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HomeMy WebLinkAboutOrmat Sustainability Report 08Clean, Reliable, Sustainable Ormat Technologies, Inc. 2008 Sustainability Report Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Table of Contents PAGE Message from Mr. Lucien Bronicki, Chairman ............................................................ 1 GRI Indicators 1.1, 1.2 Organizational Profile ................................................................................................ 3 GRI Indicators 2.2, 2.3, 2.4, 2.5, 2.6, 2.7, 2.8, 2.9, 2.10 Our Power Generation Portfolio ................................................................................ 5 GRI Indicators 3.9 About This Report ..................................................................................................... 7 GRI Indicators 3.1, 3.4, 3.5, 3.6, 3.7 Corporate Governance ............................................................................................. 8 GRI Indicators 4.1, 4.2, 4.3, 4.4, 4.12, 4.13 Environmental Leadership ......................................................................................... 11 GRI Indicators 3.9, 5, EC2, EN12, EN13, EN16, EN18, EN22, EN23, EN26, EN28 Community and Stakeholder Involvement ................................................................. 16 GRI Indicators SO1 Human Resources Policies ......................................................................................... 20 GRI Indicators SO8, EC7 Safety & Health Performance .................................................................................... 21 GRI Indicators LA7, LA8 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Message from Mr. Lucien Bronicki, Chairman and Chief Technology Officer Developing clean, reliable, and sustainable energy systems has been our mission and core business for more than four decades. From the first product Ormat created - a solar pump in Mali, Africa - to the 48 MW Olkaria geothermal power plant we now operate in Kenya - Ormat’s focus on creating value-added sustainable energy products is unchanged. Our proprietary technology – the Ormat Energy Converter, which effectively converts low and medium temperature heat into electrical energy – has been successfully applied to geothermal power plants and to recovered energy generation systems using waste heat from process industries and gas pipeline compressors. Despite an economic environment characterized by volatility and uncertainty in the second half of 2008, Ormat continued to demonstrate solid, steady growth. Our revenues increased 16.5% for the year to approximately $345.0 million, Ormat-owned generating capacity increased by 109 megawatts (MW) and demand for our geothermal and recovered energy products continued to grow, resulting in a record product backlog of $194.0 million as of February 2009 These results speak to the growing awareness, acceptance and demand for sustainable energy sources that are able to produce electricity with no or significantly less emissions of CO2 and other pollutants such as nitrogen oxides, than fossil fuel generated electricity. We believe geothermal and recovered energy sources are poised to play a significant role in the cleaner energy mix of the future – and our company is committed to advancing new opportunities and the technologies that will be necessary to enhance their availability and effectiveness on a larger scale. In the US, Ormat is a lead participant in research and development work on Enhanced Geothermal Systems, in concert with several academic institutions and the US Department of Energy (DOE). These initiatives, while still in the early stages, are focused on innovative technologies that could more than double geothermal megawatt potential in the US. We are also committed to continuing to support the future growth of our company. In 2008, Ormat added 150,000 acres of new leases to our exploration development inventory. This includes securing the geothermal rights to 35,000 acres of land in an area close to Anchorage, Alaska, an active volcanic region with high potential for discovery of a large geothermal field, compared with the more mature geological formations in Nevada and California, where our current base of operations is concentrated. 1 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Regardless of where we operate, in more developed jurisdictions or in countries that are just beginning to build their energy infrastructure, Ormat recognizes the importance of effective community and stakeholder engagement, of providing opportunities for local employment and training, as well as investing in initiatives that make a lasting difference at the local community level. In this sustainability report you‘ll be introduced to our company, our technologies and our business practices as they relate to each of these areas. You‘ll also learn more about geothermal and recovered energy production. Thank you for your interest in Ormat Technologies, Inc. We welcome your questions, comments and feedback about this report and look forward to continued dialogue. Sincerely, Lucien Bronicki Chairman and Chief Technology Officer 2 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Organizational Profile Ormat Technologies, Inc. (Ormat) is the world’s leading vertically integrated company primarily engaged in the geothermal and recovered energy power businesses. Ormat explores, develops, designs, manufactures and sells equipment for geothermal and recovered energy-based electricity generation (REG), as well as remote power unit. In addition, our company provides services relating to the engineering, procurement, construction, operation and maintenance of