year		—		403,296			10,546		413,842
Transfer of projects under exploration and development to projects under construction		12		3,494			—		3,506
Transfer of completed projects to property, plant and equipment		—		(174,354	)		—		(174,354	)
Balance at December 31, 2021	$	39,156	$	611,553		$	20,072	$	670,781