ORMAT TECHNOLOGIES INC

NOTE1 — BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

Business

The Company is primarily engaged in the geothermal and recovered energy business and primarily designs, develops, builds, sells, owns and operates clean, environmentally friendly geothermal and recovered energy-based power plants, usually using equipment that it designs and manufactures. The Company owns and operates geothermal and recovered energy-based power plants in various countries, including the United States, Kenya, Guatemala, Guadeloupe and Honduras. The Company’s equipment manufacturing operations are primarily located in Israel. Additionally, the Company owns and operates independent storage facilities in the United States providing energy storage and related services.

Most of the Company’s domestic power plant facilities are Qualifying Facilities under the PURPA. The Power Purchase Agreements for certain of such facilities are dependent upon their maintaining Qualifying Facility status.

Rounding

Dollar amounts, except per share data, in the notes to these financial statements are rounded to the closest*$1,000,* unless otherwise indicated.

Basis of presentation

The consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and include the accounts of the Company and of all majority-owned subsidiaries in which the Company exercises control over operating and financial policies, and variable interest entities in which the Company has an interest and is the primary beneficiary. Intercompany accounts and transactions have been eliminated in consolidation.

Investments in less-than-majority-owned entities or other entities in which the Company exercises significant influence over operating and financial policies are accounted for using the equity method of accounting or consolidated if they are a variable interest entity in which the Company has an interest and is the primary beneficiary. Under the equity method, original investments are recorded at cost and adjusted by the Company’s share of undistributed earnings or losses of such companies. The Company’s earnings or losses in investments accounted for under the equity method have been reflected as “equity in earnings (losses) of investees, net” on the Company’s consolidated statements of operations and comprehensive income (loss).

Use of estimates in preparation of financial statements

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of such financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. The most significant estimates with regard to the Company’s consolidated financial statements relate to the useful lives of property, plant and equipment, impairment of goodwill and long-lived assets, including intangible assets, revenue recognition of product sales using the percentage of completion method, asset retirement obligations, and the provision for income taxes.

Cash and cash equivalents

The Company considers all highly liquid instruments, with an original maturity ofthree months or less, to be cash equivalents.

Restricted cash, cash equivalents, and marketable securities

Under the terms of certain long-term debt agreements, the Company is required to maintain certain debt service reserves, including principal and interest, cash collateral and operating fund accounts, including for future wells drilling, that have been classified as restricted cash and cash equivalents. Funds that will be used to satisfy obligations due during the next12 months are classified as current restricted cash and cash equivalents, with the remainder classified as non-current restricted cash and cash equivalents, if applicable. Such amounts are invested primarily in money market accounts and commercial paper with a minimum investment grade of “A”.

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Reconciliation of cash and cash equivalents and restricted cash and cash equivalents

The following table provides a reconciliation of cash and cash equivalents and restricted cash and cash equivalents reported on the balance sheets that sum to the total of the same amounts shown on the statement of cash flows:

Marketable securities

The Company’s investments in marketable securities consisted of debt securities with maturity of up toone year and a high credit rating. The investments in marketable securities were classified as available-for-sale ("AFS") and thus measured at fair value based on quoted market prices. Unrealized gains and losses from AFS debt securities were excluded from earnings and reported net of the related tax effect in "Accumulated other comprehensive income (loss)". Realized gains and losses from sale of marketable securities, as determined on a specific identification basis, as well as interest income earned, were included in earnings. The Company considered available evidence in evaluating potential impairments of its investments, including credit market conditions, credit ratings of the security as well as the extent to which fair value is less than amortized cost. The Company estimated the lifetime expected credit losses for all AFS debt securities in an unrealized loss position under its allowance for credit losses model. The Company assessed the security’s credit indicators, including credit ratings when estimating a security’s probability of default. If the assessment indicated that an expected credit loss existed, the Company determined the portion of the unrealized loss attributable to credit deterioration and records an allowance for the expected credit loss in earnings. Unrealized gains and losses attributable to non-credit factors were recorded in "Accumulated other comprehensive income (loss)", net of tax. Marketable debt securities with original maturities ofthree months or less that are readily convertible into a known amount of cash are presented under "Cash and cash equivalents" in the consolidated balance sheets. The Company sold all of its investments in marketable securities during thesecond quarter of2022.

Concentration of credit risk*** ***

Financial instruments which potentially subject the Company to concentration of credit risk consist principally of temporary cash investments, accounts receivable and the cross-currency swap transaction.

The Company places its temporary cash investments with high credit quality financial institutions located in the U.S. and in foreign countries. At* December 31, 2023and2022,* the Company had deposits totaling $43.2 million and $10.0 million, respectively, inten United States financial institutions that were federally insured up to*$250,000* per account. At* December 31, 2023and2022,* the Company’s deposits in foreign countries of approximately $57.5 million and $64.3 million, respectively, werenot insured.

At* December 31, 2023and2022,* accounts receivable related to operations in foreign countries amounted to approximately $152.2 million and $78.9 million, respectively. At* December 31, 2023and2022,* accounts receivable from the Company’s major customers (see Note17) amounted to approximately 57% and 60%, respectively, of the Company’s accounts receivable. The aggregate amount of notes receivable exceeding10% of total receivables for the year ended* December 31, 2023and2022* is $161.0 million and $89.8 million, respectively.

The Company has historically been able to collect substantially all of its receivable balances. As of* December 31, 2023,the amount overdue from KPLC in Kenya was $62.8 million of which $32.2 million was paid in Januaryand Februaryof2024.* The Company believes it will be able to collect all past due amounts in Kenya. This belief is supported by the fact that in addition to KPLC's obligations under its power purchase agreement, the Company holds a support letter from the Government of Kenya that covers certain cases of KPLC non-payment (such as where caused by government actions and/or political events).

In Honduras, as of* December 31, 2023,the total amount overdue from ENEE was $15.7 million of which $2.5 million was collected in Januaryand Februaryof2024.* In addition, due to the financial situation in Honduras, the Company* may*experience additional delays in collection. The Company believes it will be able to collect all past due amounts in Honduras.

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Additionally, the Company considers the counterparty credit risk related to the cross-currency swap, as further described in note11 to the consolidated financial statements, when assessing the hedge effectiveness, noting such risk to be low as of* December 31, 2023.*

Inventories

Inventories consist primarily of raw material parts and sub-assemblies for power units and are stated at the lower of cost or net realizable value, using the weighted-average cost method. Inventories are reduced by a provision for slow-moving and obsolete inventories. This provision wasnot material at* December 31, 2023and2022.*

Deposits and other

Deposits and other consist primarily of performance bonds for construction and storage projects, long-term insurance contract funds and receivables, certain deferred costs and derivative instrument receivables, as applicable.

Property, plant and equipment, net

Property, plant and equipment are stated at cost. All costs associated with the acquisition, development and construction of power plants operated by the Company are capitalized. Major improvements are capitalized and repairs and maintenance (including major maintenance) costs are expensed. Power plants operated by the Company, which include geothermal wells and exploration and resource development costs, are depreciated using the straight-line method over their estimated useful lives, which range from 15 to 30 years. The other assets are depreciated using the straight-line method over the following estimated useful lives of the assets:

The cost and accumulated depreciation of items sold or retired are removed from the accounts. Any resulting gain or loss is recognized currently and recorded in the accompanying statements of operations.

The Company capitalizes interest costs as part of constructing power plant facilities. Such capitalized interest is recorded as part of the asset to which it relates and is amortized over the asset’s estimated useful life. Capitalized interest costs amounted to $17.3 million, $18.7 million, and $14.6 million for the years ended* December 31, 2023,*2022 and2021, respectively.

During thefourth quarter of2022, the Company recorded a non-cash impairment charge, primarily related to its Brawley power plant as further detailed below under the caption "Impairment of long-lived assets"

Exploration and development costs

The Company capitalizes costs incurred in connection with the exploration and development of geothermal resources once it acquires land rights to the potential geothermal resource. Prior to acquiring land rights, the Company makes an initial assessment that an economically feasible geothermal reservoir is probable on that land. The Company determines the economic feasibility of potential geothermal resources internally, with all available data and external assessments vetted through the exploration department and occasionally using outside service providers. Costs associated with the initial assessment are expensed and included in cost of electricity revenues in the consolidated statements of operations and comprehensive income (loss). Such costs were immaterial during the years ended* December 31, 2023,2022 and2021. It normally takestwo tothree years from the time active exploration of a particular geothermal resource begins to the time a production well is in operation, assuming the resource is commercially viable. However, in certain sites the process may*take longer due to permitting delays, transmission constraints or any other commercial milestones that are required to be reached in order to pursue the development process.

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In most cases, the Company obtains the right to conduct the geothermal development and operations on land owned by the Bureau of Land Management ("BLM"), various states or with private parties. The land lease payments made during the exploration, development and construction phase are accounted under lease accounting as further described under the caption Leases below and reflected as expenses under “Electricity cost of revenues” in the consolidated statements of operations and comprehensive income (loss). Upon commencement of power generation on the leased land, the Company begins to pay the lessor’s long-term royalty payments based on the utilization of the geothermal resources as defined in the respective agreements. Such payments are expensed when the related revenues are earned and included in “Electricity cost of revenues” in the consolidated statements of operations and comprehensive income (loss).

Following the acquisition of land rights to the potential geothermal resource, the Company conducts further studies and surveys, including water and soil analyses, among others, and augments its database with the results of these studies. The Company then initiates a suite of geophysical surveys to assess the resource and determine drilling locations. If the results of these activities support the initial assessment of the feasibility of the geothermal resource, the Company then proceeds to exploratory drilling and other related activities which* mayinclude drilling of temperature gradient holes, drilling of slim holes, building access roads to drilling locations, drilling full size production and/or injection wells and flow tests. If the slim hole supports a conclusion that the geothermal resource will support a commercially viable power plant, it maybe converted to a full-size commercial well, used either for extraction or re-injection of geothermal fluids, or be used as an observation well to monitor and define the geothermal resource. Costs associated with these activities and other directly attributable costs, including interest once physical exploration activities begin and permitting costs are capitalized and included in “Construction-in-process”. If the Company concludes that a geothermal resource willnot* support commercial operations, capitalized costs are expensed in the period such determination is made.

When deciding whether to continue holding lease rights and/or to pursue exploration activity, the Company diligently prioritizes prospective investments, taking into account resource and probability assessments in order to make informed decisions about whether a particular project will support commercial operation. During the years ended* December 31, 2023and2022,* the Company wrote-off $3.7 million and $0.8 million of unsuccessful exploration activities, respectively, that the Company decided tono longer pursue. There wereno write-offs of unsuccessful exploration activities in2021.

All exploration and development costs that are being capitalized will be depreciated over their estimated useful lives when the related geothermal power plant is substantially complete and ready for use. A geothermal power plant is substantially complete and ready for use when electricity generation commences.

Asset retirement obligation

The Company records the fair value of a legal liability for an asset retirement obligation in the period in which it is incurred. The Company’s legal liabilities include plugging wells and post-closure costs of power producing and storage sites. When a new liability for asset retirement obligations is recorded, the Company capitalizes the costs of the liability by increasing the carrying amount of the related long-lived asset. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. The Company periodically reassesses the assumptions used to estimate the expected cash flows required to settle the asset retirement obligation, including changes in estimated probabilities, amounts, and timing of the settlement of the asset retirement obligation, as well as changes in the legal requirements of an obligation and revises the previously recorded asset retirement obligation accordingly. At retirement, the obligation is settled for its recorded amount at a gain or loss.

Deferred financing costs

Deferred financing costs are presented as a direct deduction from the carrying value of the associated debt liability or under "Deposits and other" if associated with lines of credit. Such deferred costs are amortized over the term of the related obligation using the effective interest method or ratably, as applicable. Amortization of deferred financing costs is presented as interest expense in the consolidated statements of operations and comprehensive income (loss). Amortization expense for the years ended* December 31, 2023,2022 and2021 amounted to $5.9 million, $4.2 million, and $3.2 million, respectively. During the years ended December 31, 2023,*2022 and2021, no material amounts were written-off as a result of extinguishment of liabilities.

Goodwill

Goodwill represents the excess of the fair value of consideration transferred in the business combination transactions over the fair value of tangible and intangible assets acquired, net of the fair value of liabilities assumed and the fair value of any noncontrolling interest in the acquisitions. Goodwill isnot amortized but rather subject to a periodic impairment testing on an annual basis, which the Company performs on* December 31of each year, or if an event occurs or circumstances change that would more likely thannot* reduce the fair value of the reporting unit below its carrying amount. Additionally, it is permitted tofirst assess qualitative factors to determine whether a quantitative goodwill impairment test is necessary. Further testing is only required if the entity determines, based on the qualitative assessment, that it is more likely thannot that a reporting unit’s fair value is less than its carrying amount. Otherwise,no further impairment testing is required. An entity has the option to bypass the qualitative assessment for any reporting unit in any period and proceed directly to the quantitative goodwill impairment test. This wouldnot preclude the entity from performing the qualitative assessment in any subsequent period. The quantitative assessment compares the fair value of the reporting unit to its carrying value, including goodwill. Under ASU2017-04, Intangibles – Goodwill and Other (Topic350), an entity should recognize an impairment charge for the amount by which the carrying amount of the reporting unit exceeds its fair value. However, the loss recognized shouldnot exceed the total amount of goodwill allocated to that reporting unit. For further information relating to goodwill see Note9 - Intangible Assets and Goodwill to the consolidated financial statements.

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Intangible assets

Intangible assets consist of allocated acquisition costs of PPAs, which are amortized using the straight-line method over the 6 to 19-year terms of the agreements (see Note9) as well as acquisition costs allocation related to the Company's Energy Storage segment activities that are amortized over a period of between approximately 6 and 19 years. Intangible assets are tested for recoverability whenever events or changes in circumstances indicate that their carrying amount* may**not* be recoverable. In case there areno such events or change in circumstances, there isno need to perform an impairment testing. The recoverability is tested by comparing the net carrying value of the intangible assets to the undiscounted net cash flows to be generated from the use and eventual disposition of these assets. If the carrying amount of a long-lived asset (or asset group) isnot recoverable, the fair value of the asset (asset group) is measured and if the carrying amount exceeds the fair value, an impairment loss is recognized.

Impairment of long-lived assets and long-lived assets to be disposed of

The Company evaluates long-lived assets, such as property, plant and equipment and construction-in-process for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset* may**not* be recoverable. Factors which could trigger an impairment include, among others, significant underperformance relative to historical or projected future operating results, significant changes in the Company’s use of assets or its overall business strategy, negative industry or economic trends, a determination that an exploration project willnot support commercial operations, a determination that a suspended project isnot likely to be completed, a significant increase in costs necessary to complete a project, legal factors relating to its business or when it concludes that it is more likely thannot that an asset will be disposed of or sold.

The Company tests its operating plants that are operated together as a complex for impairment at the complex level because the cash flows of such plants result from significant shared operating activities. For example, the operating power plants in a complex are managed under a combined operation management generally withone central control room that controls all of the power plants in a complex andone maintenance group that services all of the power plants in a complex. As a result, the cash flows from individual plants within a complex arenot largely independent of the cash flows of other plants within the complex. The Company tests for impairment of its operating plants which arenot operated as a complex as well as its projects under exploration, development or construction that arenot part of an existing complex at the plant or project level. To the extent an operating plant becomes part of a complex, the Company will test for impairment at the complex level.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated future net undiscounted cash flows expected to be generated by the asset. The significant assumptions that the Company uses in estimating its undiscounted future cash flows include: (i) projected generating capacity of the complex or power plant and rates to be received under the respective PPAs and expected market rates thereafter and (ii) projected operating expenses of the relevant complex or power plant. Estimates of future cash flows used to test recoverability of a long-lived asset under development also include cash flows associated with all future expenditures necessary to develop the asset.

If the assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds their fair value. Management believes that as of* December 31, 2023,no impairment exists for long-lived assets, however, estimates as to the recoverability of such assets maychange based on revised circumstances. If actual cash flows differ significantly from the Company’s current estimates, a material impairment charge may*be required in the future.

During thefourth quarter of2022, the Company recorded a non-cash impairment charge of $30.5 million relating to its Brawley power plant. Further information relating to this impairment charge is disclosed under Note8 - Property, Plant and Equipment to the consolidated financial statements.

Derivative instruments

Derivative instruments (including certain derivative instruments embedded in other contracts) are measured at their fair value and recorded as either assets or liabilities unless exempted from derivative treatment as a normal purchase and sale. Changes in the fair value of derivativesnot designated as hedging instruments are recognized in earnings. Changes in the fair value of derivatives designated as cash flow hedging instruments are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" into earnings to offset the impact of the underlying hedge transaction when it affects earnings under the same line item in the consolidated statements of operations and comprehensive income.

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The Company maintains a risk management strategy that* may*incorporate the use of swap contracts, put options, forward exchange contracts, interest rate swaps, and cross-currency swaps to minimize significant fluctuation in cash flows and/or earnings that are caused by oil and natural gas prices, exchange rate or interest rate volatility.

Foreign currency translation

The U.S. dollar is the functional currency for all of the Company’s consolidated operations and those of its equity affiliates except the Guadeloupe power plant and the Company's operations under the Product segment in New Zealand. For those entities, all gains and losses from currency translations are included under “Derivatives and foreign currency transaction gains (losses)” in the consolidated statements of operations and comprehensive income (loss). The Euro and New Zealand Dollar are the functional currencies of the Company's operations in Guadeloupe and New Zealand, respectively, and thus the impact from currency translation adjustments in those locations is included as currency translation adjustments in "Accumulated other comprehensive income" in the consolidated statements of equity and in comprehensive income. The accumulated currency translation adjustments amounted to a debit of $2.3 million and a debit of $3.1 million as of* December 31, 2023and2022,* respectively.

Comprehensive income

Comprehensive income includes net income plus other comprehensive income (loss), which for the Company consists primarily of changes in foreign currency translation adjustments, changes in unrealized gains or losses in respect of the Company’s share in derivatives instruments of an unconsolidated investment that qualifies as a cash flow hedge, changes in respect of derivative instruments designated as a cash flow hedge and changes in unrealized gains or losses on marketable securities available-for-sale. The changes in foreign currency translation adjustments included under other comprehensive income (loss) during the years ended* December 31, 2023,*2022 and2021 amounted to $1.3 million, $(2.5) million and $(3.2) million, respectively. The changes in the Company’s share in derivative instruments of an unconsolidated investment and gains or losses in respect of derivative instruments designated as a cash flow hedge are disclosed under Note5 – Investment in unconsolidated companies and Note7 - Fair value of financial instruments, respectively, to the consolidated financial statements.

