AMENDED AND RESTATED

                       LIMITED LIABILITY COMPANY AGREEMENT

                                       OF

                            STEAMBOAT GEOTHERMAL LLC

                      A DELAWARE LIMITED LIABILITY COMPANY





                                    CONTENTS

Agreement ..................................................................  3

    1.   Organization of Company ...........................................  3

         1.1   Name ........................................................  3

         1.2   Formation ...................................................  3

         1.3   Registered Agent ............................................  3

    2.   Definitions, Rules of Construction ................................  3

    3.   Purpose ...........................................................  4

    4.   Principal Office ..................................................  4

    5.   The Member ........................................................  4

    6.   Term ..............................................................  5

    7.   Management of the Company .........................................  5

         7.1   Initial Manager .............................................  5

         7.2   Authority of Manager ........................................  5

         7.3   Limitation on Authority of Manager ..........................  5

         7.4   Appointment by Manager ......................................  6

         7.5   Execution of Company Documents ..............................  6

    8.   Resignation of Manager ............................................  6

    9.   Capital Contributions .............................................  6

    10.  Distributions; Allocations of Income and Loss .....................  7

    11.  Books and Records .................................................  7

    12.  Assignments of Company Interest ...................................  7

    13.  Withdrawal ........................................................  7





    14.  Dissolution .......................................................  7

    15.  Winding Up ........................................................  8

         15.1  Responsibility for Winding Up ...............................  8

         15.2  Distribution of Assets Upon Winding Up ......................  8

    16.  Limitation on Liability ...........................................  8

    17.  Indemnification ...................................................  8

         17.1  Indemnification of Manager and Member .......................  8

         17.2  Indemnification of Directors, Officers, Employees
               and Agents ..................................................  9

    18.  Reliance by Third Parties .........................................  9

    19.  No Corporation or Partnership Intended for Nontax
         Purposes ..........................................................  9

    20.  Amendments ........................................................  10

    21.  Approval ..........................................................  10

    22.  Governing Law .....................................................  10

EXHIBIT A ..................................................................  12


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                              AMENDED AND RESTATED
                       LIMITED LIABILITY COMPANY AGREEMENT

      This Amended and Restated Limited Liability Company Agreement of Steamboat
Geothermal LLC (the "Company") is made and entered into as of ______________,
2003, by and between the Company and ORNI 7 LLC, a Delaware limited liability
company (the "Member") for the purpose of continuing a limited liability company
pursuant to the provisions of the Delaware Limited Liability Company Act (the
"Delaware Act").

                                    AGREEMENT

      For and in consideration of the mutual covenants contained in this
Agreement, the Company and the Member agree as follows:

1.    ORGANIZATION OF COMPANY

      1.1   NAME

      The name of the Company is Steamboat Geothermal LLC or such other name as
the Manager may from time to time hereafter designate.

      1.2   FORMATION

      The Company was formed as a limited liability company under the Act on
November 25, 1996. The Member recently acquired all of the interest in the
Company and desires to continue the Company as a limited liability company under
the Act pursuant to the terms of this Amended and Restated Limited Liability
Company Agreement.

      1.3   REGISTERED AGENT

      The name and address of the registered agent of the Company are as
follows:

      HIQ Corporate Services, Inc.
      15 E. North Street
      Dover, Delaware 19901

2.    DEFINITIONS, RULES OF CONSTRUCTION

      In addition to terms otherwise defined herein, the following terms are
used herein as defined below:


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      "ACT" means the Delaware Limited Liability Company Act, and any successor
statute, as amended from time to time.

      "AGREEMENT" means this Limited Liability Company Agreement as originally
executed and as amended or restated from time to time.

      "MANAGER" means the Manager designated in Section 7 hereof.

      "MEMBER" means the Member identified in Section 5 hereof.

      "UNIT" means the limited liability company interest of the Member as
acquired by the Member pursuant to Section 9 hereof.

      Words used herein, regardless of the number and gender used, shall be
deemed and construed to include any other number, singular or plural, and other
gender, masculine, feminine or neuter, as the context requires, and, as used
herein, unless the context clearly requires otherwise, the words "hereof,"
"herein," and "hereunder" and words of similar import shall refer to this
Agreement as a whole and not to any particular provisions hereof.

3.    PURPOSE

      The purpose of the Company shall be to engage in any lawful business that
may be engaged in by a limited liability company organized under the Act, as
such business activities may be determined by the Manager from time to time.

4.    PRINCIPAL OFFICE

      The principal office of the Company, and such additional offices as the
Manager may establish, shall be located at such place or places inside or
outside the State of Delaware as the Manager may designate from time to time.

5.    THE MEMBER

      The name and business or residence address of the sole Member of the
Company is:

            ORNI 7 LLC
            980 Greg Street
            Sparks, NV 89431-6039


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6.    TERM

      The Company shall continue until dissolved and terminated in accordance
with Section 15 of this Agreement.