geothermal and recovered energy power plants. Collectively, our products and services are covered by 75 United States (US) patents. Ormat Technologies, Inc. is a public company traded on the New York Stock Exchange, under the symbol ORA and is headquartered in Reno, Nevada. Our current generating portfolio includes the following geothermal and recovered energy-based power plants: in the United States - Brady Complex, Heber Complex, Mammoth, Ormesa Complex, Puna, Steamboat Complex, OREG 1, OREG 2; in Guatemala - Zunil and Amatitlan; in Kenya - Olkaria Complex; in Nicaragua - Momotombo and in New Zealand - GDL. Global Presence - Geothermal and REG power plants and Remote Power Units installed by Ormat worldwide Geothermal Power Plants Recovered Energy Generation (REG) Power Plants Remote Power Units 3 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Ormat Project Financing Recognized as “Best Sustainability Deal” The project financing transaction supporting Ormat‘s new 48 MW Olkaria III Geothermal Power Plant in Kenya was recognized by EMEA (Europe Middle East Africa) Magazine as the “Best EMEA Sustainability Deal for 2008”. The 10-year project finance loan for US $105 million was arranged by global agent Deutsche Investitions und Entwicklungsgesellschaft mbH (DEG), in association with a group of European Development Finance Institutions. The magazine annually highlights financial transactions in the EMEA region that represent innovation and excellence. Our company is the second-largest geothermal power plant owner in the US. Ormat currently owns and operates nine geothermal and recovered-energy power plants complexes that generated, in 2008, approximately 2.5 million megawatt hours (MWh) of electricity produced without nitrogen oxide emissions and with significantly lower emissions of carbon dioxide (CO2) compared with fossil fuel generated electricity. Virtually all of the electricity generated by our geothermal and recovered-energy power plants is currently sold pursuant to long- term power purchase agreements, providing generally predictable cash flows. In the United States, the purchasers of power from our projects are typically investor-owned electric utility companies. Outside of the United States, the purchaser is typically a state-owned utility or a privately-owned entity and we typically operate our power plants pursuant to rights granted to us by a governmental agency pursuant to a concession agreement. In 2008, Ormat generated revenues of $345 million, earned net income of approximately $50 million and at December 31st, employed 1,069 people worldwide. Ormat‘s Growth Plants Ormat is one of the fastest growing geothermal and recovered power generation companies in the United States, as measured by growth in generating capacity. Ormat Revenues ($ millions) 2006 2007 2008 $269.0 $296.0 $345.0 Growth in Ormat-Owned Generating Capacity (MW) 2006 2007 2008 400 4101 5052 At the end of 2008, Ormat owned a total of 505 MW of geothermal and recovered energy generating capacity worldwide. 377 MW is generated by our power plants in the US and the remaining 128 MW is generated by our international power plants. Between 82 MW and 94 MW of geothermal and recovered energy generation projects will be added to Ormat‘s generation portfolio through new construction targeted for completion by the end of 2010. In addition, Ormat has between 150 MW and 170 MW currently under development. Our company plans to continue building a geographically balanced portfolio of geothermal and recovered energy assets, as well as to continue our record of leadership as a manufacturer and provider of products and services related to sustainable energy. 1 On September 25, 2007, Leyte transferred its power plants in the Philippines to the off taker pursuant to a Build, Operate, and Transfer agreement. This transfer reduced our owned foreign generation capacity by 39 MW. 2 Including 50 MW of the North Brawley power plant in California which is in the start up phase. 4 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Our Power Generation Portfolio Power Plants Owned and Operated by Ormat - in the USA State Project Capacity (MW)*Technology Year** California North Brawley 50***Geothermal 2008 California Heber Complex 92 Geothermal 1993, 2006, 2008 California Ormesa Complex 57 Geothermal 1988-9,2003, 2007 California Mammoth Complex 14.5****Geothermal 1994 Nevada Steamboat Complex 84 Geothermal 1986-8, 1992, 2005-8 Nevada Brady Complex 22 Geothermal 2002 North Dakota OREG II 5.5 REG 2008 South & North Dakota OREG I 22 REG 2006-7 Hawaii Puna 30 Geothermal 1992, 2004 Power Plants Owned and Operated by Ormat - Rest of the World Country Project Capacity (MW)*Technology Year** New Zealand GDL 8 Geothermal 2008 Nicaragua Momotombo 28 Geothermal 2002 Guatemala Amatitlan 20 Geothermal 2007 Guatemala Zunil 24 Geothermal 1999 Kenya Olkaria III Complex 48 Geothermal 2000, 2008 5 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Power Plants Under Construction or Under Development Country Project Capacity (MW)*Technology California, USA East Brawley 30 Geothermal California, USA Imperial Valley 50 Geothermal California, USA Mammoth 10 - 15****Geothermal Hawaii, USA Puna 8 Geothermal Nevada, USA McGinness Hills 30 Geothermal Nevada, USA Carson Lake 18- 30 Geothermal Nevada, USA Jersey Valley 18 - 30 Geothermal Colorado, USA OREG IV – Peetz 4 REG Minnesota, USA OREG III – GRE 5.3 REG North Dakota, Minnesota & Montana, USA OREG II 16.5 REG Indonesia Sarulla 43*****Geothermal * Net to the grid at design point ** In power plants that were built in phases, the year of each new phase is indicated *** The project is in start-up phase **** In partnership with