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Ormat Technologies Inc. - Analyst/Investor Day

Stocks in this article: ORA

I'd like to move into a little bit of an update on North Brawley, and for those of you who don't remember, in Brawley, we had really 2 separate issues. The first was very high cost to operate, which resulted in a negative EBITDA out of the plant. Where every -- or not every, but many of the line items, many of the activities that had to be done were more expensive in Brawley than anywhere else across our fleet. So this has been the first element that made Brawley challenging. The other element was just the ability to bring generation up. Brawley is supposed to make about 100,000-megawatt hours per quarter. As you see can see in this slide, it has been operating at somewhere between 50% and 35% of that in terms of capacity.

What were the issues that drove cost up? The first issue has been sand production, and I think that you heard that substantially. But the other part was premature failure of our production pumps. When the production pumps fail, 2 things happen. First of all, we cannot generate power, and that's a negative impact by itself. The other part is that the cost of replacing the pump itself was very high, both the cost of the pump, but also the work that is required in pulling the pump from around 1,600 feet deep in the ground, pulling it back to surface and putting a new pump in.

And our focus, if we look 5 quarters back, our focus has been to try and to reduce sand production or find ways to deal with sand production, so that it doesn't become so costly or prevents us from operating. And as we moved away from dealing with the sand, the issue has been how to increase the run life of our production pumps.

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