Power purchase agreements

Substantially all of the Company’s Electricity revenues are recognized pursuant to PPAs in the United States and in various foreign countries, including Kenya, Guatemala, Guadeloupe and Honduras. These PPAs generally provide for the payment of energy payments or both energy and capacity payments through their respective terms which expire in varying periods from2025 to2047. Generally, capacity payments are calculated based on the amount of time that the power plants are available to generate electricity. The energy payments are calculated based on the amount of electrical energy delivered at a designated delivery point. The price terms are customary in the industry and include, among others, a fixed price, SRAC (the incremental cost that the power purchaser avoids bynot having to generate such electrical energy itself or purchase it from others), and a fixed price with an escalation clause that includes the value for environmental attributes, known as renewable energy credits. Certain of the PPAs provide for bonus payments in the event that the Company is able to exceed certain target levels and potential payments by the Company if it fails to meet minimum target levels. The Company has PPAs that give the power purchaser or its designee a right offirst refusal or a right offirst offer to acquire the geothermal power plants at fair market value as negotiated between the parties. One of the Company’s subsidiaries in Guatemala sells power at an agreed upon price subject to terms of a “take or pay” PPA.

Pursuant to the terms of certain of the PPAs, the Company* maybe required to make payments to the relevant power purchaser under certain conditions, such as shortfall in delivery of renewable energy and energy credits, andnot* meeting certain performance threshold requirements, as defined in the relevant PPA. The amount of payment required is dependent upon the level of shortfall in delivery or performance requirements and is recorded in the period the shortfall occurs. In addition, if the Company doesnot meet certain minimum performance requirements, the capacity of the power plant* may*be permanently reduced.

Revenues and cost of revenues

Revenues from contracts with customers are recognized in connection with the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Specifically, the Company is required to apply each of the following steps: (1) identify the contract(s) with the customer; (2) identify the performance obligations in the contracts; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies a performance obligation.

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Revenues are primarily related to: (i) sale of electricity from geothermal and recovered energy-based power plants owned and operated by the Company; (ii) geothermal and recovered energy-based power plant equipment engineering, sale, construction and installation, and operating services and (iii) Energy storage and related services.

Electricity segment revenues: Revenues related to the sale of electricity from geothermal and recovered energy-based power plants and capacity payments are recorded based upon output delivered and capacity provided at rates specified under relevant contract terms. The Company assesses whether PPAs entered into, modified, or acquired in business combinations contain a lease element requiring lease accounting. Revenue from such PPAs are accounted for in electricity revenues. In the Electricity segment, revenues for all buteight power plants are accounted as operating leases, and therefore equipment related to geothermal and recovered energy generation power plants as described in Note8 is considered held for leasing. For power plants in the scope of ASC606, the Company identified electricity as a separate performance obligation. Performance obligations identified were evaluated and determined to be satisfied over time and qualified for the invoicing practical expedient since the invoiced amounts reasonably represents the value to customers of performance obligations fulfilled to date. The transaction price is determined based on the price per actual mega-watt output or available capacity as agreed to in the respective PPA. Customers are generally billed on a monthly basis and payment is typically due within30 to60 days after the issuance of the invoice.

Product segment revenues: Revenues from engineering, operating services, and parts and product sales are recorded upon providing the service or delivery of the products and parts and when collectability is reasonably assured. Revenues from the supply and/or construction of geothermal and recovered energy-based power plant equipment and other equipment tothird parties are recognized over time since control is transferred continuously to the Company's customers. The majority of the Company's contracts include a single performance obligation which is essentially the promise to transfer the individual goods or services that arenot separately identifiable from other promises in the contracts and therefore deemed asnot distinct. Performance obligations are satisfied over-time if the customer receives the benefits as we perform work, if the customer controls the asset as it is being constructed, or if the product being produced for the customer hasno alternative use and the Company has a contractual right to payment. In the Company's Product segment, revenues are spread over a period ofone totwo years and are recognized over time based on the cost incurred to date in ratio to total estimated costs which represents the input method that best depicts the transfer of control over the performance obligation to the customer. Costs include direct material, labor, and indirect costs. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined.

In contracts for which the Company determines that control isnot transferred continuously to the customer, the Company recognizes revenues at the point in time when the customer obtains control of the asset. Revenues for such contracts are recorded upon delivery and acceptance by the customer. This generally is the case for the sale of spare parts, generators or similar products.

Accounting for product contracts that are satisfied over time includes use of several estimates such as variable consideration related to bonuses and penalties and total estimated cost for completing the contract. The estimated amount of variable consideration will be included in the transaction price only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized willnot occur when the uncertainty associated with the variable consideration is subsequently resolved. These estimates are based on historical experience, anticipated performance and the Company's best judgment at the time.

The nature of the Company's product contracts give rise to several modifications or change requests by its customers. Substantially all of the modifications are treated as cumulative catch-ups to revenues since the additional goods arenot distinct from those already provided. The Company includes the additional revenues related to the modifications in its transaction price when both parties to the contract approved the modification. As a significant change inone or more of these estimates could affect the profitability of the Company's contracts, the Company reviews and updates its contract-related estimates regularly. If at any time the estimate of contract profitability indicates an anticipated loss on the contract, the Company recognizes the total loss in the period in which it is identified.

Energy Storage segment revenues: Battery energy storage systems as a service and related services revenues are recorded based on energy management of load curtailment capacity delivered or service provided at rates specified under the relevant contract terms. The Company determined that such revenues are in the scope of ASC606 and identified energy management services as a separate performance obligation. Performance obligations are satisfied once the Company provides verification to the electric power grid operator or utility of its ability to meet the committed capacity, the power curtailment requirements or the ancillary services and thus entitled to cash proceeds. Such verification* may*be provided by the Company bi-weekly, monthly or under any other frequency as set by the related program and are typically followed by a payment shortly after. Performance obligations identified were evaluated and determined to be satisfied over time and qualified for the invoicing practical expedient since the amounts included in the verification document reasonably represent the value of performance obligations fulfilled to date. The transaction price is determined based on mechanisms specified in the contract with the customer.

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Contract assets related to the Company's Product segment reflect revenues recognized and performance obligations satisfied in advance of customer billing. Contract liabilities related to the Company's Product segment reflect customer billing in advance of the satisfaction of performance under the contract. The Company receives payments from customers based on the terms established in the contracts. Total contract assets and contract liabilities as of* December 31, 2023and2022* are as follows:

() Contract assets and contract liabilities are presented as "Costs and estimated earnings in excess of billings on uncompleted contracts" and "Billings in excess of costs and estimated earnings on uncompleted contracts", respectively, on the consolidated balance sheets. The contract liabilities balance at the beginning of the year was recognized as product revenues during the year ended December 31, 2023*as a result of performance obligations that were partially satisfied.

The following table presents the significant changes in the contract assets and contract liabilities for the years ended* December 31, 2023and2022:*

The timing of revenue recognition, billings and cash collections result in accounts receivable, contract assets and contract liabilities on the consolidated balance sheet. In the Company's Products segment, amounts are billed as work progresses in accordance with agreed-upon contractual terms, or upon achievement of contractual milestones. Generally, billing occurs subsequent to the recognition of revenue, resulting in contract assets. However, the Company sometimes receives advances or deposits from its customers before revenue can be recognized, resulting in contract liabilities. These assets and liabilities are reported on the consolidated balance sheet on a contract-by-contract basis at the end of each reporting period. The timing of billing its customers and receiving advance payments vary from contract to contract. The majority of payments are receivedno later than the completion of the project and satisfaction of the Company's performance obligation.

On* December 31, 2023,the Company had approximately $150.8 million of remaining performance obligationsnot* yet satisfied or partly satisfied related to its Product segment. The Company expects to recognize approximately 100% of this amount as Product revenues during the next 24 months.

The following schedule reconciles revenues accounted under lease accounting and under ASC606, Revenues from Contracts with Customers, to total consolidated revenues for thethree years ended* December 31, 2023,*2022 and2021:

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Disaggregated revenues from contracts with customers for the years ended* December 31, 2023,*2022 and2021 are disclosed under Note17 - Business Segments, to the consolidated financial statements.

Allowance for credit losses

The Company performs an analysis of potential credit losses related to its financial instruments that are within the scope of ASU2018-19, Codification Improvements to Topic325, Financial Instruments – Credit Losses. Such instruments are primarily cash and cash equivalents, restricted cash and cash equivalents, receivables (excluding those accounted under lease accounting) and costs and estimated earnings in excess of billings on uncompleted contracts, based on class of financing receivables which share the same or similar risk characteristics such as customer type and geographic location, among others. The Company estimates the expected credit losses for each class of financing receivables by applying the related corporate default rate which corresponds to the credit rating of the specific customer or class of financing receivables. For trade receivables, the Company applied this methodology using aging schedules reflecting how long the receivables have been outstanding. The Company has also considered the existence of credit enhancement arrangements that* maymitigate the credit risk of its financial receivables in estimating the applicable corporate default rate. The Company considered the current and expected future economic and market conditions related to inflation and rising interest rates and determined that the estimate of credit losses wasnot* significantly impacted.

The following table describes the changes in the allowance for expected credit losses for the years ended* December 31, 2023and2022* (all related to trade receivables):

Leases

ASU2016-02, Leases (Topic842), defines a lease as a contract, or part of a contract, that conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Control over the use of the identified asset means that the customer has both (a) the right to obtain substantially all of the economic benefits from the use of the asset, and (b) the right to direct the use of the asset.

The Company is a lessee in operating lease transactions primarily consisting of land leases for its exploration and development activities. Additionally, the Company is a lessee in finance lease transactions related to fleet vehicles. As further described under Note2 - Business Acquisitions to the consolidated financial statements,one of the Company's power plant assets is subject to a sale and leaseback transaction that is accounted as a "failed" sale and leaseback. Additionally, as further described above under Revenues and cost of revenues, the Company acts as a lessor in PPAs that are accounted under ASC842, Leases.

In accordance with the lease standard, for agreements in which the Company is the lessee, the Company applies a unified accounting model by which it recognizes a right-of-use asset ("ROU") and a lease liability at the commencement date of the lease contract for all the leases in which the Company has a right to control identified assets for a specified period of time. The classification of the lease as a finance lease or an operating lease determines the subsequent accounting for the lease arrangement.

The Company, both as a lessee and as a lessor, applies the following permitted practical expedients:

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The Company applies the following significant accounting policies regarding leases it enters into following the adoption of the lease guidance on* January 1, 2019: :*

c. ** The lease term:**the lease term is the non-cancellable period of the lease plus periods covered by an extension or termination option if it is reasonably certain that the Company will exercise the option.

• Variable lease payments that depend on an index or a rate:on the commencement date, the lease payments mayinclude variability and depend on an index or a rate (such as the Consumer Price Index or a market interest rate). The Company doesnot remeasure the lease liability for changes in future lease payments arising from changes in an index or rate unless the lease liability is remeasured for another reason. Therefore, after initial recognition, such variable lease payments are recognized in profit or loss as they are incurred.

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• Other variable lease payments:variable payments that depend on performance or use of the underlying asset arenot included in the lease payments. Such variable payments are recognized in profit or loss in the period in which the event or condition that triggers the payment occurs.

At lease commencement, the Company as a lessor classifies leases as either finance or operating leases. Finance leases are further classified as a sales-type lease or as a direct financing lease, however, the Company hasno such leases as a lessor. Under an operating lease, the Company recognizes the lease payment as income over the lease term, generally as earned or on a straight-line basis.

Termination fee

Fees to terminate PPAs are recognized in the period incurred as selling and marketing expenses. No termination fees were incurred during2023, 2022 and2021.

Warranty on products sold

The Company generally provides aone totwo year warranty against defects in workmanship and materials related to the sale of products for electricity generation. The Company considers the warranty to be an assurance type warranty since the warranty provides the customer the assurance that the product complies with agreed-upon specifications. Estimated future warranty obligations are included in operating expenses in the period in which the related revenue is recognized. Such charges are immaterial for the years ended* December 31, 2023,*2022 and2021.

Research and development

Research and development costs incurred by the Company for the development of technologies related to its existing and new geothermal and recovered energy power plants as well as storage facilities are expensed as incurred.

Stock-based compensation

The Company accounts for stock-based compensation using the fair value method whereby compensation cost is measured at the grant date, based on the calculated fair value of the award, and is recognized as an expense over the requisite employee service period (generally the vesting period of the grant). The Company uses the Complex Lattice, Three-based Option Pricing model to calculate the fair value of the stock-based compensation awards.

Tax monetization Transactions

The Company hassix tax monetization transactions, Opal Geo, Tungsten, McGinness Hills3, Steamboat Hills,CD4 and North Valley as further described under Note12 – Tax Monetization Transactions. The purpose of these transactions is to form tax partnerships, whereby investors provide cash in exchange for equity interests that provide the holder a right to the majority of tax benefits associated with a renewable energy project. The Company accounts for a portion of the proceeds from the transaction as debt under ASC470. Given that a portion of these transactions is structured as a purchase of an equity interest the Company also classifies a portion as noncontrolling interest consistent with guidance in ASC810. The portion recorded to noncontrolling interest is initially measured at the fair value of the discounted tax attributes and cash distributions which represents the partner's residual economic interest. The residual proceeds are recognized as the initial carrying value of the debt which is classified as a "Liability associated with the sale of tax benefits". The Company applies the effective interest rate method to the liability associated with the tax monetization transaction component as described by ASC835 and CON7. The tax benefits and cash distributions realized by the partner each period are treated as the debt servicing amounts, with the tax benefit amounts giving rise to income attributable to the sale of tax benefits. The deferred transaction costs are capitalized and amortized using the effective interest method.

Income taxes

Income taxes are accounted for using the asset and liability approach, which requires the recognition of taxes payable or refundable for the current year and deferred tax assets and liabilities for the future tax consequences of events that have been recognized in the Company’s financial statements or tax returns. The measurement of current and deferred tax assets and liabilities are based on provisions of the enacted tax law. The Company accounts for investment tax credits and production tax credits as a reduction to income taxes in the year in which the credit arises. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are more likely thannot expected to be realized. A valuation allowance has been established to offset the Company’s U.S. deferred tax assets. Tax benefits from uncertain tax positions are recognized only if it is more likely thannot that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Interest and penalties assessed by taxing authorities on an underpayment of income taxes are included as a component of income tax provision in the consolidated statements of operations and comprehensive income.

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Earnings per share

Basic earnings per share attributable to the Company’s stockholders (“earnings per share”) is computed by dividing net income attributable to the Company’s stockholders by the weighted average number of shares of common stock outstanding for the period, net of treasury shares. The Company doesnot have any equity instruments that are dilutive, except for stock-based awards and convertible senior notes.

The table below shows the reconciliation of the number of shares used in the computation of basic and diluted earnings per share:

The number of stock-based awards that could potentially dilute future earnings per share which werenot included in the computation of diluted earnings per share because to do so would have been anti-dilutive was 82.5 thousand,29.2 thousand, and 142.4 thousand, respectively, for the years ended* December 31, 2023,*2022 and2021.

As per ASU2020-06, the if-converted method is required for calculating any potential dilutive effect from convertible instruments. For the years ended* December 31, 2023and2022,* the average price of the Company's common stock didnot exceed the per share conversion price of its convertible senior notes (the "Notes") of $90.27, and other requirements for the Notes to be convertible werenot met, and as such, there wasno dilutive effect from the Notes in respect with the aforementioned periods. Further information on the Notes is detailed under Note11 to the consolidated financial statements.

Redeemable noncontrolling interest

Redeemable noncontrolling interest is currently redeemable and relates to a certain noncontrolling shareholder in a subsidiary having an option to sell its equity interest to the Company. The carrying value of the redeemable noncontrolling interest balance as of* December 31, 2023and2022* approximates the redemption price of such interests. Changes in the carrying amount of the Company's Redeemable noncontrolling interest were as follows:

Cash dividends

During the years ended* December 31, 2023,*2022 and2021, the Company’s Board of Directors (the “Board”) declared, approved, and authorized the payment of cash dividends in the aggregate amount of $28.4 million ($0.48 per share), $27.1 million ($0.48 per share), and $27.0 million ($0.48 per share), respectively. Such dividends were paid in the years declared.

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Equity Offering

On* March 14, 2023,the Company entered into an underwriting agreement with Goldman Sachs & Co. LLC, as the sole underwriter (the “Underwriter”), in connection with a public offering, pursuant to which the Company agreed to issue and sell 3,600,000 shares of common stock, par value $0.001 per share, and the Underwriter agreed to purchase these shares at a price of $82.60 per share. In addition, the Company granted the Underwriter a30*-day option to purchase up to an additional 540,000 shares of common stock at the same price per share, which was fully exercised by the Underwriters on* April 3, 2023.*The total net proceeds from the offering, including the option, were approximately $341.7 million, after deducting offering expenses.

ORPD Transaction

On* July 11, 2023,ORPD LLC ("ORPD"), a subsidiary of the Company in which Northleaf Geothermal Holdings, LLC ("Northleaf") and the Company hold 36.75% and 63.25% equity interest, respectively, sold OREG1,* OREG2, OREG3 ("OREGs") and the Don A. Campbell complex to Ormat Nevada Inc. ("ONI"), a fully owned subsidiary of the Company. The proceeds from the sale were partially used by ORPD to make a distribution to its shareholders in which Northleaf's share was $30.0 million. Following this purchase transaction with the noncontrolling interest, the Company fully owns the OREGs and the Don A. Campbell power plant complex and ORPD remains the holder of the Puna geothermal power plant. The Company accounted for this transaction as an equity transaction.

Short-term Commercial Paper

On* October 19, 2023,the Company entered into a framework agreement for participation in the issuance of commercial paper (the "Commercial Paper Agreement") with Barak Capital Underwriting Ltd. under which the Company allowed the participants to submit proposals for purchasing and to purchase the Company's commercial paper ("Commercial Paper") in accordance with the provisions of the Commercial Paper Agreement. On October 23, 2023,the Company completed the issuance of the Commercial Paper in the aggregate amount of $73.2 million, and subsequently on December 11, 2023,the Company issued an additional amount of $26.8 million, under the same terms. The Commercial Paper was issued for a period of90* days and extends automatically for additional90 day periods for up tofive years, unless the Company notifies the participants otherwise or a notice of termination is provided by the participants in accordance with the provisions of the Commercial Paper Agreement. The Commercial Paper bears an annual interest ofthree months SOFR +1.1% which will be paid at the end of each90 day period. Base rate was5.3%.