7.    MANAGEMENT OF THE COMPANY

      7.1   INITIAL MANAGER

      The Manager shall be ORNI 7 LLC. The Manager shall serve until it resigns
or dissolves. The Manager shall constitute a quorum for the transaction of
business, however, any action required or permitted to be taken by the Manager
at a meeting may be taken without a meeting.

      7.2   AUTHORITY OF MANAGER

      The Manager shall have the sole right to manage the business of the
Company and shall have all powers and rights necessary, appropriate or advisable
to effectuate and carry out the purposes and business of the Company. Without
limiting the foregoing, the Manager shall have the authority on behalf of the
Company

            (a) to approve any merger or consolidation between or among the
Company and one or more other business entities, including limited liability
companies, corporations, business trusts and partnerships (limited or general)
and, in its sole discretion, to approve the terms and conditions of any such
merger or consolidation,

            (b) to issue debt or any other securities, to the public or in a
private offering, determining, in its sole discretion, the terms and conditions
thereof, and to take all actions, including, without limitation, the filing of a
registration statement with the adoption of a registration statement already
filed with the Commission, necessary or appropriate in connection with the
foregoing, and

            (c) to admit additional Members upon such terms and conditions, at
such time or times, and for such capital contributions as the Manager shall in
its sole discretion shall determine.

      7.3   LIMITATION ON AUTHORITY OF MANAGER

      The Manager shall not have authority to do or take any of the following
actions without approval of the Company:


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      (i)   Perform any act in contravention of this Agreement or that would
make it impossible or unreasonably burdensome to carry on the business of the
Company;

      (ii)  File for bankruptcy by or on behalf of the Company.

      7.4   APPOINTMENT BY MANAGER

      The Manager may appoint, employ, or otherwise contract with such other
persons or entities for the transaction of the business of the Company or the
performance of services for or on behalf of the Company as it shall determine in
its sole discretion. The Manager may delegate to any such officer, person or
entity such authority to act on behalf of the Company as the Manager may from
time to time deem appropriate in its sole discretion.

      7.5   EXECUTION OF COMPANY DOCUMENTS

      When the taking of such action has been authorized by the Manager, any
officer of the Company or any other person specifically authorized by the
Manager may execute any contract or other agreement or document on behalf of the
Company and may execute and file on behalf of the Company with the Secretary of
State of the State of Delaware any certificates of amendment to the Company's
certificate of formation, one or more restated certificates of formation and
certificates of merger or consolidation and, upon the dissolution and completion
of winding up of the Company, a certificate of cancellation canceling the
Company's certificate of formation.

8.    RESIGNATION OF MANAGER

      The Manager shall not have the right to resign as the Manager of the
Company without the approval of the Company. Upon such approval, the Company
shall designate a successor Manager.

9.    CAPITAL CONTRIBUTIONS

      The Member has assumed the capital account of the prior owners of the
Company. The Company will issue the Member 1,000 Units, representing its 100%
ownership interest in the Company. The Member shall make additional capital
contributions at such times and in such amounts as shall be determined by the
Manager.


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10.   DISTRIBUTIONS; ALLOCATIONS OF INCOME AND LOSS

      Distributions of cash or other assets of the Company to the Member shall
be made at such times and in such amounts as the Manager may determine.
Distributions and allocations of taxable net income or net loss shall be made
among the Members in proportion to the number of Units owned by each.

11.   BOOKS AND RECORDS

      The Manager shall maintain records and accounts of all operations and
expenditures of the Company. With respect to capital contributions,
distributions, and allocations to the Member, the Manager shall maintain records
in a written form similar to Exhibit A.

12.   ASSIGNMENTS OF COMPANY INTEREST

      The Member's interest in the Company shall be transferable in whole or in
part without the consent of any other person, and the assignee shall be admitted
as a Member and admitted to all the rights of the transferring Member upon
execution of a counterpart to this Agreement and upon the books and records of
the Company being updated to reflect the transfer of the transferring Member's
Company interest to the new Member.

13.   WITHDRAWAL

      The Member shall not withdraw from the Company. The withdrawal of the
Member shall result in the dissolution of the Company pursuant to Section 14.

14.   DISSOLUTION

      Subject to the provisions of Section 15 of this Agreement, the Company
shall be dissolved and its affairs wound up and terminated upon the first to
occur of the following:

      (a)   the determination of the Member to dissolve the Company; or

      (b)   at such time as there is no Member.


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15.   WINDING UP

      15.1  RESPONSIBILITY FOR WINDING UP

      Upon dissolution of the Company pursuant to Section 14, the Manager may
wind up the Company's affairs; but the Court of Chancery, upon cause shown, may
wind up the Company's affairs upon application of a legal representative or
assignee of the Manager, and in connection therewith may appoint a liquidating
Trustee.

      15.2  DISTRIBUTION OF ASSETS UPON WINDING UP

      Upon the winding up of the Company, the assets shall be distributed as
follows:

      a.    To creditors, including the Member should it be a creditor, in
satisfaction of liabilities of the Company other than liabilities for which
reasonable provision for payment has been made and liabilities for distributions
to the Member; and

      b.    The remainder, if any, shall go to the Members in proportion to the
number of Units owned by each.

