150MW Geothermal Power Supply for Google Data Centers

Ormat Technologies ($ORA) is pursuing a geothermal power purchase agreement of up to 150MW to support the operation of Google’s ($GOOGL) data centers. As the demand for power from AI data centers increases, there is a growing trend to incorporate renewable energy sources that can be supplied 24/7 into long-term procurement portfolios, extending into the geothermal sector.

Ormat announced on February 17 that it has signed a geothermal power purchase agreement through NV Energy to support Google’s Nevada data center operations. This agreement requires approval from the Nevada Public Utilities Commission (PUCN), and the power generation project is structured to commence commercial operations sequentially between 2028 and 2030.

The contract size is up to 150MW. This is significant as it attempts to leverage the characteristics of geothermal energy, which has less output variability compared to single solar or wind projects and can provide constant power supply, for data center energy needs. However, the actual supply timing depends on regulatory decisions and the progress of on-site construction, as approval processes and project timelines remain.

Ormat's power contracts for data centers are not limited to Google. On January 12, the company entered into a 20-year power purchase agreement with Switch to supply approximately 13MW of power from the Salt Wells geothermal power plant in Nevada, with supply expected to begin in the first quarter of 2030.

The Switch contract is Ormat's first power purchase agreement directly with a data center operator. Combined with the Google contract, the company’s geothermal power business is evolving beyond traditional power sales into long-term energy procurement for AI and cloud infrastructure.

The technological focus is on Enhanced Geothermal Systems (EGS), which involves artificially creating fluid flow in hot underground rock to convert heat into electricity. This technology aims to expand development possibilities beyond areas with existing geothermal resources, although costs, drilling results, and reservoir responses are still in the verification stage.

On June 8, Ormat announced the launch of Ormega100 and is currently conducting two EGS pilot projects. The company operates approximately 1835MW of facilities connected to the transmission grid and holds about 400,000 acres of developable geothermal leases across six states. Ormega100 is a binary generation unit targeting 100MW output.

On June 9, SLB announced that Desert Peak in Nevada has been selected as the primary candidate site for the EGS pilot project being conducted with Ormat. SLB evaluated several geothermal sites using geological and geomechanical data, explaining that Desert Peak emerged as a candidate due to its technical feasibility and accessibility to existing infrastructure. This work is a continuation of the EGS agreement signed by both companies in October 2025.

On January 21, Ormat announced a $25 million investment in Sage Geosystems' Series B round. Sage's pressure geothermal technology is expected to be piloted at existing Ormat plants. If the pilot is successful, Ormat will have the rights to develop, own, and operate geothermal power plants and energy storage projects utilizing that technology.

This trend is more a result of a gradual accumulation of data center power contracts and geothermal technology investments rather than a sudden business shift. The timeline includes a commercial agreement with Sage in 2025, EGS collaboration with SLB, the Switch contract and Sage investment in 2026, the Google-related PPA, and the launch of Ormega100. The company's strategy is focused on connecting AI demand to new sources of geothermal power.

Performance has also piqued investor interest. On August 5, Ormat reported second-quarter revenues of $258.8 million, a 10.6% increase year-over-year, and adjusted EBITDA of $143.9 million, up 6.9%. The company raised its 2026 annual revenue guidance to between $1.15 billion and $1.2 billion, and adjusted EBITDA guidance to between $630 million and $650 million.

However, it is difficult to attribute all numbers to "AI geothermal". While second-quarter energy storage revenues increased by 195.1% year-over-year, product segment revenues fell by 21.6%. The company also reflected some impairment and cessation costs from certain storage projects.

The stock price settled at a level 9.08% higher than the previous closing price in after-hours trading following the earnings announcement. This is interpreted as a mixed response to both the commercialization of EGS and the positive earnings and guidance revisions. Analyst opinions have also been mixed, with target price downgrades and maintained buy ratings.

For Korean readers, this issue is closer to the power bottleneck of AI infrastructure than cryptocurrency. As reported, the share of data centers in the Texas power grid's standby capacity has increased, indicating that the expansion of AI facilities is elevating power procurement methods to the forefront of corporate strategy. Ormat's contracts are a test case for whether geothermal can enter the data center procurement portfolio as a renewable source that can be supplied 24/7.

The key lies in approvals and on-site verification. The 150MW contract related to Google is subject to approval from the Nevada Public Utilities Commission, and the Desert Peak EGS pilot must undergo additional investigation and drilling design procedures. Power supply to Switch is targeted to begin in the first quarter of 2030, while the Google-related power generation project is set to sequentially commence commercial operations between 2028 and 2030.

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