War in Israel

On* October 7, 2023,Hamas terrorists and members of other terrorist organizations infiltrated Israel’s southern border from the Gaza Strip and conducted a series of attacks on civilian and military targets, including widespread killings and kidnappings. They also launched extensive rocket attacks on the Israeli civilian population. Shortly following the attack, Israel declared war against Hamas. The majority of the Company's senior management and its main Product segment production and manufacturing facilities are located in Israel approximately26* miles from the border with the Gaza Strip. More recently, the Houthi movement, which controls parts of Yemen, launched a number of attacks on marine vessels in the Red Sea. The Red Sea is an important maritime route for international trade. These disruptions have resulted, and* may*continue to result in, delayed deliveries of several key components used in the manufacturing of the Company's products and could impact its ability to timely deliver products to its customers under the Product Segment. This has also resulted in an increase in insurance premium costs for shipments into and out of the sea port.

As of the approval date of these consolidated financial statements,none of the Company's facilities or infrastructure have been damaged nor have its supply chains been significantly impacted since the war broke out. However, a prolonged war could result in further military reserve duty call-ups as well as irregularities to the Company's supply chain and to its ability to ship its products from Israel, which could disrupt the operations of the Company's Product segment and potentially delay some of its growth plans in the Electricity segment. Management will continue to monitor the effect of the war on the Company's financial position and results of operations.

Heber1 power plant fire

The Company's Heber1 geothermal power plant located in California experienced an outage following a fire on* February 25, 2022that caused damage primarily to the steam turbine-generator area. The Heber1* power plant is part of the81 MW Heber complex and sells its electricity under a long-term contract with the Southern California Public Power Authority. In mid-* April, 2022the Company gradually re-started operation of the binary units and in May 2023the Heber1* power plant successfully resumed operations. In2022, the Company recognized $21.8 million of insurance recoveries in respect of the Heber1 fire event, of which $8.0 million was attributable to property damage and thus recorded against the related receivable and offset the loss from the damaged equipment. The remainder of $13.8 million, was related to business interruption and thus recorded as income under electricity cost of revenues in the consolidated statements of operations and comprehensive income. The Company has received all insurance proceeds related to the Heber1 fire event.

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*** February 2021*power crisis in Texas**

In* February 2021,extreme weather conditions in Texas resulted in a significant increase in demand for electricity on theone* hand and a decrease in electricity supply in the region on the other hand. On* February 15, 2021,the Electricity Reliability Council of Texas (“ERCOT”) issued an Energy Emergency Alert Level3* ("EEA3") prompting rotating outages in Texas. This ultimately led to a significant increase in the Responsive Reserve Service (“RRS”) market prices, where the Company operates its Rabbit Hill battery energy storage facility which provides ancillary services and energy optimization to the wholesale markets managed by ERCOT. Due to the electricity supply shortage, ERCOT restricted battery charging in the Rabbit Hill facility from* February 16, 2021to February 19, 2021,resulting in a limited ability of the Rabbit Hill storage facility to provide RRS. As a result, the Company incurred losses of approximately $9.1 million, net of associated revenues, from a hedge transaction in relation to its inability to provide RRS during that period. Starting February 19, 2021,*the Rabbit Hill energy storage facility resumed operation at full capacity.

In addition, the Company recorded a provision for approximately $3.0 million for receivables related to imbalance charges from the grid operator in respect of its demand response operation as it estimated it is probable it* maybe unable to collect such receivables. The provision for uncollectible receivables is included in "General and administrative expenses" in the consolidated statements of operations and comprehensive income for the year ended December 31, 2021.*

The Company has filed billing disputes with ERCOT related to some of the imbalance charges and revenue allocated to its Demand Response services and customers, the outcome of which* may*impact the final amount.

New Accounting Pronouncements

New accounting pronouncements effective in the year ended December 31, 2023**

Revenue Contracts Acquired in a Business Combination

In* October 2021,the FASB issued ASU2021*-08, "Business Combinations (Topic805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers" ("ASU2021-08"). ASU2021-08 is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing the following topics: (1) recognition of an acquired contract liability and (2) payment terms and their effect on subsequent revenue recognized by the acquirer. The amendments in ASU2021-08 require that an entity that is the acquirer recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic606 at the acquisition date as if it had originated the contracts. The amendments in ASU2021-08 are effective for fiscal years beginning after* December 15, 2022including interim periods within those fiscal years. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company adopted this guidance as prescribed, and the adoption of this update didnot* have a material impact on its consolidated financial statements.

New accounting pronouncements effective in future periods

Accounting for Investments in Tax Credit Structures Using the Proportional Amortization Method

In* March 2023,the FASB issued ASU2023*-02 “Investments - Equity Method and Joint Ventures (Topic323),” which permits reporting entities to elect to account for tax equity investments, regardless of the tax credit program from which the income tax credits are received, using the proportional amortization method if certain conditions are met. The amendments in ASU2023-02 are effective for fiscal years beginning after* December 15, 2023,including interim periods within those fiscal years. The amendments in this update should be applied on either a modified retrospective or a retrospective basis. The Company is still evaluating the potential impact of this guidance on its consolidated financial statements, however, it anticipates that the adoption of ASU2023*-02 willnot have an impact on its consolidated financial statements.

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Improvements to Reportable Segments Disclosures

In* November 2023,the FASB issued ASU2023*-07 “Segment Reporting–Improvements to Reportable Segments Disclosures (Topic280)” to improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The amendments in this ASU (1) require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss; (2) require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition; (3) require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic280 in interim periods; (4) clarify that if the CODM uses more thanone measure of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources, a public entity* mayreportone* or more of those additional measures; and (5) require that a public entity disclose the title and position of the CODM and an explanation of how the CODM uses the reported measure or measures of segment profit or loss in assessing segment performance and deciding how to allocate resources. The amendments in this ASU are effective for fiscal years beginning after* December 15, 2023,and interim periods within fiscal years beginning after December 15, 2024,*and should be applied retrospectively to all periods presented. Early adoption is permitted. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.

Improvements to Income Tax Disclosures

In* December 2023,the FASB issued ASU2023*-09 “Income Taxes (Topic740)–Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, primarily related to the rate reconciliation and income taxes paid information. The amendments in this ASU require that public entities, on an annual basis, disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. This ASU also requires that all entities disclose, on an annual basis, (1) the amount of income taxes paid disaggregated by federal, state, and foreign taxes, (2) the amount of income taxes paid disaggregated by individual jurisdictions in which income taxes paid is equal to or greater thanfive percent of total income taxes paid, (3) income or loss from continuing operations before income tax expense or benefit disaggregated between domestic and foreign, and (4) income tax expense or benefit from continuing operations disaggregated by federal, state, and foreign. The amendments in this ASU are effective for annual periods beginning after* December 15, 2024,and should be applied on a prospective basis with the option to apply retrospectively. Early adoption is permitted for annual financial statements that havenot* yet been issued or made available for issuance. The Company is currently evaluating the impact of the adoption of these amendments on its consolidated financial statements.

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**NOTE2 **—BUSINESS ACQUISITIONS

Business combination - geothermal assets purchase transaction

On* July 13, 2021,the Company closed a transaction with TG Geothermal Portfolio, LLC (a subsidiary of Terra-Gen, LLC) (the "Seller") to acquiretwo* contracted geothermal assets in Nevada with a total net generating capacity of67.5 MW, a greenfield development asset adjacent toone of the plants, and an underutilized transmission line (the "Terra-Gen Transaction"). The Company paid approximately $171.0 million in cash (excluding working capital adjustment of approximately $10.8 million) for 100% of the equity interests in the entities holding those assets and assumed a financing obligation with a fair value at acquisition date of approximately $258.4 million. Thetwo contracted geothermal assets include the Dixie Valley and Beowawe geothermal power plants which sell power under existing power purchase agreements with Southern California Edison under a long term PPA expiring in2038 and with NV Power, Inc. under a PPA expiring in* December 2025,*respectively.

As a result of the acquisition, the Company expanded its overall generation capacity and expects to improve the profitability of the purchased assets through cost reduction and synergies. The Company accounted for the transaction in accordance with ASC805, Business Combinations. Following the transaction, the Company consolidates the Dixie Valley and Beowawe power plants as well as the other geothermal assets included in the transaction in accordance with ASC810, Consolidation. In2021, the Company incurred approximately $4.7 million of acquisition-related costs included under "General and administrative expenses" in the consolidated statements of operations and comprehensive income for the year* December 30, 2021.*

The following table summarizes the purchase price allocation to the fair value of the assets acquired and liabilities assumed (in millions):

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During the year ended* December 31, 2023,the acquired geothermal power plants contributed $51.7 million to the Company Electricity revenues, $3.8 million to earnings, net of $8.3 million related to tax and interest expense in respect of the related finance liability. During the year ended December 31, 2022,the acquired geothermal power plants contributed $48.0 million to the Company Electricity revenues, $3.3 million to earnings, net of $7.4 million related to tax and interest expense in respect of the related finance liability. During the year ended31,* 2021, starting from acquisition date, the acquired geothermal power plants contributed $26.2 million to the Company Electricity revenues, $5.5 million to earnings, net of $4.9 million related to tax and interest expense in respect of the related finance liability.

The following unaudited pro forma summary presents condensed consolidated information of the Company as if the business combination had occurred on* January 1, 2020.The pro forma results below include the impact of certain adjustments related to the depreciation of property, plant and equipment, amortization of intangible assets, transaction-related costs incurred as of the acquisition date, and interest expense on related borrowings, and in each case, the related income tax effects, as well as certain other post-acquisition adjustments. This pro forma presentation doesnot* include any impact from transaction synergies.

Business combination - Geothermal and solar assets purchase transaction

On* January 4, 2024,the Company closed a purchase transaction with Enel Green Power North America, a subsidiary of Enel SpA (ENEL.MI) to acquire a portfolio of assets which includestwo* contracted geothermal power plants,one triple hybrid power plant which consists of geothermal, solar PV and solar thermal units,two stand alone solar power plants, andtwo greenfield development assets, for a total cash consideration of $272 million (subject to a customary post-closing working capital adjustment to the purchase price, based on the levels of net working capital of the acquired companies) for 100% of the equity interests in the entities holding those assets. See further details on this business combination transaction under Note22 - Subsequent Events, to the consolidated financial statements.

NOTE3 — INVENTORIES

Inventories consist of the following:

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NOTE4 — COST AND ESTIMATED EARNINGS ON UNCOMPLETED CONTRACTS

Cost and estimated earnings on uncompleted contracts consist of the following:

These amounts are included in the consolidated balance sheets under the following captions:

The completion costs of the Company’s construction contracts are subject to estimation. Due to uncertainties inherent in the estimation process, it is reasonably possible that estimated contract earnings will be further revised in the near term.

NOTE5 — INVESTMENT IN UNCONSOLIDATED COMPANIES

Investment in unconsolidated companies consists of the following:

The Sarulla Complex

The Company holds a 12.75% equity interest in a consortium that developed the 330 MW Sarulla geothermal power plant project in Tapanuli Utara, North Sumatra, Indonesia. The Sarulla project is comprised ofthree separately constructed 110 MW units, the most recent of which,NIL 2, was completed in* April 2018.The Sarulla project is owned and operated by the consortium members under the framework of a joint operating contract and energy sales contract that were both executed on April 4, 2013.Under the joint operating contract, PT Pertamina Geothermal Energy, the concession holder for the project, provided the consortium with the right to use the geothermal field, and under the energy sales contract, PT PLN, the state electric utility, is the off-taker at the Sarulla complex for a period of 30 years. The Company has a significant influence over the Sarulla project through representation on Sarulla's board of directors and thus accounts for its investment in the Sarulla geothermal project under the equity method prescribed by ASC323* - Investments - Equity Method and Joint Ventures.

During the years ended* December 31, 2023,2022 and2021, the Company madeno cash equity investment in the Sarulla complex. As of December 31, 2023,*total cash investment in the Sarulla complex since its inception is $62.0 million.

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The Sarulla consortium entered into interest rate swap agreements with various international banks, effective as of* June 4, 2014,*and accounted for the interest rate swap as a cash flow hedge upon which changes in the fair value of the hedging instrument, relative to the effective portion, are recorded in other comprehensive income. The Company’s share of such gains (losses) recorded in other comprehensive income (loss) are as follows:

The related accumulated gain recorded by the Company under accumulated other comprehensive income as of* December 31, 2023,*2022 and2021 and was $1.5 million, $2.0 million and 6.4 million, respectively.

The Sarulla power plant complex has been experiencing a reduction in generation primarily due to wellfield issues atone of its power plants, as well as equipment failures which resulted in a decrease in profitability. In thesecond quarter of2022, Sarulla agreed with its banks on a framework to perform remediation works that are aimed to restore the power plants' performance. The outcome of thefirst phase of the recovery plan is under evaluation after which we will make a decision regarding the implementation of thesecond phase. As we determined that the current situation and circumstances related to our equity method investment in Sarulla are temporary,no impairment testing was required for the period.

The Ijen Project

On* July 2, 2019,the Company acquired 49% of the Ijen geothermal project from a subsidiary of Medco Power (“Medco”), which is a party to a Power Purchase Agreement and holds a geothermal license to develop the Ijen project in East Java in Indonesia for a total consideration of approximately $2.7 million. As part of the transaction, the Company committed to make additional funding for the exploration and development of the project, subject to specific conditions. During2023,* 2022 and2021, the Company made additional cash investments of approximately $6.1 million, $4.5 million and $6.4 million, respectively, and $48.7 million in total. Medco retains 51% ownership in the project company and the Company and Medco are developing the project jointly. The Company accounted for its investment in the Ijen geothermal project company under the equity method prescribed by ASC323 - Investments - Equity Method and Joint Ventures. The construction of the power plant has started and major equipment was shipped.

NOTE6 — VARIABLE INTEREST ENTITIES

The Company’s overall methodology for evaluating transactions and relationships under the variable interest entity (“VIE”) accounting and disclosure requirements includes the followingtwo steps: (i) determining whether the entity meets the criteria to qualify as a VIE; and (ii) determining whether the Company is the primary beneficiary of the VIE.

In performing thefirst step, the significant factors and judgments that the Company considers in making the determination as to whether an entity is a VIE include: (i) the design of the entity, including the nature of its risks and the purpose for which the entity was created, to determine the variability that the entity was designed to create and distribute to its interest holders; (ii) the nature of the Company’s involvement with the entity; (iii) whether control of the entity* maybe achieved through arrangements that donot* involve voting equity; (iv) whether there is sufficient equity investment at risk to finance the activities of the entity; and (v) whether parties other than the equity holders have the obligation to absorb expected losses or the right to receive residual returns.

If the Company identifies a VIE based on the above considerations, it then performs thesecond step and evaluates whether it is the primary beneficiary of the VIE by considering the following significant factors and judgments: (i) whether the Company has the power to direct the activities of the VIE that most significantly impact the entity’s economic performance; and (ii) whether the Company has the obligation to absorb losses of the entity that could potentially be significant to the VIE or the right to receive benefits from the entity that could potentially be significant to the VIE.

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The Company’s VIEs include certain of its wholly owned subsidiaries that ownone or more power plants with long-term PPAs. In most cases, the PPAs require the utility to purchase substantially all of the plant’s electrical output over a significant portion of its estimated useful life. Some of the VIEs have associated project financing debt that is non-recourse to the general creditors of the Company, is collateralized by substantially all of the assets of the VIE and those of its wholly owned subsidiaries (also VIEs) and is fully and unconditionally guaranteed by such subsidiaries. The Company has concluded that such entities are VIEs primarily because the entities donot have sufficient equity at risk and/or subordinated financial support is provided through the long-term PPAs. The Company has evaluated each of its VIEs to determine the primary beneficiary by considering the party that has the power to direct the most significant activities of the entity. Such activities include, among others, construction of the power plant, operations and maintenance, dispatch of electricity, financing and strategy. Except for power plants that it acquired, the Company is responsible for the construction of its power plants and generally provides operation and maintenance services. Primarily due to its involvement in these and other activities, the Company has concluded that it directs the most significant activities at each of its VIEs and, therefore, is considered the primary beneficiary. The Company performs an ongoing reassessment of the VIEs to determine the primary beneficiary for each. The Company has aggregated its consolidated VIEs into the following categories: (i) wholly owned subsidiaries with project debt; and (ii) wholly owned subsidiaries with PPAs.

The tables below detail the assets and liabilities (excluding intercompany balances which are eliminated in consolidation) for the Company’s VIEs, combined by VIE classifications, that were included in the consolidated balance sheets as of* December 31, 2023and2022:*

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NOTE7—** FAIR VALUE OF FINANCIAL INSTRUMENTS**

The fair value measurement guidance clarifies that fair value represents the amount that would be received upon selling an asset or paid upon transferring a liability in an orderly transaction between market participants at the measurement date. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or liability. The guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level1 measurements) and the lowest priority to unobservable inputs (Level3 measurements). Thethree levels of the fair value hierarchy under the fair value measurement guidance are described below:

Level1** — unadjusted observable inputs that reflect quoted prices for identical assets or liabilities in active markets;

Level2** — inputs other than quoted prices included in Level1 that are observable for the asset or liability either directly or indirectly;

Level3** — unobservable inputs.

The following table sets forth certain fair value information at* December 31, 2023and2022* for financial assets and liabilities measured at fair value by level within the fair value hierarchy, as well as cost or amortized cost. As required by the fair value measurement guidance, assets and liabilities are classified in their entirety based on the lowest level of inputs that is significant to the fair value measurement.

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(1) These amounts relate to currency forward contracts valued primarily based on observable inputs, including forward and spot prices for currencies, net of contracted rates and then multiplied by notional amounts, and are included within "Receivables, other" and "Accounts payable and accrued expenses" on* December 31, 2023and December 31, 2022,*as applicable, in the consolidated balance sheet with the corresponding gain or loss being recognized within "Derivatives and foreign currency transaction gains (losses)" in the consolidated statement of operations and comprehensive income.

