Ormat wins $35m DOE funding for EGS and hydrothermal projects
Ormat Technologies (NYSE: ORA) has been selected by the US Department of Energy (DOE) for up to approximately $35 million in funding across two geothermal projects, the company announced on 24 September 2026. The awards, which remain subject to completion of negotiations with the DOE, will support enhanced geothermal systems (EGS) work in Nevada and hydrothermal resource development in Utah.
EGS refers to engineered reservoirs created by drilling into hot dry rock and stimulating fractures to allow water circulation, extracting heat that would otherwise be inaccessible. Unlike conventional hydrothermal geothermal, which depends on naturally occurring steam or hot water, EGS expands the addressable resource to virtually any geology with sufficient subsurface heat.
The projects
The larger award, worth up to $25 million, targets Ormat's Dixie Valley site in Nevada. Developed in partnership with oilfield services group SLB and the University of Utah, the project will design, drill, test and validate an EGS doublet, a pair of wells in which water is injected through one bore and extracted as steam or hot brine through the other. The goal is to demonstrate that engineered reservoirs created adjacent to existing hydrothermal systems can deliver sustained fluid circulation, improved rock permeability and commercially relevant thermal output.
The second award, worth up to $9.7 million, covers the Cove Fort geothermal project in Utah, where Ormat is again partnering with the University of Utah. Drilling and subsurface characterisation work at Cove Fort will focus on understanding how heat and fluids are distributed within carbonate rock formations, a geology that has historically been difficult to characterise for geothermal development.
Chief executive Doron Blachar said the awards reinforce the role that innovation and collaboration can play in advancing geothermal development in the United States, noting that the Dixie Valley programme will support next-generation EGS technologies while Cove Fort deepens understanding of an existing hydrothermal resource.
Market context
Geothermal has re-entered the energy-transition conversation with renewed urgency, driven in part by rapidly growing electricity demand from AI data centres and industrial reshoring. Unlike solar and wind, geothermal delivers firm, dispatchable power around the clock without battery backup, a characteristic that commands a premium in power purchase agreement negotiations with offtakers seeking 24/7 clean energy.
The EGS segment in particular has attracted significant investor and policy interest after a series of technical milestones from developers including Fervo Energy, which has demonstrated commercial-scale EGS output in Nevada. The DOE's Geothermal Technologies Office has positioned EGS as a potential multi-terawatt resource for the United States, and the agency has channelled funding through several programmes, including the Enhanced Geothermal Shot, which targets an 90 per cent reduction in the cost of EGS by 2035.
Ormat is one of the few vertically integrated geothermal companies globally, designing and manufacturing its own power conversion equipment as well as developing and operating plants. Its current portfolio spans roughly 1,355 MW of geothermal and solar capacity across the US, Kenya, Guatemala, Indonesia, Honduras and Guadeloupe, alongside a 495 MW US energy storage portfolio. That operational base gives Ormat a data advantage over pure-play EGS startups but also means the DOE funding is incremental to an existing development programme rather than a lifeline for an early-stage company.
Policy path
The Inflation Reduction Act's production tax credit for geothermal power and the DOE's parallel funding programmes have sharpened the commercial case for EGS investment. Award negotiations with the DOE carry execution risk, as Ormat's own safe-harbour statement notes: funding could be reduced or rescinded before a final award is made. Investors will watch for confirmation that negotiations are completed, early drilling results at Dixie Valley, and whether the EGS doublet can demonstrate the circulation performance needed to justify a commercial follow-on investment.