Obviously, the market did not accept this very well:
“The low output and high costs of North Brawley materially impacted our results in 2010. However, we expect to see improvement, both in terms of revenue and costs towards the end of 2011. North Brawley capacity was recently increased to approximately 30 MW following the addition of a new injection area and work to increase the output of the power plant will continue in 2011.”
The North Brawley power plant was tested under U.S. Generally Accepted Accounting Principles (GAAP) guidance for impairment in the current year due to the low output and the higher than expected operating costs. Based on these indicators, North Brawley was tested for recoverability by estimating its future cash flows. The test for recoverability concluded that no impairment existed at December 31, 2010. However, if Ormat is not able to bring the project capacity to approximately 45 MW and the operating costs to the level of current projections, the company will have to record a material impairment of the investment in the power plant. Ormat is continuously assessing the progress in achieving these objectives.
Excerpted from this release:
Ormat Technologies Reports 2010 Year End and Fourth Quarter 2010 Results RENO, Nev., February 22, 2011
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