Constellation, represent Ormat‘s 50% interest in the project ***** Ormat owns 12.75% interest in the Sarulla Consortium For further details, including full disclosure of our offtaker see, see our 10K report 6 Ormat’s Desert Peak II geothermal power plant, part of the Brady complex in Nevada, delivers 11 MW of clean electricity Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable About This Report This is the first sustainability report published by Ormat Technologies, Inc. and is for the calendar year 2008. On a go-forward basis, Ormat plans to publish sustainability reports annually. Questions concerning any of the information contained about Ormat‘s sustainability performance may be directed to sustainability@ormat.com. This report was prepared referencing the Global Reporting Initiative‘s G3 Guidelines, however we have not self-declared a level of disclosure at this time. As our first sustainability reporting effort, Ormat is working to develop internal frameworks and processes to facilitate more comprehensive reporting in the future. While the financial and operational data presented in this report has been verified for corporate financial disclosure purposes, a formal external verification of the information presented herein has not been conducted. Ormat Technologies, Inc. or Ormat refers to the entire company and its subsidiaries. Dollar figures are US unless otherwise noted. 7 Ormat’s 84 MW geothermal complex at Steamboat, Navada supplies all of Reno's households with electricity Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Corporate Governance Ormat stands behind the principles of honesty, openness, fairness and trust as pillars of our approach to corporate governance. These principles are reflected in the exacting standards that are set out in our Corporate Governance Guidelines, and our Code of Business Conduct and Ethics, both of which were adopted in 2004 and took effect as our company was formally registered for trading on the New York Stock Exchange. Each provides a framework that is aligned with regulatory requirements and reflects ‘best practices‘ principles. Ormat established and maintains adequate internal control over financial reporting and is in compliance with Sarbanes-Oxley Act (SOX). The effectiveness of Ormat‘s internal control has been audited by Price Waterhouse Coopers (PWC, one of the “Big Four” global accounting firms). Ormat is a publicly traded company managed by a seven-member Board of Directors. Mr. Lucien Bronicki is Chairman and Chief Technology Officer, Mrs. Yehudit “Dita” Bronicki is a Director and Chief Executive Officer and Mr. Yoram Bronicki is President and Director and Chief Operating Officer of the company. The other four directors serving on Ormat‘s board are non-executive and classified as independent. They are: Robert F. Clark, Roger W. Gale, Jacob J. Worenklein, Dan Falk. In 2008, Ormat‘s Board of Directors met 13 times to review the business affairs of the company and provide oversight. Key committees of the Board of Directors include: Audit, Compensation, and Nominations & Corporate Governance. The Audit Committee‘s purpose is to assist the Board in its oversight responsibilities as they relate to Ormat‘s accounting policies and internal controls, financial reporting process and legal and regulatory compliance, as well as to maintain ongoing open lines of communication between the Board and Ormat‘s financial management, internal auditors and independent auditors. Among the key responsibilities the Audit Committee performs is the review and discussion of Ormat‘s annual audited financial statements and disclosures under “Management‘s Discussion and Analysis of Financial Condition and Results of Operations“. Ormat‘s Compensation Committee‘s primary purpose is to review and approve corporate goals and objectives relevant to compensation of our CEO, evaluate the performance of the CEO against those goals and objectives and determine and approve CEO compensation, as well as compensation of any of the five other most highly compensated executive officers. Recommendations to the Board for non-CEO compensation, incentive compensation plans and equity based plans are also under the committee’s responsibilities. Ormat‘s Code of Business Conduct & Ethics is intended to: • Promote honest and ethical conduct, including fair dealing and the ethical handling of conflicts of interest and corporate opportunities; • Promote the protection and proper use of Corporation assets; • Maintain the confidentiality of information acquired in the course of business; • Promote compliance with applicable laws and governmental rules and regulations; • Encourage the prompt reporting of any illegal or unethical behavior; The full Code of Business Conduct and Ethics document can be found at the Ormat website under the investor realation tab. 8 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable The Nominating and Corporate Governance Committee is responsible for identifying and recommending individuals to serve as members of Ormat‘s Board of directors, to oversee the evaluation of the Board‘s performance and CEO and to take a leadership role in shaping the corporate governance of the company. Corporate Charters for each committee of the Board are contained in full on Ormat‘s website under “Corporate Governance”. All directors, officers and employees of Ormat are expected to read and be familiar with our company‘s Code of Business Conduct and Ethics and Corporate Governance Guidelines, as appropriate, and are also expected to affirm their agreement to adhere to these standards by signing a compliance certificate. Ormat‘s Secretary of the Board of Directors fulfills the role of Code of Ethics contact person for our company. Shareholders of the company as well as employees are invited to participate in the Annual General Meetings Ormat hosts, where dialogue concerning the company‘s plans, progress and operations is encouraged. Our company also regularly hosts meetings for employees, where they are encouraged to learn more about company operations and share their questions and/or concerns. Employees also are informed of several tools they can use should they wish to report unethical behavior or file an anonymous complaint: a letter box, a telephone line and the website www.ethicspoint.com, on which Ormat has a section. Ormat‘s Environmental Management System has been regularly audited and certified as complying with the International Standard ISO 14001. 