(2)These amounts relate to cross currency swap contracts valued primarily based on the present value of the Cross Currency Swap future settlement prices for USD and NISzero yield curves and the applicable exchange rate as of* December 31, 2023.These amounts are included within “Accounts payable and accrued expenses” and “Other long-term liabilities” on December 31, 2023and within "Prepaid expenses and other" and “Accounts payable and accrued expenses” on December 31, 2022in the consolidated balance sheets. Cash collateral deposits in respect of the cross currency swap are presented under “Receivables, others” in the consolidated balance sheet, and amounted to $10.6 million as of December 31, 2023,andnone as of December 31, 2022.*

The following table presents the amounts of gain (loss) recognized in the consolidated statements of operations and comprehensive income (loss):

(1) The foregoing currency forward and price swap transactions werenot designated as hedge transactions and were marked to market with the corresponding gains or losses recognized within “Derivatives and foreign currency transaction gains (losses)” in the consolidated statements of operations and comprehensive income. The price swap transaction was related to a hedging agreement with athird party that was effective* January 1, 2021under which the Company fixed the price per MWh on a portion of RRS provided by its Rabbit Hill storage facility. The price swap transaction was terminated effective April 1, 2021.*

(2) The foregoing cross currency swap transactions were designated as a cash flow hedge as further described under Note1 to the consolidated financial statements. The changes in the cross currency swap fair value are initially recorded in "Other comprehensive income (loss)" and a corresponding amount is reclassified out of "Accumulated other comprehensive income (loss)" to "Derivatives and foreign currency transaction gains (losses)" to offset the remeasurement of the underlying hedged transaction which also impacts the same line item in the consolidated statements of operations and comprehensive income.

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There wereno transfers of assets or liabilities between Level1, Level2 and Level3 during the year ended* December 31, 2023.*

The following table presents the effect of derivative instruments designated as cash flow hedges on the consolidated statements of operations and comprehensive income (loss) for the years ended* December 31, 2023,*2022 and2021 :

(1) The amount of gain or (loss) recognized in Other comprehensive income (loss) for the years ended* December 31, 2023,*2022 and2021 is net of tax of $1.5 million, $0.5 million and $0.8 million, respectively.

The estimated net amount of existing gain (loss) that is reported in "Accumulated other comprehensive income (loss)" as of* December 31, 2023that is expected to be reclassified into earnings within the next12* months is immaterial. The maximum length of time over which the Company is hedging its exposure to the variability in future cash flow is from the transaction commencement date through* June 2031.*

The fair value of the Company’s long-term debt approximates its fair value, except for the following:

(*) The carrying amount value excludes the related deferred financing costs.

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The fair value of the long-term debt is determined by a valuation model, which is based on a conventional discounted cash flow methodology and utilizes assumptions of current borrowing rates, except for the fair value of the Convertible Senior Notes for which the fair value was estimated based on a quoted bid price of the Notes in an over-the-counter market on the last trading day of the reporting period. A hypothetical change in the quoted bid price will result in a corresponding change in the estimated fair value of the Notes. The carrying value of the deposits, the short term revolving credit lines with banks and the commercial paper approximate their fair value.

Recently, interest rate for both short-term and long-term debt have increased sharply which* may*have a direct impact on the fair value of the Company's long-term debt.

The following table presents the fair value of financial instruments as of* December 31, 2023:*

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The following table presents the fair value of financial instruments as of* December 31, 2022:*

NOTE8 — PROPERTY, PLANT AND EQUIPMENT AND CONSTRUCTION-IN-PROCESS

Property, plant and equipment

Property, plant and equipment, net, consist of the following:

Depreciation expense for the years ended* December 31, 2023,2022 and2021 amounted to $186.5 million, $163.2 million and $153.0 million, respectively. Depreciation expense for the years ended December 31, 2023,*2022, and2021 is net of the impact of the cash grant in the amount of $6.9 million, $7.5 million and $7.4 million, respectively.

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U.S. Operations

The net book value of the property, plant and equipment, including construction-in-process, located in the United States was approximately $3,059.7 million and $2,830.3 million as of* December 31, 2023and2022,* respectively. These amounts as of* December 31, 2023and2022* are net of cash grants in the amount of $128.0 million and $144.4 million, respectively.

Foreign Operations

The net book value of property, plant and equipment, including construction-in-process, located outside of the United States was approximately $754.2 million and $556.4 million as of* December 31, 2023and2022,* respectively.

The Company, through its wholly owned subsidiary, OrPower4, Inc. (“OrPower4”), owns and operates geothermal power plants in Kenya. The net book value of assets associated with the power plants was $377.6 million and $301.5 million as of* December 31, 2023and2022,* respectively. The Company sells the electricity produced by the power plants to Kenya Power and Lighting Co. Ltd. (“KPLC”) under a 20 year PPA ending between2033 and2036.

The Company, through its wholly owned subsidiary, Orzunil I de Electricidad, Limitada (Orzunil), owns a 97% interest in a geothermal power plant in Guatemala. The net book value of the assets related to the power plant was $31.9 million and $27.1 million at* December 31, 2023and2022,* respectively. The Company sells the electricity produced by the power plants to INDE, a Guatemalan power company under a PPA ending in2034.

The Company, through its wholly owned subsidiary, Ortitlan, Limitada (“Ortitlan”), owns a power plant in Guatemala. The net book value of the assets related to the power plant was $42.8 million and $42.3 million at* December 31, 2023and2022,* respectively.

The Company, through its wholly owned subsidiary, GeoPlatanares, signed a BOT contract for the Platanares geothermal project in Honduras with ELCOSA, a privately owned Honduran energy company, for 15 years from the commercial operation date. Platanares sells the electricity produced by the power plants to ENEE, the national utility of Honduras under a30-year PPA which expires in2047. The net book value of the assets related to the power plant was $81.9 million and $79.5 million at* December 31, 2023and2022,* respectively.

The Company, through its subsidiary, Guadeloupe Bouillante ("GB"), owns a power plant in Guadeloupe. The net book value of the assets related to the power plant was $101.7 million and $43.5 million at* December 31, 2023and2022,* respectively. GB sells the electricity produced by the power plants to EDF, the French electric utility, under a 15-year PPA ending in2030.

Construction-in-process

Construction-in-process consists of the following:

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Impairment of long-lived assets

The Brawley power plant has been generating electricity below its generating capacity of13MW due to continuous wellfield issues which have resulted in higher-than-expected operating costs and lower-than-expected electricity revenues. The Company implemented a number of remediation plans and technical solutions involving additional investments in the power plant in order to improve its performance and reduce operating costs, however, during thefourth quarter of2022, as a result of the failure of the recent remediation plan and the lower than forecasted performance of the power plant during that quarter, the Company decided that it wasno longer economical to continue investing in the Brawley power plant as the probability of success of additional wellfield work to increase capacity and reduce operating costs is low. The Company concluded that the power plant can be operated at optimal capacity of7MW which will require lower investment and results in lower operating costs.

Based on the above circumstances and indicators, the Brawley power plant was tested for recoverability during thefourth quarter of2022 by comparing the carrying amount of its assets to the estimated future net undiscounted cash flows expected to be generated by such assets, the result of which was that the carrying amount of the asset was above the estimated future net undiscounted cash flows. The Company then estimated the fair value of those assets using the expected future discounted cash flow approach using Level3 inputs under ASC820, as a measure of fair value as it deemed it to be the most appropriate for the power plant. As a result of the impairment analysis, the Brawley power plant was written down to its fair value of $13.6 million and the Company recorded a non-cash impairment loss of $30.5 million which was presented in the consolidated statement of operations and comprehensive income (loss) under “Impairment of long-lived-assets” for the year ended* December 31, 2022.*This write-down is allocated to the Electricity segment.

In estimating the fair value for the power plant, the Company utilized the discounted cash flow approach ("DCF") which is a form of the Income Approach. The DCF approach is based on the present value of the estimated cash flow expected to be generated by the Brawley power plant which is the asset group. The expected cash flow was discounted using a rate of return that reflects the relative risk of the asset, as well as the time value of money. The determination of the Company and asset specific risk-adjusted discount rate is based on the weighted-average cost of capital ("WACC") taking into consideration the value of equity and interest-bearing debt. The Company applied a WACC rate of 9% in the estimation of the Brawley power plant. The Company noted that a1% change to the WACC or long-term growth rates wouldnot yield a significant change in the estimated fair value of the Brawley power plant. In addition to the WACC rate of 9%, other significant inputs of the future net cash flow estimates were generation capacity output, average realized price, and operating costs growth rate. These future net cash flow estimates are classified as Level3 within the fair value hierarchy. Below are the significant unobservable inputs included in the valuation as of the year ended* December 31, 2022.*

NOTE9 — INTANGIBLE ASSETS AND GOODWILL

As of* December 31, 2023and2022,* intangible assets amounted to $307.6 million and $333.8 million, respectively, net of accumulated amortization of $150.2 million and $122.8 million, respectively. Intangible assets are mainly related to the Company’s PPAs acquired in business combinations and to its energy storage activities, .

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The following table summarizes the information related to the Company's intangible assets as of* December 31, 2023and2022:*

Amortization expense for the years ended* December 31, 2023,*2022 and2021 amounted to $26.8 million, $27.2 million and $21.7 million, respectively.

There wereno additions to intangible assets during2023 and2022.

During2022, the Company wrote-off specific certain customer related assets in the total amount of $0.9 million. The Company tested the intangible assets for recoverability in* December 2023,2022 and2021 and assessed whether there were events or change in circumstances which mayindicate that the intangible assets arenot* recoverable. The Company's assessment resulted in that there wereno write-offs of intangible assets in2023, 2022 and2021, except as noted above.

Estimated future amortization expense for the intangible assets as of* December 31, 2023*is as follows:

Goodwill

Goodwill amounting to $90.5 million and $90.3 million as of* December 31, 2023and2022,* respectively, represents the excess of the fair value of consideration transferred in business combination transactions over the fair value of tangible and intangible assets acquired, net of the fair value of liabilities assumed and non-controlling interest (as applicable) in the acquisitions. For the years2023, 2022 and2021, the Company's impairment assessment of goodwill related to its reporting units resulted inno impairment.

Changes in the carrying amount of the Company’s goodwill for the years ended* December 31, 2023and2022* were as follows:

There wasno goodwill acquired during2023 and2022.

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NOTE 10 —** ACCOUNTS PAYABLE AND ACCRUED EXPENSES**

Accounts payable and accrued expenses consist of the following:

NOTE 11 —** LONG-TERM DEBT, CREDIT AGREEMENTS AND FINANCE LIABILITY**

Long-term debt consists of the following loan agreements:

(1) the amounts presented exclude deferred financing costs, if any

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Full-Recourse Third-Party Debt

Mizrahi2023 Loan

On* November 1, 2023,the Company entered into a definitive loan agreement (the "Mizrahi2023* Loan Agreement") with Mizrahi Tefahot Bank Ltd. (“Mizrahi Bank”). The Mizrahi2023 Loan Agreement provides for a loan by Mizrahi Bank to the Company in an aggregate principal amount of $50.0 million (the “Mizrahi2023 Loan”). The outstanding principal amount of the Mizrahi2023 Loan will be repaid in 16 semi-annual payments of $3.1 million each, commencing on* April 12, 2024.The duration of the Mizrahi2023* Loan is 8 years. The Mizrahi2023 Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot to exceed 6.0, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The Mizrahi2023 Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

Hapoalim2023 Loan

On* February 27, 2023,the Company entered into a definitive loan agreement (the "BHI Loan Agreement") with Bank Hapoalim B.M. (“Hapoalim Bank”). The BHI Loan Agreement provides for a loan by Hapoalim Bank to the Company in an aggregate principal amount of $100.0 million (the “BHI Loan” or “Hapoalim2023* Loan”). The outstanding principal amount of the BHI Loan will be repaid in 20 semi-annual payments of $5.0 million each, commencing on* August 27, 2023.The duration of the BHI Loan is 10 years. The BHI Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot* to exceed 6.0, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The BHI Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

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Mizrahi Bank Loan

On* April 12, 2022,the Company entered into a definitive loan agreement (the "Mizrahi Loan Agreement") with Mizrahi Tefahot Bank Ltd. (“Mizrahi Bank”). The Mizrahi Loan Agreement provides for a loan by Mizrahi Bank to the Company in an aggregate principal amount of $75.0 million (the “Mizrahi Loan”). The outstanding principal amount of the Mizrahi Loan will be repaid in 16 semi-annual payments of $4.7 million each, commencing on October 12, 2022.The duration of the Mizrahi Loan is 8 years. The Mizrahi Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot* to exceed 6.0, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The Mizrahi Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

Bank Hapoalim Loan

On* July 12, 2021,the Company entered into a definitive loan agreement (the "Hapoalim Loan Agreement") with Bank Hapoalim B.M. (“Bank Hapoalim”). The Hapoalim Loan Agreement provides for a loan by Bank Hapoalim to the Company in an aggregate principal amount of $125 million (the “Hapoalim Loan”). The outstanding principal amount of the Hapoalim Loan will be repaid in 14 semi-annual payments of $8.9 million each, commencing on December 12, 2021.The duration of the Hapoalim Loan is 7 years. The Hapoalim Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot* to exceed 6, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The Hapoalim Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

HSBC Bank Loan

On* July 15, 2021,the Company entered into a definitive loan agreement (the "HSBC Loan Agreement") with HSBC Bank PLC (“HSBC Bank”). The HSBC Loan Agreement provides for a loan by HSBC Bank to the Company in an aggregate principal amount of $50 million (the “HSBC Loan”). The outstanding principal amount of the HSBC Loan will be repaid in 14 semi-annual payments of $3.6 million each, commencing on January 19, 2022.The duration of the HSBC Loan is 7 years. The HSBC Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot* to exceed 6, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The HSBC Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

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Discount Bank Loan

On* September 2, 2021,the Company entered into a definitive loan agreement (the "Discount Loan Agreement") with Israel Discount Bank Ltd. (“Discount Bank”). The Discount Loan Agreement provides for a loan by Discount Bank to the Company in an aggregate principal amount of $100 million (the “Discount Loan”). The outstanding principal amount of the Discount Loan will be repaid in 16 semi-annual payments of $6.25 million each, commencing on March 2, 2022.The duration of the Discount Loan is 8 years. The Discount Loan Agreement includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot* to exceed 6, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The Discount Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

Senior Unsecured Bonds - Series4

On* July 1, 2020,the Company concluded an auction tender and accepted subscriptions for New Israeli Shekels ("NIS")1.0 billion aggregate principal amount of senior unsecured bonds (the “Senior Unsecured Bonds - Series4”). The Senior Unsecured Bonds - Series4* are denominated in NIS and were converted to approximately $289.8 million using a cross-currency swap transaction shortly after the completion of such issuance as further detailed below. The Senior Unsecured Bonds - Series4 are payable semi-annually in arrears starting* December 2020and will be repaid in 10 equal annual payments commencing June 2022unless prepaid earlier by the Company pursuant to the terms and conditions of the trust instrument that governs the Senior Unsecured Bonds - Series4.* As of* December 31, 2023,the covenants relating to the Senior Unsecured Bonds - Series4* have been met.

(1) payable semi-annually

Cross Currency Swap

Concurrently with the issuance of the Senior Unsecured Bonds - Series4, the Company entered into a long-term cross currency swap with the objective of hedging the currency rate fluctuations related to the aggregated principal amount and interest of the Senior Unsecured Bonds - Series4 at an average fixed rate of 4.34%. The terms of the Cross Currency Swap match those of the Senior Unsecured Bonds - Series4, including the notional amount of the principal and interest payment dates. The Company designated the Cross Currency Swap as a cash flow hedge as per ASC815, Derivatives and Hedging and accordingly measures the Cross Currency Swap instrument at fair value. The changes in the Cross Currency Swap fair value are initially recorded in Other Comprehensive Income (Loss) and reclassified to Derivatives and foreign currency transaction gains (losses) in the same period or periods during which the hedged transaction affects earnings. The hedged transaction and the Senior Unsecured Bonds - Series4 effect in earnings are presented in the same line item in the consolidated statements of operations and comprehensive income.

Senior Unsecured Loan

On* March 22, 2018the Company entered into a definitive loan agreement (the "Migdal Loan Agreement") with Migdal Insurance Company Ltd., Migdal Makefet Pension and Provident Funds Ltd. and Yozma Pension Fund of Self-Employed Ltd., all entities within the Migdal Group, a leading Israeli insurance company and institutional investor in Israel. The Migdal Loan Agreement provides for a loan by the lenders to the Company in an aggregate principal amount of $100.0 million (the "Migdal Loan"). The Migdal Loan is repaid in15* semi-annual payments of $4.2 million each, commencing on* September 15, 2021,with a final payment of $37.0 million on March 15, 2029.*

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The Loan is subject to early redemption by the Company prior to maturity from time to time (butnot more frequently than once per quarter) and at any time in whole or in part, at a redemption price set forth in the Migdal Loan Agreement. If the rating of the Company is downgraded to "ilA-"(or equivalent), of any of Standard and Poor’s, Moody’s or Fitch (whether in Israel or outside of Israel) (each a “Credit Rating Agency”), the interest rate applicable to the Migdal Loan will increase by 0.50%. If the rating of the Company is further downgraded to a lower level by any Credit Rating Agency, the interest rate applicable to the Migdal Loan will be increased by 0.25% for each additional downgrade. Inno event will the cumulative increase in the interest rate applicable to the Loan exceed 1% regardless of the cumulative rating downgrade. A subsequent upgrade or reinstatement of a rating by any Credit Rating Agency will reduce the interest rate applicable to the Migdal Loan by 0.25% for each upgrade (but inno event will the interest rate applicable the Migdal Loan fall below the base interest rate of 4.8%). Additionally, if the ratio between short-term and long-term debt to financial institutions and bondholders, deducting cash and cash equivalents to EBITDA is equal to or higher than 4.5, the interest rate on all amounts then outstanding under the Migdal Loan shall be increased by 0.5% per annum over the interest rate then-applicable to the Migdal Loan.

The Migdal Loan Agreement includes various affirmative and negative covenants, including a covenant that the Company maintain (i) a debt to adjusted EBITDA ratio below 6, (ii) a minimum equity amount (as shown on its consolidated financial statements, excluding noncontrolling interests) ofnot less than $750 million, and (iii) an equity attributable to Company's stockholders to total assets ratio ofnot less than 25%. The Migdal Loan Agreement includes other customary affirmative and negative covenants and events of default.

On* March 25, 2019,the Company entered into afirst* addendum (“First Addendum”) to the Migdal Loan Agreement with the Migdal Group dated* March 22, 2018.The First Addendum provides for an additional loan by the lenders to the Company in an aggregate principal amount of $50.0 million (the “Additional Migdal Loan”). The Additional Migdal Loan is repaid in 15 semi-annual payments of $2.1 million each, commencing on September 15, 2021,with a final payment of $18.5 million on March 15, 2029.*The Additional Migdal Loan was entered into under substantially the same terms and conditions of the Migdal Loan Agreement as disclosed above.

