Good morning, everyone, welcome to the Ormat Technologies Q4 and Full Year 2022 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. If you would like to ask a question during this time, simply press star one on your telephone keypad. If you would like to withdraw your question, press star one again. Please note that this event is being recorded. I would now like to turn the conference over to Mr. Sam Cohen with Alpha IR. Please go ahead, sir.
Thank you, operator. Hosting the call today are Doron Blachar, Chief Executive Officer, Assi Ginzburg, Chief Financial Officer, and Smadar Lavi, Vice President of Investor Relations and ESG Planning and Reporting. Before beginning, we would like to remind you that the information provided during this call may contain forward-looking statements relating to current expectations, estimates, forecasts, and projections about future events that are forward-looking as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally relate to the company's plans, objectives, and expectations for future operations and are based on management's current estimates and projections of future results or trends. Actual future results may differ materially from those projected as a result of certain risks and uncertainties.
For a discussion of such risks and uncertainties, please see risk factors as described in Ormat Technologies' annual report on Form 10-K and quarterly reports on Form 10-Q that are filed with the SEC. In addition, during the call, the company will present non-GAAP financial measures such as Adjusted EBITDA. Reconciliation to the most directly comparable GAAP measures and management reasons for presenting such information is set forth in the press release that was issued last night, as well as in the slides posted on the website. Because these measures are not calculated in accordance with GAAP, they should not be considered in isolation from the financial statements prepared in accordance with GAAP.
Before I turn the call over to management, I would like to remind everyone that a slide presentation accompanying this call may be accessed on the company's website at ormat.com under the presentation link that's found on the Investor Relations tab. With all that said, I would now like to turn the call over to Doron Blachar. Doron, the call is yours.
Thank you, Sam, and good morning, everyone. Thank you for joining us today. The Q4 marked a strong finish to 2022, with 10.7% top line expansion, reflecting growth across all our operating segments. 2022 was a year in which we executed successfully our strategic plan by expanding our portfolio and improving our operational performance. During 2022, we added 78 MW of new generating capacity to our electricity segment operating portfolio, including our CD4 and Tungsten Phase II geothermal power plants, as well as our Wister Solar and two hybrid solar projects. In addition, we added a 5 MW new storage facility operating in California. Also in 2022, we signed long-term power purchase agreements, PPAs, for up to 365 MW, with 285 MW of those PPA covering geothermal facilities and 80 MW for energy storage.
These new agreements are expected to improve our economics in both segments. In our product segment, we experienced a significant recovery, delivering the highest quarterly revenue since the start of the COVID-19 pandemic. We now have a $148.1 million backlog, demonstrating the growing global demand for our geothermal products. As we look toward 2023, we expect to benefit from our portfolio expansion strategy, which has resulted in new geothermal and solar power plants in our electricity segment that started operation in the second half of 2022. We also expect to bring 170 MW of new capacity online, of which 66 MW is in the electricity segment and 104 MW are in the storage segment.
For 2023, we expect to deliver between $480 million to $510 million of Adjusted EBITDA, an increase of approximately 14% at the midpoint over 2022 actual results, which is the highest growth we have seen in years in EBITDA. This growth is supported by the new capacity added during 2022 and the expected capacity we plan to add in 2023. On an annualized basis, the new assets that will be added in 2023, as well as the potential improvements in Puna and Olkaria, are expected to add between $25 million to $30 million of additional Adjusted EBITDA versus 2022 partial operations. We continue to see strong tailwind globally for renewable energy, supported by the Inflation Reduction Act benefits, including the PTC for geothermal and ITC for storage.
We expect these benefits will reduce our capital needs and boost our EPS in the coming years. In addition, we are experiencing significant demand growth for geothermal energy and storage, driven by the volatile fossil fuel prices and global decarbonization efforts. We remain on track with our capacity expansion plans in both the electricity and the storage segments, with the potential to add approximately 700 MW by the end of 2025, which supports further top line EBITDA and net income expansion. Now before I provide further updates on our operations and plans, I will turn the call over to Assi to review the financial results. Assi?
