Ormat Stock Hits 52-Week High on Data Center Power Deal
The geothermal company secured a 20-year agreement to supply 13MW of clean energy to a Switch data center, signaling strong demand from the tech sector.
Shares of Ormat Technologies Inc. (NYSE: ORA) surged more than 3% in trading to touch a new 52-week high of $119.05 after the renewable energy company announced a long-term power supply agreement with data center operator Switch.
Ormat, a global leader in geothermal energy, has entered into a 20-year Power Purchase Agreement (PPA) to provide approximately 13 megawatts of 100% carbon-free geothermal electricity to Switch. The deal underscores the rapidly growing demand from the digital infrastructure industry for reliable, round-the-clock clean energy.
The electricity will be supplied from Ormat's Salt Wells geothermal power plant in Nevada. In an announcement released via GlobeNewswire, the company stated the agreement enhances the economics of the facility and secures a stable, long-term revenue stream.
This PPA highlights a critical trend: as artificial intelligence and cloud computing proliferate, data centers require vast and uninterrupted power supplies. Geothermal energy is uniquely positioned to meet this need by providing constant, baseload power, a key advantage over intermittent renewable sources like solar and wind that only generate electricity under specific conditions.
Investors reacted positively to the news, sending the company's stock up 3.21%. The deal reinforces Ormat's strategic position as a key supplier for the power-hungry technology sector. With a market capitalization now exceeding $7 billion, Ormat is leveraging its established geothermal portfolio to lock in predictable, multi-decade revenue contracts.
The agreement is a significant step for Ormat in capitalizing on the energy demands of the digital age. While solar and wind have dominated the renewable energy conversation, the need for 24/7 reliability for critical infrastructure like data centers is bringing geothermal power into the spotlight. For companies like Switch, which require constant power to run their facilities, geothermal offers a dependable and sustainable solution.
Wall Street analysts maintain a generally positive outlook on Ormat, with a consensus target price near $122.90. The company's strategy of securing long-duration contracts with high-quality customers in high-demand sectors provides a clear path for future growth and earnings stability.