In* April 2020,the Company entered into asecond* addendum (the “Second Addendum”) to the loan agreement with the Migdal Group dated* March 22, 2018.The Second Addendum provides for an additional loan by the lenders to the Company in an aggregate principal amount of $50.0 million (the “Second Addendum Migdal Loan”). The principal amount of $31.5 million of the Second Addendum Migdal Loan will be repaid in 15 equal semi-annual payments commencing on September 15, 2021and ending on September 15, 2028.The principal amount of $18.5 million is repaid inone* bullet payment on* March 15, 2029.The Second Addendum Migdal Loan was entered into under substantially the same terms and conditions of the Migdal Loan Agreement. As of December 31, 2023,*the covenants have been met.

(1) payable semi-annually in arrears.

Loan Agreements with DEG (the Olkaria III Complex)

On* October 20, 2016,OrPower4* entered into a new $50.0 million subordinated loan agreement with Deutsche Investitions-und Entwicklungsgesellschaft mbH ("DEG") (the “DEG2 Loan Agreement”) and on* December 21, 2016,OrPower4* completed a drawdown of the full loan amount of $50 million, with a fixed interest rate of 6.28% for the duration of the loan (the “DEG2 Loan”). The DEG2 Loan is being repaid in20 equal semi-annual principal installments which commenced on* December 21, 2018,with a final maturity date of June 21, 2028.Proceeds of the DEG2* Loan were used by OrPower4 to refinance Plant4 of the Olkaria III Complex, which was originally financed using equity. The DEG2 Loan is subordinated to the senior loan provided by DFC for Plants1-3 of the Olkaria III Complex. The DEG2 Loan is guaranteed by the Company.

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On* January 4, 2019,OrPower4* entered into an additional $41.5 million subordinated loan agreement with DEG (the “DEG3 Loan Agreement”) and on* February 28, 2019,OrPower4* completed a drawdown of the full loan amount, with a fixed interest rate of 6.04% for the duration of the loan (the “DEG3 Loan”). The DEG3 Loan is being repaid in 19 equal semi-annual principal installments, which commenced on* June 21, 2019,with a final maturity date of June 21, 2028.Proceeds of the DEG3* Loan were used by OrPower4 to refinance upgrades to Plant1 of the Olkaria III Complex, which were originally financed using equity. The DEG3 Loan is subordinated to the senior loan provided by DFC (formerly OPIC) for Plants1-3 of the Olkaria III Complex. The DEG3 Loan is guaranteed by the Company. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

Non-Recourse and Limited-Recourse Third-Party Debt

Finance Agreement with DFC (formerly OPIC) (the Olkaria III Complex)

On* August**23,* 2012, OrPower4, the Company’s wholly owned subsidiary, entered into a Finance Agreement with U.S. International Development Finance Corporation, an agency of the U.S. government, to provide limited-recourse senior secured debt financing in an aggregate principal amount of up to $310.0 million (the “OPIC Loan”) for the refinancing and financing of the Olkaria III geothermal power complex in Kenya.

The OPIC Loan is comprised of up tothree tranches:

(1) payable quarterly

The OPIC Loan is collateralized by substantially all of OrPower4’s assets and by a pledge of all of the equity interests in OrPower4. There are various restrictive covenants under the OPIC Loan, which include a required historical and projected12-month DSCR. As of* December 31, 2023,*the covenants have been met.

Finance Agreement with DFC (the Platanares power plant)

On* April 30, 2018,Geotérmica Platanares, S.A. de C.V. (“Platanares”), a Honduran sociedad anónima de capital variable and an indirect subsidiary of Ormat Technologies, Inc., entered into a Finance Agreement (the “Finance Agreement”) with DFC, pursuant to which DFC will provide to Platanares senior secured non-recourse debt financing in an aggregate principal amount of up to $114.7 million (the “Platanares Loan”), the proceeds of which will be used principally for the refinancing and financing of the Platanares 35 MW geothermal power plant located in western Honduras. The finance agreement was amended and closed in Octoberof2018.*

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(1) payable quarterly

The Platanares Loan is secured by afirst priority lien on all of the assets and ordinary shares of Platanares. The Finance Agreement contains various restrictive covenants applicable to Platanares, among others (i) to maintain a projected and historic debt service coverage ratio; (ii) to maintain on deposit in a debt service reserve account and well reserve account funds or assets with a value in excess of a minimum threshold and (iii) covenants that restrict Platanares from making certain payments or other distributions to its equity holders. As of* December 31, 2023,*the covenants have been met.

Loan Agreement with Banco Industrial S.A. and Westrust Bank (International) Limited

On* July 31, 2015,Ortitlan, Limitada, the Company’s wholly owned subsidiary, obtained a 12-year secured term loan in the principal amount of $42.0 million (the "Amatitlan Loan") for the 20 MW Amatitlan power plant in Guatemala. The loan had a maturity date of June 2027and bore interest at a rateper annumequal to the sum of LIBOR (which cannot be lower than 1.25%) plus a margin of (i)4.35% as long as the Company’s guaranty of the loan is outstanding or (ii)4.75% otherwise. On September 29, 2023,*the Company voluntarily fully prepaid the Amatitlan Loan in the amount of $14.0 million.

Plumstriker Loan

On* May 4, 2019,a wholly owned indirect subsidiary of the Company (“Plumstriker”) and itstwo* subsidiaries entered into a $23.5 million loan agreement with a United States (“U.S.”) financing division of a leading global industrial company for the financing oftwo 20 MW battery energy storage projects located in New Jersey. On* May 30, 2019,Plumstriker completed the drawdown of the full loan amount. The Plumstriker Loan bore interest ofthree* months U.S. Libor plus a 3.5% margin and had a maturity date of* May 2026.On April 4, 2023,*the Company voluntarily fully prepaid the Plumstriker Loan in the amount of $11.1 million.

Don A. Campbell Senior Secured Notes—** Non-Recourse**

On* November 29, 2016,ORNI47* LLC (“ORNI47”), the Company’s subsidiary, entered into a note purchase agreement (the “ORNI47 Note Purchase Agreement”) with MUFG Union Bank, N.A., as collateral agent, Munich Reinsurance America, Inc. and Munich American Reassurance Company (the “Purchasers”) pursuant to which ORNI47 issued and sold to the Purchasers $92.5 million aggregate principal amount of its Senior Secured Notes (the “DAC1 Senior Secured Notes”) in a private placement exempt from the registration requirements of the Securities Act of1933, as amended. ORNI47 is the owner of thefirst phase of the Don A. Campbell geothermal power plant (“DAC1”), and part of the ORPD LLC (“ORPD”) portfolio.

The net proceeds from the sale of the DAC1 Senior Secured Notes, were used to refinance the development and construction costs of the DAC1 geothermal power plant, which were originally financed using equity.

The DAC1 Senior Secured Notes constitute senior secured obligations of ORNI47 and are secured by all of the assets of ORNI47. The ORNI47 Note Purchase Agreement requires ORNI47 to comply with certain covenants, including, among others, restrictions on the incurrence of indebtedness or liens, amendment or modification of material project documents, the ability of ORNI47 to merge or consolidate with another entity. In addition, there are restrictions on the ability of ORNI47 to make distributions to its shareholders, which include a required historical and projected DSCR. As of* December 31, 2023,the covenants for this loan havenot* been met which resulted in certain restrictions on equity distribution by ORNI47.

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(1) payable quarterly

OFC2 Senior Secured Notes

In* September 2011,OFC2,* the Company’s wholly owned subsidiary and OFC2’s wholly owned project subsidiaries (collectively, the “OFC2 Issuers”) entered into a note purchase agreement (the “Note Purchase Agreement”) with OFC2 Noteholder Trust, as purchaser, John Hancock Life Insurance Company (U.S.A.), as administrative agent, and the DOE, as guarantor, in connection with the offer and sale of up to $350.0 million aggregate principal amount of OFC2 Senior Secured Notes (“OFC2 Senior Secured Notes”) due* December 31, 2034.The DOE will guarantee payment of 80% of principal and interest on the OFC2* Senior Secured Notes pursuant to Section1705 of Title XVII of the Energy Policy Act of2005, as amended. The conditions precedent to the issuance of the OFC2 Senior Secured Notes includes certain specified conditions required by the DOE in connection with its guarantee of the OFC2 Senior Secured Notes.

On* October 31, 2011,the OFC2* Issuers completed the sale of $151.7 million in aggregate principal amount Series A Notes due2032 (the “Series A Notes”). The net proceeds from the sale of the Series A Notes were used to finance a portion of the construction costs of Phase I of the McGinness Hills and Tuscarora power plants and to fund certain reserves.

On* August 29, 2014,OFC2* sold $140.0 million of OFC2 Senior Secured Notes (the “Series C Notes”) to finance the construction of thesecond phase of the McGinness Hills project. The Series C Notes are the last tranche under the Note Purchase Agreement with John Hancock Life Insurance Company and are guaranteed by the DOE’s Loan Programs Office in accordance with and subject to the DOE's Loan Guarantee Program under Section1705 of Title XVII of the Energy Policy Act of2005.

The OFC2 Senior Secured Notes are collateralized by substantially all of the assets of OFC2 and those of its wholly owned subsidiaries and are fully and unconditionally guaranteed by all of the wholly owned subsidiaries of OFC2. There are various restrictive covenants under the OFC2 Senior Secured Notes, which include limitations on additional indebtedness of OFC2 and its wholly owned subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by OFC2. In addition, there are restrictions on the ability of OFC2 to make distributions to its shareholders. Among other things, the distribution restrictions include a historical debt service coverage ratio requirement and a projected future DSCR requirement. As of* December 31, 2023,*the covenants have been met.

(1) payable quarterly in arrears

The Company provided a guaranty in connection with the issuance of the Series A Notes and Series C Notes. The guaranty* maybe drawn in the event of, among other things, the failure of any facility financed by the relevant series of OFC2* Senior Secured Notes to reach completion and meet certain operational performance levels (the “non-performance trigger”) which gives rise to a prepayment obligation on the OFC2 Senior Secured Notes. The guarantee* mayalso be drawn if there is a payment default on the OFC2* Senior Secured Notes or upon the occurrence of certain fundamental defaults that result in the acceleration of the OFC2 Senior Secured Notes, in each case, prior to the date that the relevant facility(ies) financed by such OFC2 Senior Secured Notes reaches completion and meets the applicable operational performance levels. The Company’s liability under the guaranty with respect to the non-performance trigger is limited to an amount equal to the prepayment amount on the OFC2 Senior Secured Notes necessary to bring the OFC2 Issuers into compliance with certain coverage ratios. The Company’s liability under the guaranty with respect to the other trigger event described above isnot so limited.

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Idaho Refinancing Note

On* November 28, 2022,Idaho USG Holdings, LLC (the “Issuer”) entered into a note purchase agreement with the Prudential Insurance Company of America and other noteholders, pursuant to which the Issuer issued approximately $61.6 million in aggregate principal amount of senior secured notes (“Idaho Refinancing Note”). Proceeds of the Idaho Refinancing Note were used by the Issuer for the refinancing of the Prudential Capital Group - Idaho non-recourse loan which had a remaining balance of approximately $16.0 million due in full in March 2023 (*the “Idaho Refinancing”).

The Idaho Refinancing note purchase agreement also includes an approximately $4.3 million revolving note tranche to be issued in the event of a shortfall in debt service with respect to the Idaho Refinancing Note. The Issuer shall pay a commitment fee on the revolving note tranche at a rate of 0.5% per annum. If drawn, the revolving notes shall bear interest at a rate of Term SOFR +140bps.

The Idaho Refinancing is secured by the Issuer’s 100% ownership interests in Raft River Energy I LLC, which owns the Raft River geothermal project, and by the Issuer’s 60% ownership interests in Oregon USG Holdings, LLC, the owner of USG Oregon LLC, which owns the Neal Hot Springs geothermal project. The Idaho Refinancing Note will be repaid in 31 semi-annual payments, commencing on* March**31st,* 2023. The Idaho Refinancing Note bears interest at a fixed rate of 6.26% per annum and has a final maturity date of* March 31, 2038.*The Company has provided a limited guarantee with respect to certain insurance obligations of the Issuer.

There are various restrictive covenants under the Idaho Refinancing, including limitations on additional indebtedness of the Issuer and its subsidiaries. Failure to comply with these and other covenants will, subject to customary cure rights, constitute an event of default by the Issuer. In addition, there are restrictions on the ability of the Issuer to make distributions to its shareholders. Among other things, the distribution restrictions include both a historical and projected minimum debt service coverage ratio requirement. As of* December 31, 2023,*the covenants for this loan have been met.

As part of the security package, the note purchase agreement states the Issuer shall establish and maintain customary reserve accounts which include a debt service reserve account, a make-up well reserve account, a maintenance reserve account and a construction reserve account.

U.S. Department of Energy Loan

On* August 31, 2011,USG Oregon LLC (“USG Oregon”), completed thefirst* funding drawdown associated with the U.S. Department of Energy (“DOE”) loan guarantee of $96.8 million (“Loan Guarantee”) to construct its power plant at Neal Hot Springs project in Eastern Oregon. In connection with the Loan Guarantee, the DOE has been granted a security interest in all of the equity interests of USG Oregon, as well as in the assets of USG Oregon, including a mortgage on real property interests relating to the Neal Hot Springs site. As of* December 31, 2023,*the covenants for this loan have been met.

Prudential Capital Group–** Nevada**

On* September 26, 2013,USG Nevada LLC, entered into a note purchase agreement with the Prudential Capital Group to finance Phase I of the San Emidio geothermal project located in northwest Nevada. Principal payments are due quarterly based upon minimum debt service coverage ratios established according to projected operating results made at the loan origination date and available cash balances. The loan agreement is secured by USG Nevada LLC’s right, title and interest in and to its real and personal property, including the San Emidio project and the equity interests in USG Nevada LLC. As of December 31, 2023,*the covenants for this loan have been met.

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(1) payable semi-annually, except for Prudential Capital Group - Nevada which is payable quarterly

Bpifrance Loan - Non Recourse

On* April 4, 2019,an indirect subsidiary of the Company (“Guadeloupe”), entered into a $8.9 million loan agreement with Banque Publique d’Investissement (“Bpifrance”). On April 29, 2019,Guadeloupe completed the drawdown of the full loan amount, bearing a fixed interest rate of 1.93%. The loan will be repaid in20* equal quarterly principal installments, commencing* June 30, 2021.The final maturity date of the loan is March 31, 2026.The loan isnot* guaranteed by the Company or any of its other subsidiaries. As of* December 31, 2023,*$4.2 million is outstanding under the Bpifrance Loan.

Société** Générale Loan - Limited Recourse**

On* April 9, 2019,Guadeloupe, entered into a $8.9 million loan agreement with Société Générale. On April 29, 2019,Guadeloupe completed the drawdown of the full loan amount of the loan, bearing a fixed interest rate of 1.52%. The loan is being repaid in 28 quarterly principal installments, which commenced on July 29, 2019.The final maturity date of the loan is April 29, 2026.The loan has a limited guarantee byone* of the Company’s subsidiaries. As of* December 31, 2023,*$3.5 million was outstanding under the Société Géneralé Loan.

Convertible Senior Notes

On* June 22, 2022,the Company issued $375.0 million aggregate principal amount of its 2.5% convertible senior notes ("Notes") due2027.* The Notes were offered and sold in a private offering to qualified institutional buyers pursuant to Rule144A under the Securities Act of1933, as amended, pursuant to an indenture between the Company and U.S. Bank National Association, as trustee. Additionally, the Company granted the initial purchasers an option to purchase up to an additional $56.25 million aggregate principal amount of the Notes. The initial purchasers executed their option on* June 27, 2022,and by that, increased the total aggregated principal amount of the Notes issued to $431.25 million. The Notes bear annual interest of 2.5%, payable semiannually in arrears on January 15and July 15of each year, beginning on January 15, 2023.The Notes mature on July 15, 2027,*unless earlier converted, redeemed or repurchased and are the Company's senior unsecured obligations.

Holders of the Notes* mayconvert all or any portion of their Notes at their option at any time prior to the close of business on the business day immediately preceding January 15, 2027only under the following circumstances: (1) during any calendar quarter commencing after the calendar quarter ending on September 30, 2022 (and only during such calendar quarter), if the last reported sale price of the Company's common stock, par value $0.001 per share (the “Common Stock”), for at least20* trading days (whether ornot consecutive) during a period of30 consecutive trading days ending on, and including, the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day (equivalent to an initial conversion price of approximately $90.27 per share of common stock); (2) during thefive consecutive business day period immediately after anyfive consecutive trading day period (the “Measurement Period”) in which the trading price per*$1,000* principal amount of Notes, as determined following a request by a holder or holders of the Notes for each trading day of the Measurement Period was less than 98% of the product of the last reported sale price of the Company's Common Stock and the conversion rate on each such trading day; (3) if the Company calls any or all of the Notes for redemption (the Company* may**not* redeem the notes prior to* July 21, 2025),at any time prior to the close of business on thesecond* scheduled trading day prior to the redemption date, but only with respect to the Notes called (or deemed called) for redemption; or (4) upon the occurrence of specified corporate events. On or after* January 15, 2027until the close of business on thesecond* scheduled trading day immediately preceding the maturity date, holders* mayconvert all or any portion of their Notes at any time, regardless of the foregoing circumstances. Upon conversion, the Company will pay cash up to the aggregate principal amount of the Notes to be converted and pay or deliver, as the case may*be, cash, shares of its common stock or a combination of cash and shares of its common stock, at its election, in respect of the remainder, if any, of its conversion obligation in excess of the aggregate principal amount of the Notes being converted.

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The initial conversion rate was 11.0776 shares of common stock per*$1,000* principal amount of Notes, which is equivalent to an initial conversion price of approximately $90.27 per share of common stock, subject to adjustment in certain events. In addition, following certain corporate events that occur prior to the maturity date or if the Company delivers a notice of redemption, it will, in certain circumstances, increase the conversion rate for a holder who elects to convert its Notes in connection with such a corporate event or notice of redemption, as the case* maybe. The Company may**not* redeem the notes prior to* July 21, 2025.The Company mayredeem for cash all or any portion of the Notes, at its option, on or after July 21, 2025and on or before the41st* scheduled trading day immediately preceding the maturity date, if the last reported sale price of its common stock has been at least 130% of the conversion price then in effect for at least20 trading days (whether ornot consecutive) during any30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which we provide notice of redemption at a redemption price equal to 100% of the principal amount of the notes to be redeemed, plus accrued and unpaid interest, but excluding, the redemption date.No sinking fund is provided for the Notes. Additionally, if the Company undergoes a fundamental change (other than certain exempted fundamental changes), holders* may*require the Company to repurchase for cash all or any portion of their Notes at a fundamental change repurchase price equal to 100% of the principal amount of the Notes to be repurchased, plus accrued and unpaid interest.