Thank you, Doron. Let me start my review of our financial highlights on slide five. The Q4 marked a strong finish to an overall excellent year in 2022. Total revenue for 2022 was $734.1 million, up 10.7% year-over-year. Revenue for the Q4 was $205.5 million, up 7.6% year-over-year, reflecting growth across all three of our operating segments. Across the full year 2022, our Adjusted EBITDA results of $435.5 million increased 8.5% compared to $401.4 million in 2021. Q4 Adjusted EBITDA of $124.7 million increased 7.5% compared to $116 million in the Q4 of last year.
Year-over-year, the increase in the Adjusted EBITDA was largely driven by an increase in revenues in each of our three operating segments. In addition, G&A expenses were lower in 2022 due to lower reduced legal costs. In the full year 2022, net income attributed to the company shareholders was $65.8 million or $1.17 per diluted share. This represent an increase of 6% and 6.4% versus the same period last year, respectively. On an adjusted basis, net income attributed to the company stockholder was $92.2 million or $1.63 per diluted share, an increase of 7.3% and 7.1% versus the same period last year, respectively. The year-over-year earning growth was driven by better performance of our assets and lower effective tax rate.
In the Q4 of 2022, net income attributed to the company stockholder was $18 million or $0.32 per diluted share, in comparison to the $18.9 million or $0.34 per diluted share in the same period last year. The net income and earning per diluted share were negatively impacted by an after-tax non-cash write-off of $25.1 million related to our Brawley power plant. On an adjusted basis, net income attributed to the company stockholders was $41.2 million or $0.73 per diluted share, with an adjusted net income attributed to the stockholders up 80.3%, and diluted adjusted EPS was up 78% versus the same period last year. The adjusted net income attributed to the company stockholder was mainly adjusted for the write-off of the Brawley power plant.
The Brawley power plant has been generating electricity at level lower than its generating capacity of 13 MW due to continuous well feed issues. This has historically resulted in higher than expected operating costs and lower than expected electricity revenue. We believe that we can operate the Brawley plant economically at 7 MW or 6 MW lower than the asset's current capacity. We will get additional value from the assets through our plans to add solar plus storage facility adjacent to the geothermal project, utilizing existing interconnection at the Brawley complex. Moving to slide six. We break the revenue down at the segment level.
Electricity segment level revenue increased 7.8% to $631.7 million and 0.6% to $165.2 million in the year end, Puna due to higher in the year end, Q4 2022 respectively. This increase was driven by increased revenue at Puna due to higher generation and electricity rates for the full year, inclusion of the Dixie and Beowawe power plants that were acquired in July 2021, the start of commercial operation of our CD4 power plant facility in July 2022, and the start of commercial operation of Tungsten Mountain 2 in April 2022. Revenue growth in the segment was partially offset by the ongoing shutdown at our Heber One plant, for which we expect to complete the repower during Q2 2023.
In the product segment, revenue increased 52% to $71.4 million and 58% to $32.2 million in the full year 2022 and in the Q4, respectively. The growth in our product segment was primarily driven due to our recognition of revenue from newly signed contracts in New Zealand, Indonesia, and Nicaragua. Energy storage segment revenue increased 2.1% to $31 million and 27.3% to $8.1 million in the full year 2022 and in the Q4, respectively. Revenue growth in 2022 as well as in the quarter was primarily by higher rates at PJM. Moving to slide seven.
The gross margin for the electricity segment was 39.8% and 45.3% in 2022 and Q4, down to 70 and 60 basis point respectively. The decrease was driven by $15 million in insurance proceeds received in 2021 related to our Puna operation, compared to $1.7 million in 2022. In the product segment, gross margin was 15.3% and 22.8% in 2022 and the Q4, up 350 basis point and 1,220 basis point, respectively. Margin increased significantly in the Q4 due to a better overall margin generated on newly signed contracts. The energy storage segment, a full year 2022 gross margin of 21% compared to 33% in 2021.
