InvestNot yet confirmed elsewhere1 publisher3 min readPublished
Ormat's fracking bet: geothermal anywhere, tested where geothermal already works
The world's largest geothermal operator wants to sell AI data centers power anywhere. Its two pilots sit at plants it already owns, and revenue is growing ten times faster than profit.
The Investor · Invest desk
What happened
- Ormat, 60 years into building plants only where hot water and steam sit near the surface, is aiming enhanced geothermal at Western US data center demand.
- It has two pilots running with different partners: startup Sage Geosystems, and SLB, the largest oilfield services firm in the world.
- The company has bought acreage in New Mexico, Oregon and Idaho, and CEO Doron Blachar says he is bullish on Texas.
- Rival Fervo listed in May in the biggest US clean energy IPO, hit a $10 billion market cap and has since fallen to $5 billion.
Why it matters
- constraint Until the technique is demonstrated off a known resource, Ormat's sellable market stays the Western states it already understands, not the "anywhere" the product is marketed on.
- cost The drilling ambition is being funded out of a profit line barely moving while revenue climbs, so shareholders carry the option rather than being paid for it.
- decision Data center buyers shopping for round-the-clock supply must price a vendor whose flagship product is at pilot stage against gas and nuclear offers that are not.
- exposure Ormat's re-rated equity now carries AI-power expectations, which means a slipped pilot takes back gains earned by the businesses that actually produce the cash.
Blue Mountain and Desert Peak, the two sites Ormat picked for its enhanced geothermal pilots, are plants it already operates in Nevada, a state Fortune describes as a hotspot for geothermal energy [3]. That is the friendliest rock on the table, and the least demanding test of the proposition the whole pitch rests on: generation almost anywhere a customer asks for it, reached with oilfield drilling and fracking [21]. The nearest thing to an "anywhere" result belongs to the startup partner rather than to Ormat. Sage Geosystems brought its own first pilot online in August near San Antonio, as a precursor to the joint project [10].
The location case is still a case. The income statement is not, and it repays a second look. First-half 2026 revenue of $662.7 million was up 43 percent year on year; net profit of $71.2 million was up 4 percent [11]. Run those rates backwards and the year-earlier half was roughly $463 million of revenue on roughly $68.5 million of net income [18]. So about $199 million of additional revenue carried about $2.7 million of additional profit, an incremental net margin near 1.4 percent [15], and the overall net margin fell from about 14.8 percent to about 10.7 percent [16]. CEO Doron Blachar's point that Ormat is profitable outside the pilots holds [5]. The arithmetic adds that the revenue arriving now earns far less per dollar than the revenue already there, and Fortune's account does not say which businesses did the diluting.
That is the pressure behind the comparison Ormat itself invites. Fortune reports the science of enhanced geothermal as proven, with the open question being whether the plants can be built economically and efficiently enough to contend with gas-fired power, renewables and nuclear [8]. Competing on cost means earning back a drilling program at a price a hyperscaler will sign, which is what a pilot is for: finding the number.
The public comparable shows what the market pays for the story without the cash flow. Fervo went public in May in the largest US clean energy IPO, reached a $10 billion market cap, then fell to about $5 billion after what Fortune terms modest setbacks [13]. Ormat is up almost 20 percent over twelve months at about $6.75 billion [12], roughly 1.35 times Fervo [19], after half of Fervo's peak value disappeared [20]. Blachar's own framing matches that gap. He told Fortune that even if the enhanced geothermal push fails, Ormat will be successful, on traditional geothermal plus a battery storage business growing with solar [4]. Read plainly, that is the option priced correctly: for Ormat, drilling deeper is upside bolted to an operating business; for a pure play, it is the business.
What a buyer of firm capacity would most want verified is the thinnest part of the record. Blachar says Ormat holds contracts with hyperscalers and utilities for hundreds of megawatts and knows how to get permits and interconnections [22], and the company is working closely with Google and the data center developer Switch [9]. Fortune's account attaches no contract values, prices or delivery dates to any of it [23]. Until it does, his "endless demand" [6] describes appetite, not booked revenue.
What to watch
- Whether either Nevada pilot publishes flow and temperature results, and whether Ormat commits an EGS project on the New Mexico, Oregon, Idaho or Texas acreage rather than an existing field.
- Whether the hundreds of megawatts of hyperscaler and utility contracts turn into disclosed agreements with prices and in-service dates.