The Company incurred approximately $11.6 million of issuance costs in respect of the issuance of the Notes, which were deferred and are presented as a reduction to the Notes principal amounts on the consolidated balance sheets. The deferred issuance costs are amortized over the term of the Notes into interest expenses, net in the consolidated statements of operations and comprehensive income. During the year ended* December 31, 2023,*$2.3 million was recorded as amortized issuance costs under interest expenses, net. The effective interest rate on the Notes, including the impact of the deferred debt issuance costs, is 3.1%.

Based on the closing market price of the Company's common stock on* December 31, 2023,*the if-converted value of the Notes was less than their aggregate principal amount.

Capped Call Transactions

In connection with the issuance of the convertible notes described above, the Company entered into capped call transactions (the "Capped Calls") with certain counterparties. The capped call transactions will cover, subject to customary adjustments, the number of shares of our common stock initially underlying the Notes of approximately 4.8 million shares of common stock and at an initial strike price of $90.27 per share. The Capped Calls are generally intended to reduce the potential dilution to the Company's Common Stock upon any conversion of the Notes and/or offset any cash payments the Company is required to make in excess of the principal amount of converted Notes, in the event that at the time of conversion, the Common Stock price exceeds the conversion price. If, however, the market price per share of Common Stock exceeds the cap price of the Capped Calls, there would nevertheless be dilution or there wouldnot be an offset of such potential cash payments, in each case, to the extent that such market price exceeds the cap price of the Capped Calls.

The Capped Calls exercise price is equal to the $90.27 initial conversion price of each of the Notes and the cap price of the Capped Calls is initially $107.63 per share, which represents a premium of approximately 55% above the closing price of the Company's common stock on the date of the Notes offering and is subject to customary anti-dilution adjustments. The Capped Calls transactions are separate transactions entered into by the Company with the option counterparties, arenot part of the terms of the Notes and willnot change the holders’ rights under the Notes.

The Company paid approximately $24.5 million for the Capped Calls which was recorded as a reduction to Additional Paid-in Capital in the consolidated statements of equity in thesecond quarter of2022, as such transactions qualify for the equity classification withno subsequent adjustment to fair value under ASU815, Derivatives and Hedging. The Capped Calls arenot included in the calculation of diluted earnings per share because their impact is anti-dilutive.

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Purchase of Treasury Stock

In connection with the issuance of the Notes as described above, the Company used approximately $18.0 million of the net proceeds from the issuance of these Notes to repurchase 258,667 shares of its common stock in privately negotiated transactions at a price of $69.45 per share. The Company recorded this purchase of treasury stock as a reduction to its equity on the consolidated statements of equity in thesecond quarter of2022.

Prepayment of Series3 Bonds

Additionally, in connection with the issuance of the Notes as described above, on* June 27, 2022,the Company used approximately $221.9 million of the net proceeds from the issuance of these Notes to prepay its Series3* Bonds that were set to mature in* September 2022in a single bullet payment. This amount included an aggregated principal amount of $218.0 million, $2.8 million of accrued interest and $1.1 million of make-whole premium which was recorded in thesecond* quarter of2022 under Other non-operating income (expense), net in the consolidated statements of operations and comprehensive income.

Financing Liability

On* July 13, 2021,the Company closed a transaction with TG Geothermal Portfolio, LLC (a subsidiary of Terra-Gen, LLC) (the "Seller") to acquire a number of geothermal assets and a transmission line. The financing liability is related to a sale and leaseback transaction entered into by the Seller in September 2015under which it sold and leased back the undivided interests in the Dixie Valley power plant asset through June 2038.The lease transaction was accounted for by the Seller as a finance lease due to the Seller's continued involvement and management of the power plant and the existence of an early buy-out option in September 2024.During thefourth* quarter of2023, the Company decided to defer the buy-out payment to* June 2038,as permitted under the lease transaction agreement, which resulted in an adjustment to the effective interest rate of the financing liability. The adjusted rate increased from 2.55% to 6.12%, prospectively. Further details on the Terra-Gen business combination are described under Note2* to the consolidated financial statements. As of* December 31, 2023,*the covenants have been met.

(1) payable semi-annually

(2) final maturity date of the financing liability is assuming execution of the buy-out option in June 2038.

Revolving Credit Lines with Commercial Banks

As of* December 31, 2023,the Company has credit agreements for committed and uncommitted credit lines with a number of financial institutions for an aggregate amount of $608.0 million (including $60.0 million from MUFG Union Bank, N.A. (“Union Bank”) and $35.0 million from HSBC Bank USA N.A. as described below). Under the terms of these credit agreements, the Company, or its Israeli subsidiary, Ormat Systems Ltd. (“Ormat Systems), can request: (i) extensions of credit in the form of loans and/or the issuance ofone* or more letters of credit in the amount of up to $453.0 million; and (ii) the issuance ofone or more letters of credit in the amount of up to $155.0 million. The credit agreements mature between* March 2024and August 2025.Loans and draws under the credit agreements or under any letters of credit will bear interest at the respective bank’s cost of funds or SOFR plus a margin. As of December 31, 2023,*short-term credit lines of $20.0 million were outstanding and letters of credit with an aggregate amount of $302.8 million were issued and outstanding under committed and non-committed lines under such credit agreements (including the amounts outstanding under the section Credit Agreements below with MUFG Union bank and HSBC bank).

Credit Agreements

Credit Agreement with MUFG Union Bank

Ormat Nevada has a credit agreement with MUFG Union Bank under which it has an aggregate available credit of up to $60.0 million as of* December 31, 2023.The credit termination date is June 30, 2024.*

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The facility is limited to the issuance, extension, modification or amendment of letters of credit. Union Bank is currently the sole lender and issuing bank under the credit agreement, but is also designated as an administrative agent on behalf of banks that* may,*from time to time in the future, join the credit agreement as lenders. In connection with this transaction, the Company entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which the Company agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.

There are various restrictive covenants under the credit agreement, which include a requirement to comply with the following financial ratios, which are measured quarterly: (i) a12-month debt to EBITDA rationot to exceed 4.5; (ii)12-month DSCR ofnot less than 1.35; and (iii) distribution leverage rationot to exceed 2.0. As of* December 31, 2023: (i) the actual12*-month debt to EBITDA ratio was 1.24; (ii) the12-month DSCR was 5.75; and (iii) the distribution leverage ratio was 0.7. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of Union Bank. As of* December 31, 2023,*the covenants have been met.

As of* December 31, 2023,*letters of credit in the aggregate amount of $59.3 million were issued and outstanding under this credit agreement.

Credit Agreement with HSBC Bank USA N.A.

Ormat Nevada has a credit agreement with HSBC Bank USA, N.A forone year with annual renewals. The current expiration date of the facility under this credit agreement is* October 31, 2024.On December 31, 2023,*the aggregate amount available under the credit agreement was $35.0 million. This credit line is limited to the issuance, extension, modification or amendment of letters of credit. In addition, Ormat Nevada has an uncommitted discretionary demand line of credit in the aggregate amount of $65.0 million available for letters of credit including up to $20 million of credit. In connection with this transaction, the Company entered into a guarantee in favor of the administrative agent for the benefit of the banks, pursuant to which the Company agreed to guarantee Ormat Nevada’s obligations under the credit agreement. Ormat Nevada’s obligations under the credit agreement are otherwise unsecured.

There are various restrictive covenants under the credit agreement, including a requirement to comply with the following financial ratios, which are measured quarterly: (i) a12-month debt to EBITDA rationot to exceed 4.5; (ii)12-month DSCR ofnot less than 1.35; and (iii) distribution leverage rationot to exceed 2.0. As of* December 31, 2023: (i) the actual12*-month debt to EBITDA ratio was 1.24; (ii) the12-month DSCR was 5.75; and (iii) the distribution leverage ratio was 0.7. In addition, there are restrictions on dividend distributions in the event of a payment default or noncompliance with such ratios, and subject to specified carve-outs and exceptions, a negative pledge on the assets of Ormat Nevada in favor of HSBC. As of* December 31, 2023,*the covenants have been met.

As of* December 31, 2023,*letters of credit in the aggregate amount of $34.3 million were issued and outstanding under the committed portion of this credit agreement and $36.3 million under the uncommitted portion of the agreement.

Surety Bonds

The Company entered into surety bond agreements (the “Surety Agreements”) with Chubb Limited, Travelers, Allianz and certain otherthird parties (the “Surety”) pursuant to which the Company* mayrequest that the Surety issue up to an aggregate amount of $635.0 million of surety bonds with respect to the contractual obligations of the Company and its subsidiaries in exchange for bank letters of credit or as otherwise maybe required. There isno* expiration date for the Surety Agreements, but they* maybe terminated by the Company at any time upon betweentwenty* andthirty days’ prior written notice to the Surety. Delivery of such termination notice willnot affect any surety bonds issued and outstanding prior to the date on which such notice is delivered. As of* December 31, 2023,*the Surety issued surety bonds in the amount of $237.7 million under the Surety Agreement.

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Restrictive Covenants

The Company’s obligations under the credit agreements, the loan agreements, and the trust instrument governing the bonds, described above, are unsecured, but are subject to a negative pledge in favor of the banks and the other lenders and certain other restrictive covenants. These include, among other things, a prohibition on: (i) creating any floating charge or any permanent pledge, charge or lien over the Company's assets without obtaining the prior written approval of the lender; (ii) guaranteeing the liabilities of anythird party without obtaining the prior written approval of the lender; and (iii) selling, assigning, transferring, conveying or disposing of all or substantially all of the Company's assets, or a change of control in the Company's ownership structure. Some of the credit agreements, the term loan agreements, as well as the trust instrument contain cross-default provisions with respect to other material indebtedness owed by us to anythird party. In some cases, the Company has agreed to maintain certain financial ratios, which are measured quarterly, such as: (i) equity of at least $750 million and inno event less than 25% of total assets; and (ii)12-month debt, net of cash, cash equivalents marketable securities and short-term bank deposits to Adjusted EBITDA rationot to exceed 6. As of* December 31, 2023: (i) total equity was $2,441 million and the actual equity to total assets ratio was 46.9%, and (ii) the12*-month debt, net of cash, cash equivalents marketable securities and short-term bank deposits to Adjusted EBITDA ratio was 3.74 and as such, the covenants have been met as of* December 31, 2023.During the year ended December 31, 2023,*the Company distributed dividends in an aggregate amount of $28.4 million.

Future minimum payments

Future minimum payments under long-term obligations, including long-term debt and financing liability, as of* December 31, 2023*are as follows:

**NOTE12 **—TAX MONETIZATION TRANSACTIONS

North Valley Tax Equity Transaction

On* October 27, 2023,*one of the Company’s wholly-owned subsidiaries that indirectly owns the North Valley Geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the North Valley Geothermal power plant project for an initial purchase price of approximately $43.1 million and for which it will pay additional installments that are expected to amount to approximately $6.1 million. The Company continues to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant, as described below.

Under the transaction documents, prior to* December 31, 2032 (“Target Flip Date”), the Company’s wholly-owned subsidiary, Ormat Nevada Inc. ("Ormat Nevada"), receives substantially all of the distributable cash flow generated by the project, while the private investor receives substantially all of the tax attributes of the project. Following the later of the Target Flip Date and the date on which the private investor reaches its target return, Ormat Nevada will receive 97.5% of the distributable cash and taxable income, on a go-forward basis. In the event that the private investor willnot* reach its target return by the Target Flip Date, then for the period between the Target Flip Date and the date on which the private investor reaches its target return, the private investor will receive 100% of the distributable cash generated by the power plant and 99% of the tax attributes as long as the project is generating Production Tax Credits ("PTCs") (and 5% of the tax attributes afterwards).

On the Target Flip Date, Ormat Nevada has the option to purchase the private investor’s interests at the then-current fair market value, plus an amount that causes the private investor to reach its target return, if needed. If Ormat Nevada exercises this purchase option, it will become the sole owner of the project again.

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Transferable production and investment tax credits

The Inflation Reduction Act was signed into law in* August 2022and introduces a transferability provision for certain tax credits related to the clean production of energy. Under this provision, a reporting entity can monetize such credits through sale to athird* party. The option for transferability of credits applies to taxable years beginning after* December 31, 2022.Several of the Company’s projects that arenot* currently part of a tax monetization transaction generate eligible tax credits, such as ITCs and PTCs, that are eligible to be transferred to athird-party under the provisions of the IRA. The Company accounts for ITCs under ASC740 through the “Income tax (provision) benefit” line in the consolidated statement of operations and comprehensive income. PTC’s are accounted similarly to refundable or direct-pay credits outside of the tax line with income recognized in the “Income attributable to sale of tax benefits” line in the consolidated statement of operations and comprehensive income. Income related to the expected sale of such transferable PTC’s recorded during2023 amounted to $10.8 million, net of discount. Tax benefits recognized related to such transferable ITC’s during2023 was $18.7 million, net of discount.

In* December 2023,the Company entered into tax credit purchase agreements with athird*-party under which it sold in cash to thethird party PTC's in the amount of $3.3 million, net, which were generated by its eligible power plants and ITC's in the amount of $21.8 million, attributable to its investment in storage facilities.

Casa Diablo IV ("CD4") tax monetization transaction

On* December 23, 2022,*one of the Company’s wholly-owned subsidiaries that indirectly owns theCD4 Geothermal power plant entered into a partnership agreement with JPM. Under the transaction documents, the private investor acquired membership interests in theCD4 Geothermal power plant project for an initial purchase price of approximately $50.3 million and for which it will pay additional installments that are expected to amount to approximately $7.3 million. The Company continues to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant, as described below.

Under the transaction documents, prior to* December 31, 2031 (“CD4* Target Flip Date”), the Company receives substantially all of the distributable cash flow generated by the project, while the private investor receives substantially 99% of the tax attributes of the project. Following the later of theCD4 Target Flip Date and the date on which the private investor reaches its target return, the Company will receive 97.5% of the distributable cash and 95.0% of the taxable income, on a go forward basis. In the event that JPM willnot reach its target return by theCD4 Target Flip Date, then for the period between theCD4 Target Flip Date and the date on which the private investor reaches its target return, the private investor will receive 75% of the distributable cash generated by the power plant and 99% of the tax attributes as long as the project is generating Production Tax Credits ("PTCs") (and 5% of the tax attributes afterwards).

On the Target Flip Date, the Company has the option to purchase the private investor’s interests at the then-current fair market value, plus an amount that causes JPM to reach its target return, if needed. If the Company exercises this purchase option, it will become the sole owner of the project again.

JPM’s capital contribution of*$50.3* million was recorded as allocation to noncontrolling interests of $3.9 million and to liability associated with sale of tax benefits of $46.4 million.

Steamboat Hills tax monetization transaction

On* October 25, 2021,*one of the Company’s wholly-owned subsidiaries that indirectly owns the Steamboat Hills Repower Geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the Steamboat Hills Repower Geothermal power plant project for an initial purchase price of approximately $38.9 million and for which it will pay additional installments that are expected to amount to approximately $5.3 million. The Company continues to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant, as described below.

Under the transaction documents, prior to* December 31, 2029 (“Steamboat Hills Target Flip Date”), the Company’s wholly-owned subsidiary, Ormat Nevada Inc. ("Ormat Nevada"), receives substantially all of the distributable cash flow generated by the project, while the private investor receives substantially all of the tax attributes of the project. Following the later of the Steamboat Hills Target Flip Date and the date on which the private investor reaches its target return, Ormat Nevada will receive 97.5% of the distributable cash and 95.0% of the taxable income, on a go forward basis. In the event that the private investor willnot* reach its target return by the Steamboat Hills Target Flip Date, then for the period between the Steamboat Hills Target Flip Date and the date on which the private investor reaches its target return, the private investor will receive 100% of the distributable cash generated by the power plant and 99% of the tax attributes as long as the project is generating PTCs (and 5% of the tax attributes afterwards).

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On the Steamboat Hills Target Flip Date, Ormat Nevada has the option to purchase the private investor’s interests at the then-current fair market value, plus an amount that causes the private investor to reach its target return, if needed. If Ormat Nevada exercises this purchase option, it will become the sole owner of the project again.

McGinness Hills3 tax monetization transaction

On* August 14, 2019,*one of the Company’s wholly-owned subsidiaries that indirectly owns the McGinness Hills phase3 geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the McGinness Hills phase3 geothermal power plant for an initial purchase price of approximately $59.3 million and for which it will pay additional installments that are expected to amount to approximately $9.0 million and can reach up to $22.0 million based on the actual generation. The Company continues to consolidate, operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant and the private investor will receive substantially all of the tax attributes, as described below.

Pursuant to the transaction documents, prior to* December 31, 2027 (**“MGH3* Target Flip Date”),one of the Company’s wholly owned subsidiaries receives substantially all of the distributable cash flow generated by the McGinness Hills phase3 power plant, while the private investor receives substantially all of the tax attributes of the project. Following the later of theMGH3 Target Flip Date and the date on which the private investor reaches its target return, the Company will receive 97.5% of the distributable cash generated by the power plant and 95.0% of the tax attributes, on a go forward basis. In the event that the private investor willnot reach its target return by theMGH3 Target Flip Date, then for the period between theMGH3 Target Flip Date and the date on which the private investor reaches its target return, the private investor will receive 100% of the distributable cash generated by the power plant and 99% of the tax attributes as long as the project is generating PTCs (and 5% of the tax attributes afterwards).

On theMGH3 Target Flip Date, the Company, throughone of its wholly-owned subsidiaries, has the option to purchase the private investor’s interests at the then-current fair market value, plus an amount that causes the private investor to reach its target return, if needed. If the Company exercises this purchase option, it will become the sole owner of the project again.

Tungsten Mountain tax monetization transaction

On* May 17, 2018,*one of the Company’s wholly-owned subsidiaries that indirectly owns the Tungsten Mountain Geothermal power plant entered into a partnership agreement with a private investor. Under the transaction documents, the private investor acquired membership interests in the Tungsten Mountain Geothermal power plant project for an initial purchase price of approximately $33.4 million and for which it will pay additional installments that are expected to amount to approximately $13.0 million. The Company continues to operate and maintain the power plant and will receive substantially all the distributable cash flow generated by the power plant, as described below.

