Hawaii's Erupting Volcano Too Close for Ormat Geothermal Plant
(Bloomberg) -- The hot magma spewing from fissures around Hawaii’s Kilauea volcano show off the destructive side of the underground energy that, until recently, also provided the Big Island with about 38 megawatts of electricity.
The Puna geothermal plant taps natural subsurface heat to run steam generators that supply about 14 percent of the island’s power. The lava flows that began with the May 3 eruption have come close enough for Ormat Technologies Inc. to close the plant, cap the wells and remove flammable materials from the site, according to a statement late Tuesday from the geothermal energy company.
Shares of Reno, Nevada-based Ormat have slumped more than 10 percent since May 3.
The Puna geothermal plant is 15 miles (24 kilometers) from the volcano and Ormat says there’s little risk the lava will reach it. Still, seismic activity continues to cause ground deformations that may impact the geothermal wells, and Ormat, which owns 63 percent of the plant, has insurance coverage worth about $100 million.
Paul Coster at JPMorgan downgraded the company to neutral from overweight Tuesday, and said damage to the site, or destruction, could cut about $38 million from Ormat’s revenue.
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