9 Ormat’s Puna geothermal power plant, located in Hawaii, which delivers 30 MW of clean electricity Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Corporate Memberships Ormat Technology, Inc. is a member of the following organizations: • Centre for Energy Efficiency and Renewable Technologies (CEERT) • Geothermal Energy Association (GEA) • Geothermal Resources Council (GRC) • Reno-Sparks Chamber of Commerce • Economic Development Authority of Western Nevada (EDAWN) • Nature Conservancy of Nevada • National Renewable Energy Laboratory (NREL) • American Council On Renewable Energy (ACORE) • International Energy Agency (IEA) • The International Solar Energy Society (ISES) Sustainability Index Participation Ormat’s expertise and innovation in developing geothermal energy has been recognized by a growing number of sustainability indexes worldwide: • The Cleantech IndexTM – www.cleantechindex.com • The SB20 List – www.SustainableBusiness.com • NEX WilderHill New Energy Global Innovation Index – www.nexindex.com • The Domini 400 SocialSM Index (DS400) – www.kld.com/indexes/ds400index/index.html • The WilderHill Clean Energy Index – ECO – www.wildershares.com/stock.php • RENIXX ® - Renewable Energy Industrial Index – www.renewable-energy-industry.com/stocks/ 10 Ormat selected for SB20 List Ormat is now a member of the SB20 (Sustainable Business 20) a ranking of the world’s 20 most innovative companies that are playing a leading role in creating the sustainable economy of the future. Compiled by the Progressive Investor newsletter, the judging panel for the SB20 is comprised of leading green stock analysts who use both sustainability and financial criteria to identify the most compelling green companies. The 20 companies selected are noted for their advancement of sustainability, must have made significant progress toward achieving their stated goals, demonstrate strong management and be leading influencers in their particular sector. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Environmental Leadership The Environmental Benefits of Geothermal and Recovered Energy Geothermal energy is heat energy that comes from the earth‘s molten interior deep in the earth‘s crust. This valuable heat is brought near to the surface due to movements in the earth‘s crustal plates by intrusion of molten magma and by deep circulation of groundwater. Reservoirs of hot water under pressure are formed. By drilling wells into these reservoirs, steam and high-pressure hot water can be captured and directed to drive turbines in power plants, completing the conversion of this earth-bound energy from heat to electrical energy. Cooled geothermal fluid is injected back to the reservoir where it is reheated and preserves the resource mass balance and sustainability. The advantages of geothermal energy are enormous; it harnesses a natural locally available energy source, it offers base load electricity 24/7 year-round supply with high reliability and provides an environmentally friendly energy alternative which produces no NOx emissions and negligible CO2 emissions. Geothermal energy is used as a source of direct heat and electrical power generation in over 29 countries today, providing approximately 10,000 MW of electricity3 which is enough to power between 10 and 12 million average homes. 3 Source: GEA and Earth Policy Institute 11 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Ormat also develops products that produce electricity from recovered energy or so-called “waste heat”. Recovered energy represents residual heat that is generated as a by-product of a variety of industrial processes, such as cement manufacturing and gas compression stations. This residual heat, which would otherwise be wasted, may be captured in the recovery process and used by recovered energy power plants to generate electricity without burning additional fuel and/or generating emissions. Ormat (and its parent company Ormat Industries Ltd.) has developed and manufactured over 1,200 MW of geothermal and recovered energy generation power plants with zero fossil fuel consumption and negligible emissions. We are committing considerable effort towards exploring the vastly untapped geothermal and recovered energy resources available, and are working to develop and to innovate our geothermal power plants and technology. We believe the importance of renewable energy as an alterative to fossil fuel will continue to grow and be aided by state, federal and international regulatory frameworks that are intended to reduce carbon emissions, promote renewable energy use, introduce market-based emissions trading systems and provide economic stimulus in a sustainable context. In the US, actions in these frameworks have been introduced through the implementation of the Renewable Portfolio Standards and, most recently the provision under the American Recovery and Reinvestment Act of 2009 (Stimulus