ORMAT TECHNOLOGIES, INC.ORA
ORMAT TECHNOLOGIES, INC. Commitments Disclosure
COMMITMENTS AND CONTINGENCIES
Geothermal Resources
The Company, through its project subsidiaries in the United States and other foreign locations, controls certain rights to geothermal fluids through certain leases with the BLM or through private leases. Royalties on the utilization of the geothermal resources are computed and paid to the lessors as defined in the respective agreements. Royalty expense under the geothermal resource agreements were $31.0 million, $32.1 million and $30.9 million for the years ended December 31, 2025, 2024 and 2023, respectively.
Letters of Credit
In the ordinary course of business with customers, vendors, and lenders, the Company is contingently liable for performance under letters of credit totaling $286.0 million at December 31, 2025. Management does not expect any material losses to result from these letters of credit because performance is not expected to be required.
Purchase Commitments
The Company purchases raw materials for inventories, construction-in-process and services from a variety of vendors. During the normal course of business, in order to manage manufacturing lead times and help assure adequate supply, the Company enters into agreements with contract manufacturers and suppliers that either allow them to procure goods and services based upon specifications defined by the Company, or that establish parameters defining the Company’s requirements. At December 31, 2025, total obligations related to such supplier agreements were $355.1 million (out of which $106.7 million relate to construction-in-process). All such obligations are payable in 2026.
Grants and Royalties
The Company, through Ormat Systems, had historically, through December 31, 2003, requested and received grants for research and development from the Office of the Chief Scientist of the Israeli Government. Ormat Systems is required to pay royalties to the Israeli Government at a rate of 3.5% to 5.0% of the revenues derived from products and services developed using these grants. No royalties were paid for the years ended December 31, 2025, 2024 and 2023. The Company is not liable for royalties if the Company does not sell such products and services. Such royalties are capped at the amount of the grants received plus interest of 5.9%. The cap at December 31, 2025 and 2024, amounted to $2.7 million and $2.6 million, respectively, of which approximately $1.8 million and $1.6 million, represents the interest portion, as defined above, for 2025 and 2024, respectively.
Lease Commitments
The Company's lease commitments are detailed under Note 21, Leases to the consolidated financial statements.
Contingencies
In February 2025, Engie Resources, LLC and certain of its affiliates filed an action against the Company’s wholly-owned subsidiary in the United States District Court for the Northern District of Texas, which was later re-filed in the Texas Business Court. The complaint alleges that the Company breached its contractual obligations, including certain indemnity obligations, under certain service agreements with or involving the plaintiffs, by failing to properly schedule responsive reserve service on behalf of the plaintiffs during the power crisis in Texas in February 2021. The plaintiffs originally sought $47.5 million in damages. In December 2025, the plaintiffs amended their complaint to add claims related to the same facts, seeking an additional $7.0 million in damages. The Company considers it has strong legal defenses and intends to vigorously defend itself against the claims and take all necessary legal action to have them dismissed. The Company has filed a motion for summary judgment with a hearing date set for March 20, 2026. Trial is scheduled to begin subject to the outcome of the motion for summary judgment on May 18, 2026. No amounts have been accrued for potential losses under this matter, as the Company believes the probability of the claimant receiving a material award is low and it cannot currently reasonably predict the outcome of the proceedings, which is inherently uncertain.
Additionally, from time to time, the Company is named as a party to other various lawsuits, claims and other legal and regulatory proceedings that arise in the ordinary course of the Company's business. These actions typically seek, among other things, compensation for alleged personal injury, breach of contract, property damage, punitive damages, civil penalties or other losses, or injunctive or declaratory relief. With respect to such lawsuits, claims and proceedings, the Company accrues reserves when a loss is probable, and the amount of such loss can be reasonably estimated. It is the opinion of the Company’s management that the outcome of these proceedings, individually and collectively, will not be material to the Company’s consolidated financial statements as a whole.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 23, 2024 | |
| 2022 | Feb 24, 2023 | |
| 2021 | Feb 25, 2022 | |
| 2020 | Feb 26, 2021 | |
| 2019 | Mar 2, 2020 | |
| 2018 | Mar 1, 2019 | |
| 2017 | Mar 16, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 26, 2016 | |
About Commitments Disclosures
Commitments and contingencies disclosures catalog a company's off-balance-sheet obligations and legal exposures — purchase commitments, guarantee arrangements, pending litigation, and regulatory proceedings. These items represent potential future cash outflows that may not appear as liabilities on the balance sheet until they become probable and estimable.
Key signals: litigation reserves and disclosed loss ranges quantify management's estimate of legal exposure, but unquantified "reasonably possible" losses often represent the larger risk. Watch for changes in language around pending cases — shifts from "remote" to "reasonably possible" or increases in estimated loss ranges signal deteriorating outcomes. Unconditional purchase obligations and take-or-pay contracts create fixed cost structures that reduce operational flexibility. Guarantee arrangements for subsidiaries or joint ventures can create cascading obligations. Compare the total commitment schedule against projected free cash flow to assess whether the company can meet its obligations without additional financing.