The reduction was mainly driven by normalization of high revenue at Rabbit Hill in 2021 due to the Texas winter storm event, which we did not occur in 2022. In the Q4 of 2022, margin was 11.7% compared to 16.4%. Looking at slide eight, the electricity segment generated 95% of our total consolidated Adjusted EBITDA in 2022. The product segment generate 2% and the energy storage reported an EBITDA of $11.9 million, representing almost 3% of total Adjusted EBITDA. A reconciliation of EBITDA and Adjusted EBITDA are provided in the appendix slide. Looking at slide nine, our net debt as of December 31st, 2022 was approximately $1.8 billion.
Cash and cash equivalent and restricted cash and cash equivalent as of December 31st, 2022 was approximately $227 million compared to $387 million in the end of 2021. The slide breakdown the use of cash for the 12 months, illustrating our ability to reinvest in the business and service debt, our obligation while returning capital to our shareholders. Our total debt as of December 31st, 2022 was approximately $2 billion net of deferred financing costs, and its payment schedule is represented on slide 30 in the appendix. The average cost of debt of the company stands at 4%. We think it is important to note that nearly all of our debt liability remains fixed in nature, which we believe will help continue positioning Ormat competitively in a rising global interest rate environment.
Moving to slide 10, we have approximately $690 million of total liquidity. Our total expected capital for 2023 is approximately $589 million for capital expenditure, as detailed in slide 31 in the appendix. In 2023, we are planning to invest approximately $180 million in our storage assets compared to approximately $80 million in 2022. The increase is mainly related to the 80 MW, 320 MWh Bottleneck storage assets, the largest project under development in the energy storage segment. Overall, Ormat is very well positioned to execute our strategic growth plan from a capital resource perspective with excellent liquidity and ample access to additional capital as well as cash we expect to receive from the IRA benefit.
We expect that each project that will reach commercial operation in the next two years in the US will be entitled to between 30%-50% of funding supported by the new IRA benefit. On February 22, 2023, our board of directors declared, approved and authorized a payment of a quarterly dividend of $0.12 per share to all holders of the company's issued and outstanding shares common stock as of March 8, 2023, payable on March 22, 2023. In addition, we expect to pay a quarterly dividend of $0.12 per share in each of the next three quarters. That concludes my financial overview. I would like now to turn the call over to Doron to discuss some of our recent developments.
Thank you, Assi. Turning to slide 13 for a look at our operating portfolio. Generating growth was positively supported by inclusion of CD4, Tungsten Phase II and Wister Solar, as well as higher capacity at Puna. The generation was partially offset by the shutdown at Heber One following the fire early in 2022, and by lower generation at our old facilities due to lower availability of the heat source. As you can see, our generating capacity was updated to 1,070 MW in the electricity segment compared to 1,012 MW in 2021. We added 73 MW of new geothermal and solar power plants, which we slightly offset by adjustment to the generating capacity, reflecting changes in the well field performance. As noted on slide 14 in the Q4, our Puna geothermal power plant operated at a level between 23 and 25 MW.
In 2022, we received higher energy rates at the plant as a result of the global elevated oil prices. We are currently negotiating new amendments to the fixed price PPA we signed with KPLC that will allow us to continue with our plans to repower the Puna complex and increase its capacity to a total of 46 MW. At our Olkaria power plant in Kenya, the lower performance of the well field limited the generation of the power plant that is currently generating 125 MW. We are currently performing a drilling campaign and expect to increase its capacity during the year. With respect to Heber One, as you know, Heber One is experiencing a partial outage due to a fire in early 2022, and it's operating at 20 MW, less than half of its capacity.
We have decided not to rebuild the Heber power plant, and we settled the insurance claim related to the fire event, including all business interruption and property damages claim. We're currently optimizing the Heber complex through a repowering project, which is expected to be completed in the Q2 of 2023. Turning to slide 15. Our product backlog stands at $148 million and includes the recently signed $32 million contract for the Ijen power plant in Indonesia, in which we hold a minority equity position of 49%. The backlog is improving. We see a pickup in demand and slowdown in raw material cost increases, which should result in better pricing and rise higher margin. Moving to slide 16 for an update on our energy storage segment. The segment delivered another strong quarter, supported by higher rates at PJM.