16.   LIMITATION ON LIABILITY

      The debts, obligations and liabilities of the Company, whether arising in
contract, tort or otherwise, shall be solely the debts, obligations and
liabilities of the Company, and the Member and Manager of the Company shall not
be obligated personally for any such debt, obligation or liability of the
Company solely by reason of being the Member or Manager.

17.   INDEMNIFICATION

      17.1  INDEMNIFICATION OF MANAGER AND MEMBER

      To the fullest extent not prohibited by law, the Company shall indemnify
and hold harmless the Member and Manager from and against any and all losses,
claims, demands, costs, damages, liabilities (joint and several), expenses of
any nature (including attorneys' fees and disbursements), judgments, fines,
settlements, and other amounts arising from any and all claims, demands,
actions, suits, or proceedings, civil, criminal, administrative or
investigative, in which the Member of Manager may be involved, or threatened to
be involved, as a party or otherwise, arising out of or incidental to any
business of the Company transacted or occurring while the Member was a Member or
the Manager was a Manager, as the case may be, regardless of


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whether the Member of Manager continues to be a Member or the Manager of the
Company at the time any such liability or expense is paid or incurred.

      17.2  INDEMNIFICATION OF DIRECTORS, OFFICERS, EMPLOYEES AND AGENTS

      Each person who was or is made a party or is threatened to be made a party
to or is otherwise involved in any action, suit or proceeding, whether civil,
criminal, administrative or investigative (hereinafter a "proceeding") by reason
of the fact that he or she is or was serving at the request of the Company as a
director, officer, employee or agent of another limited liability company or of
a corporation, partnership, joint venture, trust or other enterprise, including
a service with respect to an employee benefit plan (hereinafter an
"indemnitee"), whether the basis of such a proceeding is alleged action in an
official capacity as a director, officer, employee or agent or in any other
capacity while serving as a director, officer, employee or agent, shall be
indemnified and held harmless by the Company to the fullest extent authorized by
the Act, as the same exists or may hereafter be amended (but, in the case of any
such amendment, only to the extent that such amendment permits the Company to
provide broader indemnification rights than such law permitted the Company to
provide prior to such amendment), against all expense, liability and loss
(including attorneys' fees, judgments fines, excise taxes or penalties and
amounts paid in settlement) reasonably incurred or suffered by such indemnitee
in connection therewith.

18.   RELIANCE BY THIRD PARTIES

      This Agreement is entered into among the Company and the Member for the
exclusive benefit of the Company, its Member, and their successors and assigns.
Specifically (but not by way of limitation), this Agreement is not intended for
the benefit of any creditor of the Company or any other person. Except to the
extent provided by applicable statute, and then only to that extent, no such
creditor or third party shall have any rights under this Agreement or under any
other agreement between the Company and the Member, either with respect to any
contribution to the Company or otherwise.

19.   NO CORPORATION OR PARTNERSHIP INTENDED FOR NONTAX PURPOSES

      The member has formed the Company under the Act, and expressly denies any
intent hereby to form a partnership under either the Delaware Uniform
Partnership Act or the Delaware Limited Partnership Act or a corporation under
the Delaware General Corporation Laws. For federal income tax purposes, the
Member intends to treat this entity as a division of ORNI 7 LLC.


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20.   AMENDMENTS

      This Agreement may be amended only upon the written consent of the ORNI 7
LLC.

21.   APPROVAL

      Any required approval by the Company under this Agreement, the Act or
otherwise shall be made by obtaining the written consent of Members owning more
than 50% of the total outstanding Units of the Company.

22.   GOVERNING LAW

      This Agreement shall be governed by and construed in accordance with the
domestic laws of the State of Delaware without giving effect to any choice of
law or conflict of law provision or rule (whether of the State of Delaware or
any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of Delaware.

      IN WITNESS WHEREOF, the undersigned have duly executed this Agreement as
of July 29, 2003.

                                        MEMBER:

                                        ORNI 7 LLC
                                             By ORMAT NEVADA INC., Its
                                             Manager


                                        By: /s/ Connie Stechman
                                            --------------------------------
                                          Its Assistant Secretary
                                            --------------------------------

                                        COMPANY:

                                        STEAMBOAT GEOTHERMAL LLC
                                             By ORNI 7 LLC, Its Manager

                                             By ORMAT NEVADA INC., Its
                                                Manager


                                        By: /s/ Connie Stechman
                                            --------------------------------
                                          Its Assistant Secretary
                                            --------------------------------


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                                    EXHIBIT A

       MEMBER            CAPITAL      UNITS     DISTRIBUTIONS   ALLOCATIONS
   NAME & ADDRESS        ACCOUNT      OWNED      DATE/AMOUNT    DATE/AMOUNT
---------------------   ----------   --------   -------------   -----------
     ORNI 7 LLC         $_________    1,000
   980 Greg Street
Sparks, NV 89431-6039

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