Under the transaction documents, prior to* December 31, 2026 (“Tungsten Mountain Target Flip Date”), the Company’s wholly-owned subsidiary, Ormat Nevada Inc. ("Ormat Nevada"), receives substantially all of the distributable cash flow generated by the project, while the private investor receives substantially all of the tax attributes of the project. Following the later of the Tungsten Mountain Target Flip Date and the date on which the private investor reaches its target return, Ormat Nevada will receive 97.5% of the distributable cash and 95.0% of the taxable income, on a go forward basis. In the event that the private investor willnot* reach its target return by the Tungsten Mountain Target Flip Date, then for the period between the Tungsten Mountain Target Flip Date and the date on which the private investor reaches its target return, the private investor will receive 100% of the distributable cash generated by the power plant and 99% of the tax attributes as long as the project is generating PTCs (and 5% of the tax attributes afterwards).

On the Tungsten Mountain Target Flip Date, Ormat Nevada has the option to purchase the private investor’s interests at the then-current fair market value, plus an amount that causes the private investor to reach its target return, if needed. If Ormat Nevada exercises this purchase option, it will become the sole owner of the project again.

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Opal Geo tax monetization transaction

On* December 16, 2016,Ormat Nevada entered into an equity contribution agreement (the “Equity Contribution Agreement”) with OrLeaf LLC (“OrLeaf”) and JPM with respect to Opal Geo. Also on December 16, 2016,OrLeaf, a newly formed limited liability company formed by Ormat Nevada and ORPD LLC, entered into an amended and restated limited liability company agreement of Opal Geo (the “LLC Agreement”) with JPM. The transactions contemplated by the Equity Contribution Agreement and LLC Agreement will allow the Company to monetize federal PTCs and certain other tax benefits relating to the operation offive* geothermal power plants located in Nevada, until JPM reaches its target internal rate of return which was expected to be on* December 31, 2022.On December 22, 2022,the Equity Contribution Agreement was amended (the "Amendment") and the target internal rate of return date was postponed by an additionalone* year in order to allow allocation of additional PTCs to JPM, as further described below.

In connection with the transactions contemplated by the Equity Contribution Agreement and the LLC Agreement, Ormat Nevada transferred its indirect ownership interest in the McGinness Hills (Phase I and Phase II), Tuscarora, Jersey Valley andsecond phase of the Don A. Campbell (“DAC2”) geothermal power plants to Opal Geo. Prior to such transfer, Ormat Nevada held an approximately 63.25% indirect ownership interest in DAC2 through ORPD LLC, a joint venture between Ormat Nevada and Northleaf Geothermal Holdings LLC (“Northleaf”), an affiliate of Northleaf Capital Partners, and held, directly or indirectly, a 100% ownership interest in the remaining geothermal power plants that were transferred to Opal Geo.

Pursuant to the Equity Contribution Agreement, in* December 2016,JPM contributed approximately $62.1 million to Opal Geo in exchange for 100% of the Class B Membership Interests of Opal Geo. JPM also agreed to make deferred capital contributions to Opal Geo based on the amount of electricity generated by the DAC2* and McGinness Hills Phase II power plants which are eligible for the federal PTC. The aggregate amount of such contributions totaled $15.3 million, as of* December 31, 2022.Pursuant to the Amendment, JPM willnot* make additional deferred capital contributions during2023, and the Company will indemnify JPM for tax losses incurred during the extendedone year period.

Under the original LLC Agreement, until* December 31, 2022,OrLeaf received distributions of 97.5% of any distributable cash generated by operation of the power plants while JPM received distributions of 2.5% of any distributable cash generated by operation of the power plants. Starting December 31, 2022,*until JPM has achieved its target internal rate of return, JPM will receive 100% of any distributable cash generated by operation of the power plants. Thereafter, OrLeaf will receive distributions of 97.5%, and JPM will receive 2.5%, of any distributable cash generated by operation of the power plants.

Under the LLC Agreement, all items of Opal Geo income and loss, gain, deduction and credit (including the federal production tax credits relating to the operation of thetwo PTC eligible power plants) will be allocated, until JPM has achieved its target internal rate of return on its investment in Opal Geo (and for so long as thetwo PTC eligible power plants are generating PTCs),99% to JPM and 1% to OrLeaf, or 5% to JPM and 95% to OrLeaf if PTCs areno longer available to either of thetwo PTC eligible power plants. Once JPM achieves its target internal rate of return, all items of Opal Geo income and loss, gain, deduction and credit will be allocated 5% to JPM and 95% to OrLeaf.

Under the LLC Agreement, OrLeaf, which owns 100% of the Class A Membership Interests in Opal Geo, serves as the managing member of Opal Geo and control the day-to-day management of Opal Geo and its portfolio offive power plants. However, in certain limited circumstances (such as bankruptcy of OrLeaf, fraud or gross negligence by OrLeaf) JPM* mayremove OrLeaf as the managing member of Opal Geo. JPM, as the Class B Member of Opal Geo, has consent and approval rights with respect to certain items that are designated as major decisions for Opal Geo and thefive* power plants. In addition, by virtue of certain provisions in OrLeaf’s own limited liability company agreement, and consistent with the ORPD LLC formation documents, Northleaf has similar consent and approval rights with respect to OrLeaf’s determination of major decisions pertaining to the DAC2 power plant. In both cases, these major decisions are generally equivalent to customary minority protection rights. As a result, the Company’s wholly owned subsidiary, Ormat Nevada, which serves as the managing member of OrLeaf and as the managing member of ORPD LLC, effectively retains the day-to-day control and management of Opal Geo and its portfolio offive power plants.

The LLC Agreement contains certain customary restrictions on transfer applicable to both OrLeaf and JPM with respect to their respective Membership Interests in Opal Geo, and also provides OrLeaf with a right offirst offer in the event JPM desires to transfer any of its Class B Membership Interests, pursuant to which OrLeaf* maypurchase such Class B Membership Interests. Following the Amendment to the LLC Agreement made on December 22, 2022,the Target Flip Date was extended to December 31, 2023,entitling JPM to receive $2.0 million on such date. During the extended period, JPM shallnot* be required to make deferred contributions. The OrLeaf option to purchase all of the Class B Membership Interests at a price equal to the greater of (i) the fair market value of the Class B Membership Interests as of the date of purchase (subject to certain adjustments) and (ii) $3.0 million, was extended to* December 31, 2023.The final settlement of amounts due and payable to JPM shall take place during thefirst* quarter of2024.

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Pursuant to the Equity Contribution Agreement, the Company has provided a guaranty for the benefit of JPM of certain of OrLeaf’s indemnification obligations to JPM under the LLC Agreement. In addition, Ormat Nevada also provided a guaranty for the benefit of JPM of all present and future payment and performance obligations of OrLeaf under the LLC Agreement and each ancillary document to which OrLeaf is a party.

NOTE 13 —** ASSET RETIREMENT OBLIGATION**

The following table presents a reconciliation of the beginning and ending aggregate carrying amount of asset retirement obligation for the years presented below:

NOTE14 — STOCK-BASED COMPENSATION

The Company makes an estimate of expected forfeitures and recognizes compensation costs only for those stock-based awards expected to vest. As of* December 31, 2023,*the total future compensation cost related to unvested stock-based awards that are expected to vest is $15.8 million, which will be recognized over a weighted average period of 1.25 years.

During the years ended* December 31, 2023,*2022 and2021, the Company recorded compensation related to stock-based awards as follows:

During thefourth quarter of2023, 2022 and2021, the Company evaluated the trends the employees stock-based award forfeiture rate and determined that the actual rates are 11.6%,11.5% and 11.1%, respectively. This represents an increase of 0.9%,3.6%, and 2.8%, respectively, from prior estimates. As a result of the change in the estimated forfeiture rate, there was an immaterial impact on stock-based compensation expense for each of the respective periods.

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Valuation assumptions

The Company estimates the fair value of the stock-based awards using the Complex Lattice, Tree-based option-pricing model. The dividend yield forecast is expected to be at least 20% of the Company’s yearly net profit, which is equivalent to a 0.6% yearly weighted average dividend rate in the year ended* December 31, 2023.*The risk-free interest rate was based on the yield from U.S. constant treasury maturities bonds with an equivalent term. The forfeiture rate is based on trends in actual stock-based awards forfeitures.

The Company calculated the fair value of each stock-based award on the date of grant based on the following assumptions:

The Company estimated the forfeiture rate (on a weighted average basis) as follows:

Stock-based awards

The2012* Incentive Compensation Plan*

In* May 2012,the Company’s shareholders adopted the2012* Incentive Plan, which provides for the grant of the following types of awards: incentive stock options, non-qualified stock options, restricted stock units ("RSUs"), stock appreciation rights ("SARs”), stock units, performance awards, phantom stock, incentive bonuses, and other possible related dividend equivalents to employees of the Company, directors and independent contractors. Under the2012 Incentive Plan, a total of 4,000,000 shares of the Company’s common stock were reserved for issuance, all of which could be issued as options or as other forms of awards. Options and SARs granted to employees under the2012 Incentive Plan typically vest and become exercisable as follows:50% on thetwo year anniversary of the grant date and 25% on each of thethree year andfour year anniversaries of the grant date. Options granted to non-employee directors under the2012 Incentive Plan will vest and become exercisableone year after the grant date. Restricted stock units granted to directors and members of senior management vest according to a vesting schedule as follows: for the directors,100% on theone year anniversary of the grant date and for members of senior management,25% on each of the first, second,third andfourth anniversaries of the grant date. The term of stock-based awards typically ranges fromsix toten years from the grant date. The shares of common stock issued in respect of awards under the2012 Incentive Plan are issued from the Company’s authorized share capital upon exercise of options or SARs. The2012 Incentive Plan expired in* May 2018upon adoption of the2018* Incentive Compensation Plan (“2018 Incentive Plan”), except as to stock-based awards outstanding under the2012 Incentive Plan on that date.

The2018* Incentive Compensation Plan*

In* May 2018,the Company held its2018* Annual Meeting of Stockholders at which the Company's stockholders approved the2018 Incentive Plan. The2018 Incentive Plan provides for the grant of the following types of awards: incentive stock options, RSUs, SARs, Performance Stock Units ("PSUs"), stock units, performance awards, phantom stock, incentive bonuses and other possible related dividend equivalents to employees of the Company, directors and independent contractors. Under the2018 Incentive Plan, a total of 5,000,000 shares of the Company’s common stock were authorized and reserved for issuance, all of which could be issued as options or as other forms of awards. SARs, RSUs and PSUs granted to employees under the2018 Incentive Plan typically vest and become exercisable as follows:50% on thesecond anniversary of the grant date and 25% on each of thethird andfourth anniversaries of the grant date. SARs, RSUs and PSUs granted to directors under the2018 Incentive Plan typically vest and become exercisable (100%) on thefirst anniversary of the grant date. The term of stock-based awards typically ranges fromsix toten years from the grant date. The shares of common stock issued in respect of awards under the2018 Incentive Plan are issued from the Company’s authorized share capital upon exercise of options or SARs. In* June 2022,the2018* Incentive Compensation Plan was amended and restated to increase the number of shares authorized for issuance by 1,700,000 shares, to change the fungible ratio, and to implement aone year mandatory minimum vesting period.

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As of* December 31, 2023,3,313,670 shares of the Company’s common stock are available for future grants under the2018* Incentive Plan.

In* March 2023,the Company granted certain members of its management and employees an aggregate of 174,422 RSUs and 35,081 PSUs under the Company’s2018* Incentive Compensation Plan. The RSUs and PSUs have vesting periods of between 1 to 4 years from the grant date. The fair value of each RSU and PSU on the grant date was $79.9 and $79.6, respectively. The Company calculated the fair value of each RSU and PSU on the grant date using the Complex Lattice, Tree-based option-pricing model based on the following assumptions:

In* May 2023,the Company granted its directors an aggregate of 10,852 RSUs under the Company’s2018* Incentive Compensation Plan. The RSUs have vesting periods 1 year from the grant date. The fair value of each RSU on the grant date was $82.9. The Company calculated the fair value of each RSU and PSU on the grant date using the complex lattice, tree-based option-pricing model based on the following assumptions:

On* November**30,* 2022, the Company granted certain employees an aggregate of 19,750 RSUs under the Company’s2018 Incentive Plan. The RSUs have a vesting period of between 2 to 3 years from the grant date. The fair value of each RSU on the grant date was $89. The Company calculated the fair value of each RSU on the grant date using the Complex Lattice, Tree-based option-pricing model based on the following assumptions:

On* March 1, 2022,the Company granted certain directors, members of its management and employees an aggregate of 513,385 SARs,72,303 RSUs and 19,581 PSUs under the Company’s2018* Incentive Plan. The exercise price of each SAR was $71.15 which represented the fair market value of the Company’s common stock on the grant date. The SARs will expire insix years from date of the grant and the SARs, RSUs and PSUs have a vesting period of between 2 to 4 years from grant date. The average fair value of each SAR, RSU and PSU on the grant date was $22.3, $69.6 and $75.3, respectively. The Company calculated the fair value of each SAR on the grant date using the Complex Lattice, Tree-based option-pricing model based on the following assumptions:

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On* November 2021,the Company granted its directors an aggregate of 11,804 RSUs under the Company’s2018* Incentive Plan. The RSUs have a vesting period ofone year from the grant date. The average fair value of each RSU on the grant date was $76.2. The Company calculated the fair value of each RSU on the grant date using the Complex Lattice, Tree-based option-pricing model based on the following assumptions:

Information on the awards outstanding and the related weighted average exercise price as of and for the years ended* December 31, 2023,*2022 and2021 are presented in the table below:

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The following table summarizes information about stock-based awards outstanding at* December 31, 2023 (*shares in thousands):

The following table summarizes information about stock-based awards outstanding at* December 31, 2022 (*shares in thousands):

The aggregate intrinsic value in the above tables represents the total pretax intrinsic value, based on the Company’s stock price of $75.79 and $86.48 as of* December 31, 2023and2022,* respectively, which would have potentially been received by the stock-based award holders had all stock-based award holders exercised their stock-based award as of those dates. The total number of in-the-money stock-based awards exercisable as of* December 31, 2023and2022* was 605,753 and 749,101, respectively.

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The total pretax intrinsic value of options exercised during the year ended* December 31, 2023and2022* was $11.5 million and $21.9 million, respectively, based on the average stock price of $79.4 and $82.8 during the years ended* December 31, 2023and2022,* respectively.

NOTE 15 —** INTEREST EXPENSE, NET**

The components of interest expense are as follows:

NOTE 16 —** INCOME TAXES**

U.S. and foreign components of income from continuing operations, before income taxes and equity in income (losses) of investees consisted of:

The components of the provision (benefit) for income taxes, net are as follows:

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Reconciliation of the U.S. federal statutory tax rate to the Company’s effective income tax rate is as follows:

The net deferred tax assets and liabilities consist of the following:

The following table presents a reconciliation of the beginning and ending valuation allowance:

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At* December 31, 2023,the Company had U.S. federal net operating loss (“NOL”) carryforwards of approximately $35.4 million, all of which was generated before2018* and expires by2038.

At* December 31, 2023,the Company had PTCs in the amount of $109.6 million . These PTCs are available for a 20 years period and begin to expire in 2026. At December 31, 2023,*the Company had U.S. foreign tax credits (“FTCs”) in the amount of $33.4 million. These FTCs are available for a 10 year period and begin to expire in 2027.

At* December 31, 2023,the Company had state NOL carryforwards of approximately $268.0 million, $268.3 million which expire between 2025 and 2034 and $4.7 million are available to be carried forward for an indefinite period. At December 31, 2023,*the Company had state tax credits in the amount of $0.8 million. These state tax credits are available to be carried forward for an indefinite period.

The Company has recorded deferred tax assets for net operating losses, foreign tax credits, and production tax credits. Realization of the deferred tax assets and tax credits is dependent on generating sufficient taxable income in appropriate jurisdictions prior to expiration of the NOL carryforwards and tax credits. Based upon available evidence of the Company’s ability to generate additional taxable income in the future and historical losses in prior years, a valuation allowance in the amount of $2.9 million and $2.5 million is recorded against the U.S. deferred tax assets as of* December 31, 2023and2022,* respectively, as it is more likely thannot that the deferred tax assets willnot be realized. The overall decrease in the valuation allowance of $0.4 million is due to changes in state tax apportionment rates in various states. The Company is maintaining a valuation allowance of $2.9 million against a portion of its state NOLs and capital loss carryforward that are expected to expire before they can be utilized in future periods.

On* April 24, 2018,the Company acquired 100% of stock of USG for approximately $110 million. Under the acquisition method of accounting, the Company recorded a net deferred tax asset of $1.7 million comprised primarily of federal and state NOLs netted against deferred tax liabilities for partnership basis differences and fixed assets. The total amount of acquired federal and state NOLs, which are subject to limitations under Section382,* were $113.9 million and $49.9 million, respectively. A valuation allowance of $1.8 million has been recorded against such acquired state NOLs, as it is more likely thannot that the deferred tax asset willnot be realized.

The FASB released guidance Staff Q&A, Topic740, No. 5, that states a company can make an accounting policy election to either recognize deferred taxes related to GILTI or to provide for the GILTI tax expense in the year the tax is incurred as a period cost. The Company has elected to treat any GILTI inclusions as a period cost. We have elected and applied the tax law ordering approach when considering GILTI as part of our valuation allowance.

The Company uses the flow-through method to account for investment tax credit earned on eligible battery storage projects. Under this method, the investment tax credits are recognized as a reduction to income tax expense in the year they are earned rather than a reduction in the asset basis.

The following table presents the deferred taxes on the balance sheet as of the dates indicated:

(1) The non-current deferred tax asset has been reduced by the uncertain tax benefit of $0.1 million in accordance with ASU2013-11, Income Taxes.

At* December 31, 2023,the Company isno* longer indefinitely reinvested with respect to the earnings of its foreign subsidiaries due to forecasted changes in cash needs and the impact of U.S. tax reform. The Company has accrued withholding taxes that would be owed upon future distributions of such earnings. Accordingly, as of* December 31, 2023,*the Company has accrued $15.5 million of foreign withholding taxes on future distributions of foreign earnings.

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Uncertain tax positions

The Company is subject to income taxes in the United States (federal and state) and numerous foreign jurisdictions. Significant judgment is required in evaluating the Company's tax positions and determining its provision for income taxes. During the ordinary course of business, there are many transactions and calculations for which the ultimate tax determination is uncertain. The Company establishes reserves for tax-related uncertainties based on estimates of whether, and the extent to which additional taxes will be due. These reserves are established when the Company believes that certain positions might be challenged despite evidence supporting the position. The Company adjusts these reserves in light of changing facts and circumstances, such as the outcome of tax audits. The provision for income taxes includes the impact of reserve positions and changes to reserves that are considered probable.