Our 2023 revenue guidance for the storage segment assume that energy rates at PJM will not remain as elevated as 2022 levels. Before I move to discuss our long-term growth, please turn to slide 17 to discuss the two main drivers for our growth in the US. This will improve both the economics in the electricity and the storage segment, and reduce our capital needs in the US even further than anticipated. We see continued increase in the demand for geothermal energy. Both California and Nevada, which employ massive amount of intermittent power, recognize the importance of geothermal as a zero emission, high capacity energy source.
The recognition was translated into the known CPUC decision to adopt a portfolio that resulted in an acceleration of new geothermal development, and for what enabled us to sign during 2022 new long-term PPAs in California and in Nevada at improved economics. Also, the IRA which was signed on August 16, 2022, as discussed previously, had a significant positive impact on our ability to develop geothermal and storage assets in the US at higher economics due to lower capital needs. We are planning to continue to claim the PTC for our new geothermal power plants and enter into new tax equity transactions, which can fund over 40% of our capital needs for new geothermal plants.
For our new storage assets, for the first time, we'll have the ability to claim between 30%-50% ITC and sell them to third parties, enabling us to capture potentially higher value of the tax benefits. We expect that the ITC for storage will reduce our tax expense and boost our EPS for the coming years. In 2023, we expect to receive approximately $150 million in cash related to the PTC and ITC benefits. This source of cash enabled us to significantly reduce our overall capital needs. Moving to slide 19 and 20. As we have communicated, 2022 was a significant build-up year comprised mainly of geothermal and hybrid solar PV projects in development. This build-up supports our robust growth plan.
Despite some delays, mainly from the permitting processes, we expect to increase our total electricity portfolio generation to approximately 1.3 GW by the end of 2025, adding between 230 and 260 MW of new capacity. In 2022, our energy storage portfolio was impacted by supply chain delays and limited accessibility of raw materials, as well as longer than expected process for connecting these assets to the grid. This caused delay in the commercial operation dates for some of our facilities. Despite these headwinds, we remain on track with our growth plan and expect to bring online six new assets in 2023 and reach between 500-520 MW and over 1 gigawatt hour by the end of 2025. Slide 21 and 22 display the geothermal and the hybrid solar PV projects currently underway.
We are on track with the commercial operation of North Valley, Heber One, and Dixie Valley, all of which we expect to bring online during the first half of 2023, as well as Zunil in the second half of the year. Moving to slide 23 and 24. The third layer of our growth plan comes from the energy storage segment. Slide 23 demonstrates the energy storage facilities that have started construction. We have 8 projects under development that will add 104 MW, which is 124 MWh to our storage portfolio by the end of 2023, and an additional 100 MW, which are 340 MWh in 2024. Please turn to slide 25 for a discussion of our 2023 guidance.
We expect total revenues to increase by 14% year over year at the midpoint and to be between $823 million and $858 million, with the electricity segment revenues between $670 million and $685 million, an increase of 7% compared to 2022. We expect an approximately 79% increase in the product segment with revenues between $120 million and $135 million. Energy storage revenues are expected to be between $33 million and $38 million. We expect Adjusted EBITDA to increase by approximately 14% at the midpoint, the highest growth we have experienced in the last few years and to be between $480 million and $510 million. We expect the annual Adjusted EBITDA attributable to minority interest to be approximately $36 million.
On an annualized basis, the new assets that will be added in 2023, as well as the potential improvements in Puna and Olkaria are expected to add between $25 million-$30 million of additional Adjusted EBITDA versus 2023 partial operation. I will end our prepared remarks on slide 26. This was a strong quarter demonstrated by continued financial and operating momentum with significant progress against our long-term goals.