Act). Ormat Power Projects Eligible for Greenhouse Gas Emissions Trading In December 2008, the Executive Board of the United Nations Framework Convention on Climate Change (UNFCCC) officially registered Ormat‘s Amatitlan Geothermal Project in Guatemala as a Clean Development Mechanism (CDM). The project is expected to offset emissions of approximately 83,000 tons of CO2 per year. With Amatitlan registered under the CDM, the project will be eligible to receive certified emission reduction credits, each equivalent to one ton of carbon dioxide, which can be traded or sold. The project has a long-term contract to sell all of its emission reduction credits to a European buyer. Ormat‘s GDL power plant in New Zealand is also working towards participation in the JI mechanism and the Olkaria III power plant is working towards participation in the CDM mechanism. 12 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Ormat‘s 2008 Geothermal and REG Power Production Ormat‘s geothermal and recovered energy power plants produce green, fossil fuel free electricity. To accurately calculate the emissions our renewable generation sources mitigate, we have calculated mitigation factors for several other potential energy sources which could have been used to provide electricity. As Ormat‘s power plants provide baseload (constant, year-round) electricity, we compared them with other baseload energy sources: coal, oil, and natural gas. The comparison is based on a 2002 EIA study4. In 2008, power plants owned by Ormat have produced more than 3 million MWh of electricity. According to the calculation, this means our power plants mitigated 2.6 million tons of CO2 compared with coal, 2.4 million of CO2 compared with oil and 1.5 million tons of CO2 compared with natural gas-fired electricity. The power plants which Ormat sold to third parties produced in 2008 approximately the same amount of electricity, thus mitigating a similar amount of CO2. We are unable to provide exact figures as we do not operate these power plants. However, in aggregate, in 2008 all power plants using Ormat‘s technology have mitigated approximately 5.2 million tons of CO2 compared with coal, 4.8 million tons of CO2 compared with oil, and 3 million tons of CO2 compared with natural gas. Improving Environmental Performance Ormat‘s generating portfolio as of the end of 2008 includes a total of 14 geothermal and recovered energy power plant in the United States, Guatemala, Kenya, Nicaragua and New Zealand. While each power plants in our portfolio provides a positive alternative to carbon- intensive electricity generation, our company remains committed to ongoing action to minimize the environmental impact of our operations through reducing, reusing, recycling and applying leading edge technology. In fact, this approach is encapsulated in the Ormat Quality, Environmental, Health and Safety Policy, which guides these initiatives. 4 Bloomfield, K., Moore, J.N., and R.M. Neilson Jr. (2003), Geothermal Energy Reduces Greenhouse Gases. Geothermal Research Council, GRC Bulletin, April 2003. www.geothermal.org/articles.html 13 Ormat’s Energy Consumption In 2008, the amount of electricity consumed by all of our manufacturing facilities was 3,514 MWh, all of which is derived from the grid and whose souce are fossil fuel based power plants. Still, this amount is negligible, as these 3,514 MWh are equivalent to less than 11 hours of operation of clean, low-carbon energy produced by Ormat’s fleet of geothermal and REG power plants. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Ormat‘s Quality, Environmental, Health and Safety Policy Ormat‘s QEHS policy is an integral part of our corporate policy and includes the following elements: • Active communications between Ormat and its customers and suppliers in order to achieve understanding of customers‘ requirements, expectations, customer satisfaction and to provide effective product support. • Compliance with applicable environmental, health and safety regulations where Ormat operates. • continuous efforts to achieve: – High standards of safety in the production, construction and operational phases of our products in order to minimize risks to personnel and the public, improved product performance and reliability – Reduced costs and time to market – Prevent of pollution – Savings in energy and materials • Implementation and certification of an integrated management system in accordance with ISO 9001 and 14001 international standards. • Top management committed to dedicate resources and attention in order to comply with the requirements and continually improve the effectiveness of the integrated management system. In Ormat‘s offices , efforts are in place to reduce the unnecessary use of paper products and preserve forests. Due to our widespread corporate geography, our company relies extensively on the Internet to enhance communication between head office and operating locations. We also reduce travel time and conduct training using “webinars”, rather than through meetings. Car pooling is also encouraged for employees engaged in any travel on behalf of the company, as well as for regular commuting. Most of our power plants are air cooled consuming no water. In addition a number of initiatives are underway throughout our facilities to reduce the amount of water and energy our operations consume. For example, we are investigating different ways to use recycled water in the power plants we operate in California and Nevada, and through the use of recuperators, we are reducing the water consumption of each new power plant we construct. Wildlife Studies Enhance Conservation Thymeleaf buckwheat is an endangered plant species and