At* December 31, 2023and2022,* there are $8.7 million and $6.6 million of unrecognized tax benefits, respectively, that if recognized would reduce the effective tax rate. Interest and penalties assessed by taxing authorities on an underpayment of income taxes are included as a component of income tax provision in the consolidated statements of operations and comprehensive income.

A reconciliation of the Company's unrecognized tax benefits is as follows:

The Company and its U.S. subsidiaries file consolidated income tax returns for federal and state (where applicable) purposes. As of* December 31, 2023,the Company hasnot* been subject to U.S. federal or state income tax examinations.

The Company remains open to examination by the Internal Revenue Service for the years 2006-2022 and by local state jurisdictions for the years 2008-2022. These examinations* may*lead to ordinary course adjustments or proposed adjustments to the Company's taxes or the Company's net operating losses with respect to years under examination as well as subsequent periods.

The Company’s foreign subsidiaries remain open to examination by the local income tax authorities in the following countries for the years indicated:

Management believes that the liability for unrecognized tax benefits is adequate for all open tax years based on its assessment of many factors, including among others, past experience and interpretations of local income tax regulations. This assessment relies on estimates and assumptions and* mayinvolve a series of complex judgments about future events. As a result, it is possible that federal, state and foreign tax examinations will result in assessments in future periods. To the extent any such assessments occur, the Company will adjust its liability for unrecognized tax benefits. The Company isnot* able to reasonably estimate the amount of unrecognized tax benefits that will be reduced within the nexttwelve months.

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Tax benefits in the United States

On* August 16, 2022,the Inflation Reduction Act was signed into law in the United States. The Company believes that the construction and operations of its geothermal power plants, recovered energy-based power plants, battery energy storage systems and solar PV will benefit in the future from the IRA and enhance the economic feasibility of projects in the United States. PTC’s can be generated from2.75* cents per kWh, once the Wages & Apprenticeship rules are met, and if bonus credit requirements are met the credit could rise up to3.30 cents per kWh. ITC’s can be earned on investments from30.0%, once the Wages & Apprenticeship rules are met, and if bonus credit requirements are met the credit could rise up to50.0%. Battery Energy Storage Systems are eligible for ITC for projects placed-in-service after* December 31, 2022.In addition, the Company can now monetize PTC’s and ITC’s earned by transferring the credits to athird* party without having to enter into a tax equity transaction.

Income taxes related to foreign operations

Guadeloupe - The Company’s operations in Guadeloupe are taxed at a maximum rate of 28% in2020, 26.5% in2021, 25% in2022 and 25% in2023.

Guatemala — The enacted tax rate is 25%. Orzunil, a wholly owned subsidiary, was granted a benefit under a law which promotes development of renewable power sources. The law allows Orzunil to reduce the investment made in its geothermal power plant from income tax payable, which currently reduces the effective tax rate to zero. Ortitlan pays income tax of 7% on its Electricity revenues.

Honduras -The Company’s operations in Honduras are exempt from income taxes for thefirst ten years starting at the commercial operation date of the power plant, which was in* September 2017.*

Israel — The Company’s operations in Israel through its wholly owned Israeli subsidiary, Ormat Systems Ltd. (“Ormat Systems”), were taxed at a reduced corporate tax rate of 16% in2017 and 23% in2018 and 16% thereafter, under the “Benefited Enterprise” tax regime of the Encouragement of Capital Investments Law,1959 (the “Investment Law”), with respect totwo of its investment programs. In* January 2011,new legislation amending the Investment Law by adding, inter alia, the Preferred Enterprise Regime was enacted. Under the Preferred Enterprise Regime, a uniform reduced corporate tax rate would apply to all qualified income of certain industrial companies, as opposed to the Investment Law incentives that are limited to income from a “Benefited Enterprise” during their benefits period. According to the amendment, the uniform tax rate applicable to the zone where the production facilities of Ormat Systems are located would be 16% in2014* and thereafter. Ormat Systems decided to irrevocably comply with the new law starting in2011.

On* December 29, 2016,the Investment Law was amended (“73* Amendment”), which includes, inter alia,two new tax incentive opportunities. These are the Preferred Technological Enterprise (“PTE”) and Special Preferred Technological Enterprise (“SPTE”). In order to benefit from either of these options, a company must meet certain qualifications and receive formal approval from the Israel Innovation Authority (“IIA”). The Company received such approval on* January 20, 2021,which allowed the Company to use the reduced corporate tax rate of12%* on its "Preferred Technological Income" for the tax years2021, 2022 and2023. The benefit of the reduced corporate tax rate has been reflected in these financial statements.

The Investment Law also included a specific order that allowed companies to distribute earnings that were previously untaxed after paying a reduced corporate tax rate of10% versus25% under the prior tax regime. Ormat elected to pay the10% corporate rate on such previously untaxed earnings during2021 which now allows such earnings to be dividended.

Kenya - On* June 26, 2023,the President of Kenya signed into law the2023* Finance Act ("Finance Act"). On* June 30, 2023,the Kenyan High Court issued a Temporary Conservatory Order against the Finance Act which barred the implementation of the Finance Act until a decision was made by the High Court. The Finance Act, among several other changes, reduces the statutory corporate income tax rate for Branches from 37.5% to 30%, introduces a Branch Profits tax based on the change in Net Assets and limits interest deductions to30%* of EBITDA. On* July 28, 2023,the Kenya appeals court lifted the Temporary Conservatory Order on the Finance Act which results in the Finance Act being implemented as signed. As a result, the Company recorded a tax benefit associated with the corporate tax rate change for Branches from 37.5% to 30.0% in2023,* in the amount of approximately $7.4 million. This benefit is recorded as a reduction to income tax expense in the condensed consolidated statements of comprehensive operations and income.

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NOTE17 — BUSINESS SEGMENTS

The Company hasthree reporting segments: the Electricity segment, the Product segment and the Energy Storage segment. These segments are managed and reported separately as each offers different products and serves different markets.

Transfer prices between the operating segments were determined on current market values or cost plus markup of the seller’s business segment.

Summarized financial information concerning the Company’s reportable segments is shown in the following tables, including, as further described under Note1 to the consolidated financial statements, the Company's disaggregated revenues from contracts with customers as required by ASC606:

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Reconciling information between reportable segments and the Company’s consolidated totals is shown in the following table:

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The Company sells electricity, products and energy storage services mainly to the geographical areas set forth below based on the location of the customer. The following tables present certain data by geographic:

The following table presents revenues from major customers:

(1)Revenues reported in Electricity segment.

(2)Subsidiaries of NV Energy, Inc.

NOTE 18 —** TRANSACTIONS WITH RELATED ENTITIES**

There wereno transactions between the Company and related entities, other than those disclosed elsewhere in these consolidated financial statements.

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NOTE19 — EMPLOYEE BENEFIT PLAN

401(k) Plan

The Company has a401(k) Plan (the “Plan”) for the benefit of its U.S. employees. Employees of the Company and its U.S. subsidiaries who have completed60 days of employment are eligible to participate in the Plan. Contributions are made by employees through pre- and post-tax deductions up to 60% of their annual salary. In2023, 2022 and2021, the Company matched employee contributions, after completion ofone year of service, up to a maximum of 6%,5% and 4% of the employee’s annual salary, respectively. The Company’s contributions to the Plan were $3.9 million , $2.6 million and $1.8 million for the years ended* December 31, 2023,*2022 and2021, respectively.

Severance plan

The Company, through Ormat Systems, provides limited non-pension benefits to all current employees in Israel who are entitled to benefits in the event of termination or retirement in accordance with the Israeli Government sponsored programs. These plans generally obligate the Company to payone month’s salary per year of service to employees in the event of involuntary termination. There isno limit on the number of years of service in the calculation of the benefit obligation. The liabilities for these plans are recorded at each balance sheet date by determining the undiscounted obligation as if it were payable at that point in time. Such liabilities have been presented in the consolidated balance sheets as “liabilities for severance pay”. The Company has an obligation to partially fund the liabilities through regular deposits in pension funds and severance pay funds. The amounts funded are to $6.5 million and $6.9 million at* December 31, 2023and2022,* respectively, and have been presented in the consolidated balance sheets as part of “Deposits and other”. The severance pay liability covered by the pension funds isnot reflected in the financial statements as the severance pay risks have been irrevocably transferred to the pension funds. Under the Israeli severance pay law, restricted funds* may**not* be withdrawn or pledged until the respective severance pay obligations have been met. As allowed under the program, earnings from the investment are used to offset severance pay costs. Severance pay expenses for the years ended* December 31, 2023,*2022 and2021 were $2.2 million, $2.2 million and $2.0 million, respectively, which are net of income (loss) amounting to $(0.2) million, $(1.0) million, and $1.3 million, respectively, generated from the regular deposits and amounts accrued in severance funds.

The Company expects to pay the following future benefits to its employees upon their reaching normal retirement age:

The above amounts were determined based on the employees’ current salary rates and the number of years’ service that will have been accumulated at their retirement date. These amounts donot include amounts that might be paid to employees that will cease working with the Company before reaching their normal retirement age.

NOTE20 — 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 $30.9 million, $30.1 million and $25.2 million for the years ended* December 31, 2023,*2022 and2021, respectively.

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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 $302.8 million at* December 31, 2023.Management doesnot* expect any material losses to result from these letters of credit because performance isnot 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, 2023,total obligations related to such supplier agreements were approximately $419.8 million (out of which approximately $251.3 million relate to construction-in-process). All such obligations are payable in2024.*

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, 2023,2022 and2021. The Company isnot liable for royalties if the Company doesnot 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, 2023and2022,* amounted to $2.5 million and $2.3 million, respectively, of which approximately $1.5 million and $1.2 million, represents interest portion, as defined above, for2023 and2022, respectively.

Lease commitments

The Company's lease commitments are detailed under Note21, Leases to the consolidated financial statements.

Contingencies

• On* December 15, 2021,the Center for Biological Diversity and the Fallon Paiute-Shoshone Tribe (the “Plaintiffs”) filed a lawsuit in the U.S. District Court for the State of Nevada against the U.S. Department of the Interior, the Bureau of Land Management (“the BLM”) and Jake Vialpando, in his official capacity as a field manager of the BLM, alleging that the defendants violated the National Environmental Protection Act and other federal laws by approving the Company’s Dixie Meadows project and the associated environmental assessment and Finding ofNo* Significant Impact (“FONSI”). Plaintiffs additionally alleged that the project threatens the Dixie Valley Toad and infringes on the tribe’s enjoyment of a religious sacred site. Plaintiffs sought for the court to vacate and set aside the environmental assessment, FONSI and the BLM’s authorizations for the project and to enjoin project construction. The Company intervened in the action on* January 4, 2022.On January 14, 2022,the court granted a temporary,90-day injunction pausing construction of the project while it ruled on the merits of the case. The Ninth Circuit subsequently set aside the temporary injunction, pending a hearing on June 15, 2022,and construction began in February 2022.On August 1, 2022the Ninth Circuit issued an order in the Company’s favor, affirming the District Court’s ruling that an injunction after90*-days wasnot warranted. On* April 4, 2022,the U.S. Fish and Wildlife Services (“FWS”) emergency listed the Dixie Valley Toad under the Endangered Species Act of1973* (the “ESA”). On* July 6, 2022,Plaintiffs amended their complaint to add causes of action related to the ESA listing against the Company. The Company is currently working with the BLM and FWS in the Section7* Consultation process including discussion and identification of potential additional mitigation measures, and has agreed to temporarily pause construction of the facility. The Company requested that the BLM amend the Decision Record to limit the scope of the project to thefirst planned phase of development, a single power plant of approximately12 MW and the BLM granted that request. The Company further requested that the court stay the litigation until the Section7 Consultation process was complete, and the court granted the motion to stay on* February 14, 2023.In July 2023,the Company determined that it would conduct a supplemental NEPA review with BLM, which will run simultaneously with Section7* Consultation, during which time the litigation remains stayed. On* September 18, 2023,*the court issued an Order administratively closing the case without prejudice to reopening upon a motion by either party. The Company requested the BLM to begin a supplemental NEPA review of the project in order to renew the permit.

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, willnot be material to the Company’s consolidated financial statements as a whole.

On* March 2, 2021,*the Company's Board of Directors established a special committee of independent directors (the "Special Committee") to investigate, among other things, certain claims made in a report published by a short seller regarding the Company’s compliance with anti-corruption laws. The Special Committee is working with outside legal counsel to investigate the claims made. All members of the Special Committee are “independent” in accordance with the Company's Corporate Governance Guidelines, the NYSE listing standards and SEC rules applicable to boards of directors in general. The Company is also providing information as requested by the SEC and Department of Justice ("DOJ") related to the claims.

In Kenya, since2021, various task forces have been appointed by the President and/or the Senate to review and analyze PPAs entered into between KPLC and various independent power producers (including our long-term PPA for the Olkaria complex), with the recommendation that KPLC review its contracts and attempt renegotiation with these independent power producers to reduce PPA tariffs within existing contractual arrangements. The Company has been approached by certain of these task forces and has participated in requested discussions with them, which remain ongoing.

NOTE21 — LEASES

The Company is a lessee in operating and finance lease transactions primarily consisting of land leases for its exploration and development activities and fleet vehicles, respectively. The Company is a lessor in PPAs that are accounted under lease accounting, as further described under Note1 to the consolidated financial statements under "Revenues and cost of revenues" and "Leases".

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Leases in which the Company is a lessee

The table below presents the effects on the amounts relating to total lease cost:

()The increase in the weighted-average remaining lease term and discount rate is attributable to the deferral of the buy-out payment in the financing liability to June 2038,as further described under Note11* to the consolidated financial statements.

Future minimum lease payments under non-cancellable leases as of* December 31, 2023*were as follows:

(1) Financing liability was assumed as part of the Terra-Gen business combination transaction as further described under Note2 to the consolidated financial statements and is related to the sale and lease-back transaction of the Dixie Valley geothermal assets.

174

Leases in which the Company is a lessor

The table below presents lease income recognized as a lessor:

NOTE22 — SUBSEQUENT EVENTS

Cash dividend

On* February21,* 2024, the Company’s Board of Directors declared, approved and authorized payment of a quarterly dividend of $6.7 million ($0.12 per share) to all holders of the Company’s issued and outstanding shares of common stock on* March6,* 2024,* payable on* March20,* 2024.*

Business combination - Geothermal and solar assets purchase transaction

On* January 4, 2024,the Company closed a purchase transaction with Enel Green Power North America, a subsidiary of Enel SpA (ENEL.MI) to acquire a portfolio of assets which includestwo* contracted geothermal power plants,one triple hybrid power plant which consists of geothermal, solar PV and solar thermal units,two stand alone solar power plants, andtwo greenfield development assets, for a total cash consideration of $272 million (subject to a customary post-closing working capital adjustment to the purchase price, based on the levels of net working capital of the acquired companies) for100% of the equity interests in the entities holding those assets.

The geothermal power plants include the Cove Fort power plant located in Beaver County, Utah, which sells electricity under a long-term power purchase agreement with Salt River Project and the Salt Wells power plant located in Churchill County, Nevada, which sells electricity under a long-term power purchase agreement with NV Energy. The Stillwater triple hybrid geothermal, solar PV and solar thermal power plant is located in Churchill County, Nevada, and sells electricity to NV Energy under a power purchase agreement. The Solar assets of Stillwater Solar PV II in Churchill County, Nevada, and Woods Hill in Windham County, Connecticut, sell their electricity under power purchase agreements, respectively.

As a result of the acquisition, the Company expanded its overall generation capacity and expects to improve the profitability of the purchased assets through cost reduction and synergies. The Company will account for the transaction under ASC805, Business Combinations. The Company is still evaluating the accounting related to the purchase transaction, including the purchase price allocation, and therefore, such allocation isnot provided herewith. The Company expects to consolidate the acquired assets in its consolidated financial statements starting at the acquisition date.

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Hapoalim2024 Loan

Concurrently with the purchase transaction with EGPNA, on* January 2, 2024,the Company entered into a definitive loan agreement (the "BHI Loan Agreement2024") with Hapoalim Bank. The BHI Loan Agreement2024* provides for a loan by Hapoalim Bank to the Company in an aggregate principal amount of $75 million (the “Hapoalim2024 Loan”). The outstanding principal amount of the Hapoalim2024 Loan will be repaid in 32 quarterly payments of $2.3 million each, commencing on* April 1, 2024.The duration of the Hapoalim2024* Loan is 8 years and it bears interest of 6.6%, payable everythree months. The BHI Loan Agreement2024 includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot to exceed 6.0, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The BHI Loan Agreement includes other customary affirmative and negative covenants, including payment and covenant events of default.

HSBC Bank2024 Loan

Concurrently with the purchase transaction with EGPNA, on* January 2, 2024,the Company entered into a definitive loan agreement (the "HSBC Loan Agreement2024") with HSBC Bank. The HSBC Loan Agreement2024* provides for a loan by HSBC Bank to the Company in an aggregate principal amount of $125 million (the “HSBC Bank2024 Loan”). The outstanding principal amount of the HSBC Bank2024 Loan will be repaid in 7 semi-annual payments of $12.5 million each, commencing on* July 1, 2024,and an additional final principal payment on January 1, 2028of $37.5 million. The duration of the HSBC Bank2024* Loan is 4 years and it bears interest of3-month SOFR+2.25%, payable quarterly. The HSBC Loan Agreement2024 includes various affirmative and negative covenants, including a requirement that the Company maintain (i) a financial debt to adjusted EBITDA rationot to exceed 6, (ii) a minimum equity capital amount ofnot less than $750 million, and (iii) an equity capital to total assets ratio ofnot less than 25%. The HSBC Loan Agreement2024 includes other customary affirmative and negative covenants, including payment and covenant events of default.

Interest Rate Swap

Concurrently with the issuance of the HSBC Bank2024 Loan, the Company entered into a long-term interest rate swap ("IRS") transaction with the objective of hedging the variable interest rate fluctuations related to the HSBC Bank2024 Loan at a fixed3-month SOFR of 3.9%. The terms of the IRS match those of the HSBC Bank2024 Loan, including the notional amount of the principal and interest payment dates. The Company designated the IRS as a cash flow hedge as per ASC815, Derivatives and Hedging, and accordingly will measure the IRS instrument at fair value. The changes in the IRS fair value will initially be recorded in Other Comprehensive Income (Loss) and reclassified to Interest expense, net in the same period or periods during which the hedged transaction affects earnings. The hedged transaction and the IRS effect in earnings are presented in the same line item in the consolidated statements of operations and comprehensive income.** **

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