Looking ahead to 2023, we expect to add 170 MW combined new capacity at both our electricity and the storage segments, which represent a significant progress towards our target of over 1.8 GW by end of 2025. As discussed earlier, the new capacity will benefit from the IRA, claimed benefits will reduce our capital needs in 2023. We strongly believe that the regulatory tailwinds and the increased PPA prices we are seeing in the market, combined with our strategy, our assets, and our advantages, cost structure, position Ormat for success and will result in meaningful shareholder value in 2023 and beyond. This concludes our prepared remarks. Now I'd like to open the call for questions. Operator, please.
Thank you. Ladies and gentlemen, at this time, if you have any questions, simply press star one. Just a reminder, if you find your question has already been addressed, you can remove yourself from the queue by pressing star one again. We'll take our first question this morning from Noah Kaye of Oppenheimer.
Good morning, thanks for taking the questions. Maybe we could start with the $150 million cash tax benefit you're expecting from IRA. Can we compare that to pre-IRA? Obviously, the geothermal PTC had lapsed at the beginning of 2022, but I assume you had some projects that already met immense construction. How much of the $150 million is really incremental post-IRA? Then just on a housekeeping matter, how should we be modeling those benefits flowing through the P&L and cash flow statements that treat it as reduction in tax expense, income from sale, tax benefits? Any color you can provide there would be helpful.
Hey, Noah. Good morning. There are a few elements to the IRA that's gonna impact us. As you rightfully say, in the past, we also had, I will say a tax equity transaction that we have done on the geothermal. We expect in 2023, approximately $125 million out of the $150 to come from two new tax equity transaction that we plan to do in the US . One of them will be for the Heber combined operation, so it will be three when you combine the two Hebers. I will say that if you look before that amount was probably lower by 10% because, as you remember, the ITC, the PTC is up from 25% to 27.5%.
Instead of $125 million, that number would have been probably closer to somewhere $110 million. The other piece will be PTCs that we will be able to sell through the year to third party, and those will be showing up either as other income or as part of the tax equity income. The last piece, which is around $15 million, should flow through the tax line item. These are ITCs related to a new storage project. When you look at the CapEx that we're spending in 2023, and you look into 2024, we will see a much bigger amount coming from the ITC part. As we see it, in 2024, we have the COD of Bottleneck, which is around a $100 , $105 million project.
In addition to Montague, which is another large project. We will receive anywhere from 30%- 40% on those in the form of a tax return, and those should flow through the tax line item. We will see a boost in EPS, especially in 2024 because of the Bottleneck project and the Montague project.
Very helpful, Assi. Maybe just to follow up on that, just to help us with the simple math on unexpected funding mix for 23 CapEx. You know, you got this $150 million benefit plus the cash from operations. We assume you would need to raise additional project debt, maybe talk through that and where you would expect project debt to pencil out on new projects.
As you rightfully so say that, the funding requirement next year will include the project debt, tax equity, transaction, and maybe other form of financing. Right now, based on our best estimate, the project debt will fall in the around 6% debt. That's the last quote that we got. This will be a long-term debt, fully secured. If you look at bank debt Ormat, we are, you know, in the six plus, I would say anywhere from 20-45 basis points, depends on the mood of the market and the day.
Okay. If I could sneak one last one in, just on the guide for 2023, including some improvements at Puna and Olkaria with some rollover benefits. Just what incremental improvement capacity do you expect to get for those projects? What's the rough timing on when you think they reach those capacity targets?
Hi, Noah. It's Doron. Thank you for the question. These are two different items. In Puna, we finished an important part of our campaign, and we are in the process of connecting the wells that we finished drilling, production and injection well. We expect to connect them toward the beginning of Q2, and we expect to see the benefits impacting starting in Q2 going forward. Following that, we plan to drill another well over there and to see an additional increase somewhat of the second half of the year. We do expect a larger impact starting Q2 and then another one toward the second half.
Olkaria, we are in the middle of the drilling campaign over there. We expect a gradual increase in capacity as we connect each well that we drill over there. We finished one well that we plan to connect these days actually. We do expect to see an increase over there. The other wells in Olkaria, the wells are very deep. The timing to drill takes a bit longer than in other places. We expect that to happen to increase mainly in the second half of the year.