- Whether second-half margins recover, or growth keeps converting into almost no additional net profit.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence42
- Adoption34
- Hype gap+42
- Incentives72
- Confidence52
Claim ledger
Ranked by verification strength, evidence, and original report placement.
- [1]
Ormat aims to grow with the AI data center boom by building baseload clean power plants throughout the Western United States using enhanced geothermal systems (EGS).
- [2]
Ormat is launching two separate EGS pilot projects with different partners: geothermal startup Sage Geosystems, and SLB, the century-old largest oilfield services firm in the world.
- [3]
Both EGS pilots are in Nevada, described as a hotspot for geothermal energy: the Sage pilot at Ormat's Blue Mountain power plant and the SLB pilot at Ormat's Desert Peak plant.
- [4]
Blachar said that even if the push into EGS fails, Ormat will be successful, citing traditional geothermal growth plus a newer battery energy storage business growing with solar installations nationwide.
ReportedSupportedSource: Ormat CEO Doron Blachar, to Fortune2 sources— create a free account to open themView cited source - [5]
Blachar notes Ormat is profitable outside of its pilot projects.
ReportedSupportedSource: Ormat CEO Doron Blachar, to Fortune2 sources— create a free account to open themView cited source - [6]
Blachar said: "We're in a very rare situation where all the stars are aligned exactly on time... we see endless demand for our product. The more electricity we can generate, the more we sell."
ReportedSupportedSource: Ormat CEO Doron Blachar, to Fortune2 sources— create a free account to open themView cited source - [7]
For 60 years Ormat Technologies built geothermal plants where nature allows, over underground reservoirs of high-pressure water or steam, including around the Pacific Ring of Fire, making it the largest geothermal operator in the world.
- [8]
Fortune reports the science is proven, but Ormat and competitors are racing to show they can build the plants economically and efficiently enough to contend with other sources of generation including gas-fired power, renewables and nuclear.
- [9]
Ormat is also working closely with Google and data center developer Switch.
- [10]
Sage's milestone first pilot, a precursor to its Ormat project, came online in August near San Antonio.
- [11]
Ormat posted revenues of $662.7 million for the first half of 2026, up 43% year on year, on a net profit of $71.2 million, up 4% year on year.
- [12]
Ormat's stock has risen almost 20% in 12 months to a market cap of about $6.75 billion, slightly below an all-time high set in early June.
- [13]
Fervo went public in May with the biggest clean energy IPO ever in the US; its market cap quickly jumped to $10 billion but, after some modest setbacks, has since fallen to $5 billion.
- [14]
Ormat has acquired new acreage in New Mexico, Oregon and Idaho, and Blachar said he is bullish on Texas too.
- [15]
About $199 million of additional first-half revenue carried about $2.7 million of additional net profit, an incremental net margin of about 1.4%.
- [16]
Ormat's first-half net margin fell from about 14.8% to about 10.7%.
- [17]
Ormat's first-half revenue growth rate was about 10.8 times its net profit growth rate.
- [18]
Implied year-earlier first-half figures: about $463 million of revenue and about $68.5 million of net income.
- [19]
Ormat's market cap is about 1.35 times Fervo's current $5 billion.
- [20]
Fervo's market cap has fallen 50% from its post-IPO peak.
- [21]
EGS marries traditional geothermal with the newest oil-drilling and fracking techniques, and is intended to allow next-generation geothermal plants to be built almost anywhere the customer desires by tapping deeper, higher-temperature reservoirs more easily.
- [22]
Blachar said: "We know how to buy land positions. We have [contracts] with hyperscalers, with utilities, for hundreds of megawatts," adding that Ormat knows how to get permits and interconnections.
ReportedInsufficientSource: Ormat CEO Doron Blachar, to Fortune2 sources— create a free account to open themView cited source - [23]
Fortune's account reports no contract values, prices or delivery dates for the hundreds of megawatts of hyperscaler and utility contracts Blachar cites.
Sources
1 independent publisher whose own reporting we read for this story.
- fortune.comPowering the cloud after 60 years underground: Ormat’s geothermal pivot to AI
1 article · August 22, 2026
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Topics
- Enhanced Geothermal SystemsFollow
- Energy Project ExecutionFollow
- Clean Energy Public MarketsFollow
- AI Data Center Power SupplyFollow