as such, is one of the plants that Ormat‘s operations take precise measures to protect. From our Steamboat power plant in Nevada, Ormat has donated to the Nevada Department of Wildlife, the state agency responsible for the restoration and management of fish and wildlife resources, to further study sagebrush in the region. Other species we work to develop and maintain include the Flat Tailed Horned Lizard, Sage Grouse, Desert Tortoises and Burrowing Owls. We recognize the value of cultural resources on the sites that we develop and provide cultural resource surveys at a number of power plants to promote awareness of the archeological and biological significance of the land. 14 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Scrap metal, used oil, and plastics & glass from used computers are the major categories of recyclables currently collected at Ormat facilities. All facilities benefit from our efforts to maximize the efficiency of our operations. We‘ve introduced more efficient turbine units at our Steamboat 2/3 plants, which have resulted in lower oil consumption. The use of variable speed drives on key well pump motors has increased their output and productivity, while decreasing oil consumption. In addition, rigorous technical evaluation of geophysical data helps us reduce drilling risk and the number of holes that are required to maximize the output of geothermal reservoirs. Drilling with a Difference Ormat‘s operating procedures require all employees, as well as drilling contractor personnel, to be educated about and adhere to our company‘s policy regarding the standards for environmental protection we apply to our drilling activities and ongoing operations. Drilling geothermal wells is, in many respects, similar to the drilling procedures used for conventional oil and gas drilling. Our overarching goal is to minimize disturbance to the site from the outset, to protect wildlife, land and ground water throughout the well‘s operating life and to restore the site to its natural state when the well is no longer productive. Our environmental protocols for drilling geothermal wells include prevention of soil erosion, surface and ground water quality protection, by using steel casing cemented to below these zones, the use of only non-toxic, non-hazardous drilling mud constituents, the containment of all waste drilling mud, cuttings and runoffs, air quality protection and noise prevention. These measures may be implemented either prior to construction, during construction or during operations of the plant, depending on the specific measure. Throughout 2008, Ormat did not incur any fines for environmental incidents or infractions. Compliance with Environmental Laws Ormat‘s US operations operate in compliance with the National Environmental Policy Act (NEPA) on public lands and the California Environmental Quality Act (CEQA) on private lands. This compliance includes performing environmental studies and implementing a variety of measures to mitigate any identified significant impact. 15 Ormat’s Ormesa geothermal complex, located in California, which delivers 57 MW of clean electricity Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Community and Stakeholder Involvement Connecting with the Community As a responsible and responsive corporate citizen, Ormat believes it is important to cultivate positive relationships with a wide variety of stakeholders who have an interest in our geothermal and recovered energy power plants. To do so, we employ a variety of activities and communications tools which include websites about our power plants and ongoing projects that affect the local community; a community relations program that encourages employee volunteerism and purchasing from local vendors; participation in local boards such as the Mammoth Lakes Alternative Energy Task Force; the maintenance of an extensive list of stakeholders with whom we stay in touch with via email, phone calls, meetings, and tours of the power plant; and by providing local support to community organizations. These combined efforts ensure that stakeholders are provided with timely and accurate information about our operations and development plans and that they are able to learn more about geothermal energy and how it contributes to the local economy and a cleaner environment. 16 Ormat’s Zunil geothermal power plant, located in Guatamala, which delivers 24 MW of clean electricity Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Support for Education Ormat is a strong supporter of education as the foundation for positive, life-long learning and the path to fulfilling and brighter economic futures. Wherever we operate, we look for innovative ways to help improve the educational opportunities available within the local community, to advance research and development in the geothermal industry, to strengthen the array of tools and resources available and to further the academic careers of students by funding student scholarships and internships. Advancing Higher Learning Ormat has developed several close relationships with the institutes of higher learning in Nevada, where our corporate headquarters are located. We work with the Nevada System of Higher Education, which includes three institutions – the University of Nevada, Reno (UNR) which includes the Great Basin Center for Geothermal Energy, the University of Nevada Las Vegas and the Desert Research Institute. In addition to providing direct funding support, Ormat also supports these institutions in different ways: senior Ormat employees regularly deliver lectures on geology and engineering projects; we support research and development initiatives that will further the understanding of geothermal energy; and we utilize and hire interns who work in our operations, gaining first-hand experience in geothermal energy production. Ormat is an associate member of the Massachusetts Institute of Technology Energy Initiative (MITEI). Our company‘s contribution to this leading institution in 2008 provides funding for Energy Fellowship support for students. Ormat supports UNR with a grant as well as offering internship for students. Oramt is also a supporting member in the leadership council of the University of Colorado-Boulder Renewable and Sustainable Energy Institute (RASEI). 