Okay. Thanks so much. I'll turn it over.
Thank you. We go next now to Justin Clare at Roth MKM.
Yeah. Hi. Thanks for taking our questions. I guess first off here, just wanted to ask, you know, also on the $150 million in tax credits, expected in 2023. Are there any assumptions for, you know, getting bonus adders within that 150, such as the energy community adder? Is if not, is that possible, and do you need to see, you know, treasury guidance, before you can fully figure out exactly what the tax credit benefit will be?
For 2023, the numbers do not include any adder because we are not in this specific location that you mentioned. With that being said, there is a good potential that for 2024 some of our storage assets are in these areas, and that's why we expect to get almost, in those cases, 40%. When we look at storage 2025, we are also looking for options to buy batteries in the US in order to try and qualify to anywhere between 40%-50% on the storage. On the geothermal right now, we are assuming the basic $27.5 per BC.
With that being said, as you mentioned, rightfully so, we are looking at the actual guidance to see if we can take that number higher by the 10% because there is no available equipment similar in the US for geothermal. The question is, will we be able to claim local manufacturing because the drilling is in the US, the construction is in the US . That's a question that we will ask ourselves going forward, but we're still waiting for the guidance. Many of the guidance are still up in the air, but the things that we are claiming for, 2023 are the base. And when I say the base, I mean the five time the base. You know, the base is $5.50, for example. We are claiming 27.5 because we're getting five times the base.
Got it. Okay. That's really helpful. Then just on storage, we've heard that the supply chain could be improving in terms of the availability for batteries. This might be in part due to some demand softening for electric vehicles. Could you just update us on what you're seeing in terms of the supply chain? Do you have all the batteries that you need? Is there any potential to pull projects forward if, you know, if batteries are more freely flowing these days?
Yeah. Thank you. I will say the project, the eight projects that we listed in the presentation, all of them have secured batteries from different vendors. On them, you know, the supply chain issue is mainly, you know, delivery issues and things like that. We have seen in the last couple of weeks a reduction in the battery prices, a small reduction, which follows what you've said, a bit of a weakening in that market due to the EV market. I can say that we have between three to six projects that are looking for batteries. Once we have the batteries at the right price, it's a question mainly of price and timing, we will be able to release them going forward.
These are part of, you know, our plans, and targets for the over 1 GWh generation at the end of 2025 for the storage. We have projects in the storage. We have the site control. We're in a very, very, very advanced interconnection and permitting process, and I think the last block is the batteries. We are happy that the market is softening a little bit. Hopefully once we are able to secure the battery, we'll be able to release the project.
Great. Okay. then maybe just one more. You know, your guidance for the product segment suggests that, you know, quarterly revenues could be $30 million or maybe a little bit above that, in 2023. You know, at that level of revenue, you know, could you get back to a growth margin range of, you know, 24%-28%? is that assumed in your guidance, that kind of level for margins?
So you know, we had a very good Q4 with margins are being better. There is no doubt that the contract that we signed in 2022 and the one that will impact 2023 are already in a, at an improved margin. We are still in the sub 20, I would say, in our guidance, somewhere between 18%-20%. We think that it might be better, but at this point, you know, supply chain can still be an issue for 2023. Like always, we are being, I will say, a little bit, making sure that we're gonna meet the numbers. We think it's gonna be somewhere around the sub 20, maybe 18%.
Okay. Thank you. I'll pass it on.
Thank you. We'll go next now to Jeff Osborne with Cowen and Company.
Yeah. Good morning. A couple quick ones on my side. I was wondering if we could get an update on the Bottleneck project. I think in the Q3 call, you had talked about getting CPUC approval by the end of the year. I don't think that happened. I noticed in the investor presentation that moved to Q1 of 2024 versus the end of 2023. Can you give us an update on where that is?
Yes. Thanks. It's the Bottleneck, CPUC, we got approval at the beginning of January. The contract is fully approved by the CPUC, and we're running on it. Moving between Q4 2023 to Q1 of 2024, it's mainly issues of potential some slow supply of batteries, but mainly the connection to the grid and the process it takes from you once you finish construction until you can actually generate revenue. We do expect to finish construction in 2023, the connection itself might take us into 2024.
Got it. That's helpful. Two other quick ones, just following up on Noah's question around taxes and the ITC. What tax rate should we assume for Ormat in 2023 and 2024? Is that a number you have handy?
When you look at 2024, I would say there definitely should be a much lower tax rate because we expect a extremely large ITC benefits that will impact us. For 2023, you can assume, I would say if our normal tax rate is around 32%, you can assume, maybe 10% less than that.
22% or take off 3.2%?
No, no. Somewhere between 25 to 30.
25-30. Okay. Got it. The last one I had is just on the North Brawley facility. I might have missed that. I think going back to, like, 2010, that originally was a 50 MW resource, then it went to 17, and then 13, and now it's seven. Is that all due to the sand and salinity issues that that site's had for years, or is there something else going on there?
No, there's nothing new going on there. It's mainly the same issues. Over the years, in various points in time, we had ideas how to solve it with investment. Invested different into different technologies and different structures in order to bring it back to higher generating capacity. At this stage, we don't think that we can do it. What I would say is that the North Brawley facility has a larger interconnection that is not going to be utilized through the geothermal. We are in advanced discussions with the CCA there to build a solar and storage facility, by that actually take the benefit of the interconnection that North Brawley has. Once, this will be finalized, we will update you exactly on the project.
Perfect. I appreciate the details. Thanks so much.
Thank you. We take our next question now from Julien Dumoulin-Smith of Bank of America.
Hey, good morning, team. Thank you so much for the time and the opportunity. Listen, just with respect to some of the impacts here, some of the operational issues on some of the geothermal assets, can you elaborate a little bit? I mean, how much of this is gonna be made up, if you will, in 2024? I don't know if it's exactly a fair question to ask, but in totality, whether we're looking at Heber or Brawley, you know, obviously, there have been some specific issues.
In totality, is there a good way to think about kind of the shift in value that you had previously contemplated in 2023 moving into kind of more of a run rate 2024 as a way to think about it across each of the discrete issues that you described earlier? Maybe in EBITDA terms.
Good morning, Julien. Great question. As you know, many of the storage segment assets, CODs moved from 2022 to during the year 2023. Also, we decided to take a closer look at our drilling campaigns in Olkaria and in Puna, which are now look very, I will say, on track to perform this year. These two items, in addition to the dead megawatt on the geothermal, which is like you mentioned, rightfully so, Heber and North Valley should rate on an run rate base additional $25 million-$30 million of an EBITDA in the following year. If everything would have gone right in 2022 and things would have been on time, everything, you're right.
Our guidance for 2023 would have been, $25 million-$30 million higher, which will put us probably at a record EBITDA for the company growth. I will say that, we are a long-term marathon runners. For us, if something will start, operation in January or April, it does make a difference, and we want it as early as we can, but we want it right.
When we look at 2024, not including assets that we will add in in 2024, we are seeing a pickup in EBITDA on those assets of $25 million-$30 million, with almost all of it also coming from a top-line growth of storage and geothermal assets. I will say, when you combine this, I think there's a lot of value in what we've done over the last two years, and maybe there's a little bit more patience that is needed. I think that, $25 million-$30 million on top of what we gave guidance for 2023 are very good numbers for the company.
Indeed. Just sorry, just to clarify that if I can, and hopefully this is a fair question. That 25-30 is incremental versus projects that were previously contemplated for in service in 2024, right? I.e., this is just the shift that you're announcing here in timeline.
Yes. It's assets that were supposed to start online mostly in the end of 2022. They will start operation in 2023. They will contribute some amount in 2023. On top of it, on an annual basis, when you look at 2024, they will add additional $25 million-$30 million of Adjusted EBITDA.
Right. It's the partial year catch-up for some of the assets reaching through the year in 23 as well as, some of the operational issues, you know, really getting fully resolved here.