17 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Opening Educational Doors Ormat operates geothermal power plants in Guatemala, Nicaragua and Kenya – countries where local residents are challenged by limited access to education. In these countries, Ormat helps meet more basic needs. For example, in 2008 in Kenya, our company provided funding to seven local primary schools to sponsor the salary costs for 21 teachers. While providing resources for instruction is important, helping to supplement the nutritional needs of the students is also a priority. In 2008, Ormat sponsored a feeding program at the Narasha Primary School throughout the academic year. Providing construction funding for a new classroom, and channeling support for secondary school fees are other practical ways our funds opened doors to the future for Kenyan students. In Guatemala, Ormat provides similar types of support to ensure local resident who reside in the communities close to Ormat‘s Amatitlan plant – El Cedro, Bejucal, San Francisco las Sales, San Jose Calderas and Pepinal – benefit from our presence. In 2008, Ormat created a trust fund to manage all community affairs programming and provided seed funding of $150,000 to launch the fund. The trust is concentrating on education, health and eco- tourism initiatives to help develop economic opportunities at the local community level and is managed by three individuals – a representative from the local community, a representative from Ormat‘s Amatitlan plant and an independent advisor. Our support for education is expressed through scholarships to students who excel in their studies, funding for computers, books, maintenance and other classroom resources, as well as through an ongoing school breakfast program. 18 Enhancing local educational opportunities in the South American and African countries where we operate is an investment in the future of local communities. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Providing a Hand-Up While supporting educational initiatives is the primary focus of Ormat‘s community investment outreach, there are many other ways in which our company reaches out to the local people who live close to our power plants. In Nicaragua in 2008, our company contributed to a wide variety of social, recreational, community infrastructure and building projects, which included providing medicine, buying Christmas gifts for disadvantaged children, supplementing the local fire fighting facilities and contributing to the construction of the Momotombo Church. In Kenya, support provided by Ormat in 2008 for the local Narasha community helped them repair a leading water tank. Other gifts helped channel monthly support to the Kenya Wildlife Service‘s education assistant, the Kenya NEMA annual environmental conference, the Aberdare National Park Rhino Ark, the Lake Naivasha Riparian Association (LNRA) world conservation day and LNRA membership. At this year‘s inauguration ceremony, Ormat contributed to the National Famine Relief Fund. In Guatemala, Ormat‘s connection with the local community close to the Zunil power plant resulted in medical visits for students and the local school and the distribution of vitamins throughout the community. 19 Many of Ormat’s community investments help supplement existing infrastructure and contribute in an important way to the local quality of life. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Human Resources Policies Ormat recognizes that engaged, motivated and energized employees are the key to our success as a leading geothermal and renewable energy innovator. Wherever we operate around the globe, it is Ormat policy to hire locally and to ensure that our employees are trained and ready to realize their potential. In all of our power plants, all employees, from the plant manager down, are locals. Wherever our company operates, Ormat respects and adheres to the laws of each country. We are an equal opportunity employer and comply with all state and federal laws prohibiting discrimination based upon race, color, national origin, marital status, religion, sex, age, sexual orientation, mental condition, medical disability, veteran or other protected status. Ormat did not record any legal action or complaints with respect to our human resources activities in 2008. In addition to competitive salaries, Ormat provides employees with an attractive series of employee benefits, which include an employer-sponsored retirement plan, an employee assistance program, voluntary benefits for four types of insurance, emergency travel assistance, and leave time for illness, bereavement and jury duty time. 20 Ormat is an equal opportunity employer. Wherever we operate, we hire locally and empower our employees to realize their potential. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Safety & Health Performance Safety is a significant priority at Ormat. We believe training – in face-to-face and on-line forums – continually reinforces the importance of applying the right procedures and helps keep safety awareness, values and attitudes at the top of our employees and contractors minds during their day-to-day activities inside our power plants and other operating facilities. In 2008, Ormat recorded a Total Case Incident Rate (TCIR) of 2.4 across all of our operations in North America and worldwide. TCIR is calculated based on the number of recordable incidents a company experiences in a year, multiplied by 200,000 and divided by the total hours worked by employees during that year. The 2.4 TCIR Ormat achieved compares favorably with the industry average TCIR of 4.7 in 2008. Also in 2008, Ormat recorded a Days Away and Restricted Time (DART) performance of 1.6, compared with the industry average of 2.9. No fatal incidents were recorded in any of Ormat‘s operations in 2008. 21 Construction of an Ormat Power Plant Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Safety Training Priorities Ormat employees with operational responsibilities are required to complete annual coursework which is aligned with Ormat‘s safety procedures and for which completion is mandatory. Employees are tested to verify their knowledge at the end of each course, which include the following: • Blood Borne Pathogen Guidelines. • Breeching and Hot Tapping – This involves procedures for developing a work plan for breeching working fluid piping components as well as hot brine piping and components. • Cold Weather Awareness – Guidelines for safe operations in cold weather, including personal protection. • Confined Space Entry Program – This program outlines requirements for determining and mitigating confided space hazards and controlling entry into confined space areas. • Contractor Safety. • Cranes/Rigging/Lifting Devices. • Electrical Safety Procedure – This program includes guidelines for NFPA 70e clothing and process. • Emergency Action Plan requirements, which are site specific. • Ergonomics. • Excavation and Trenching. • Fall Protection. • Fire Prevention – Employees receive annual training on plant fire systems and fire extinguisher usage. • First Aid/CPR. • HAZCOM – includes Material Safety Data Sheets (MSDS) and chemical awareness. • Heat Illness Awareness – Required in California and covered at all other plant sites. • Hearing Conservation – Employees exposed to noise levels above 85dba receive training and hearing screening annually. • Hot Work/Cutting and Welding. • Injury and Illness Prevention Plan, Written Workplace Safety Plan. • Lockout/Tagout – This involves control of energy for safe work. • Personal Protective Equipment (PPE). • Process Safety Management – Three-year rotating classes on elements of PSM that are not covered under general safety training. • Respiratory Protection – Those employees who are required to wear respiratory PPE receive annual pulmonary and respiratory screening. • Safety Policy/Safety Responsibilities. 22 Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Ormat‘s Safety Resource Structure Ormat operates 14 different geothermal and recovered energy generation plants in several different countries. To ensure that a consistent approach is applied to safety throughout our company we have created an overarching Strategy Safety Committee. This committee includes Ormat‘s Vice-President of Operations, Manager of Business Processes, Operations Planning Coordinator, Human Resources and Plant Manager, and outlines the expectations and safety plan for the company. An Operations Safety Improvement Team regularly meets and consists of representatives from each Ormat power plant. Together, they share their experiences, review incidents and ways to prevent them from reoccurring, identify best practices, evaluate new equipment, programs and services and provide an important conduit to Ormat‘s corporate management about plant issues and opportunities from a safety context. This team also conducts regular safety audits at each power plant. Safety Improvement Teams are plant site specific and feature cross-functional plant representation. These teams work with plant management to develop and implement safety plans, review incidents and provide support in resolving issues and develop projects designed to enhance the safety performance of the power plant. Ormat has an Industrial Hygiene function currently managed by contract with an outside vendor who is charged with developing and maintaining sampling plans for noise, heat, dust, chemicals, welding emissions and asbestos-free verification. 23 Ormat achieves a consistent company-wide approach to safety through an overarching Strategy Safety Committee. Ormat Technologies, Inc. 2008 Sustainability Report Clean, Reliable, Sustainable Safe Harbor Statement Information provided in this sustainability report may contain statements relating to current expectations, estimates, forecasts and projections about future events that are “forward- looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to Ormat‘s plans, objectives and expectations for future operations and are based upon its management‘s current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties. For a discussion of such risks and uncertainties, see “Risk Factors” as described in Ormat Technologies, Inc.‘s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 5, 2008 and on Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on November 6, 2008. These forward-looking statements are made only as of the date hereof, and we undertake no obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise. For further information about Ormat‘s operations, please visit www.ormat.com 24 Clean, Reliable, Sustainable Ormat Technologies Inc. 6225 Neil Road Reno, NV 89511 Tel: +1 775 356 9029 Fax: +1 775 356 9039 E-Mail: ormat@ormat.com © Copyright 2009 Ormat. All rights reserved