Yes.
Exactly. Sorry, I don't mean to belabor that too much. Just on the product side, super quick, obviously pretty incredible developments here in reacceleration. Backlog, you know, largely contemplated to be consumed seemingly this year. How do you think about adding more to that backlog? It's been a pretty impressive recovery trajectory here the last couple of years and obviously looking to 2023. Can you talk a little bit about expectations on adding backlog, you know, here over the next few months to continue this momentum? Or is this the new run rate, if you will?
Thanks, Julien. On the product backlog, as we said, we see a change in the demand, not only in the US, but globally. We're competing today on multiple projects that we expect to win some of them. I would say the largest opportunity is in New Zealand, which is a big part of our backlog today, but the potential there is huge. We do hope that Turkey, and we've seen some indications from our customers that Turkey might wake up again. Assuming the economy will be a little bit better in Turkey, the potential there is very, very big. We do expect the backlog to continue. You know, it's not something you can measure it by quarters, but we definitely expect the backlog over time to increase.
Okay. Excellent. Maybe related to that, the products level here, just in terms of this new level that you got for this year, call it 130-ish. Do you think that we're going to see that as being a new run rate or we're going to continue to accelerate? It sounds like further acceleration is possible, but you're not ready to articulate it yet.
I couldn't answer you better than the question.
All right. Fair enough. We'll leave it there. Thank you, guys. Good luck. All right.
Thank you.
Thank you, Julian.
Thank you. just a reminder, ladies and gentlemen, star one, please, for any questions. We go next now to Ryan Levine at Citi.
Good morning. I'm hoping to start off with the power market exposure. You highlighted some of the duration in the PJM forwards and some other markets. Can you quantify the materiality of that movement to your 2023 outlook? Are you looking to change any of your hedging profiles on a go-forward basis?
Thanks. On the. I'll start with that. We're not doing today any hedging within the storage market. We have most of our contracts are merchant, apart from the RA contract that we have in California. In 2024, we'll have a Bottleneck with the Tolling Agreement, but we're not hedging any contracts. We are playing in the merchant market. PJM prices in 2022 were very, very high. They were above $50. Today, they are in the range of $20-$25. So that's a big decline in the PJM. Again, it has a merchant market, so it depends quite a lot of the weather and the demand. PJM is related a lot to natural gas pricing. If natural gas pricing are going up, the PJM prices will go up. This is a merchant, a merchant play.
Okay. In terms of.
Ryan, let me add one more thing. We have roughly 40 MW now operation in the East Coast in the PJM. If we will see a pickup in prices towards what we saw in 2022, we expect revenue in the storage to be higher by $6 million-$8 million. We are already taking into consideration the fact that prices are slightly lower. If there will be a pickup in prices back to the 40, 50, then we should see roughly another $6 million-$8 million. I will say that, you know, this thing is very volatile. December started very slow, for example, and then over one weekend, we generated $2 million of revenue.
Overall, we like some of our assets to be in these areas, and we believe that, even at $25-$30 per megawatt, we still have a very good returns on our investment over there.
Okay, great. Then in terms of your dividend policy with the incremental $150 million of capital offsets from the federal policy and some of these moving pieces with timelines of implementation and movements in power curves, how are you thinking about your dividend policy on a go-forward basis, and could that be something that gets reevaluated in light of some of these moving pieces?
The dividend policy is reevaluated between the management and the board every quarter and every year when we do our work plan. However, as we discussed, there is such a large demand for geothermal assets and storage assets in the US and globally that the view of the company is to invest in capital as much as we can and not to go and increase the dividend. We see the big upside in growing the business. We have in 2023 a 14% increase in EBITDA, which is the highest we had for many, many years. Highest growth in EBITDA for many, many years. This is where the focus that we're putting on.
Okay. Last question from me. In terms of the CapEx outlook on a per megawatt basis, are you seeing any movement there given some of the components costs evolving?
No. Over the last year or so, two years basically, you know, prices did, raw materials did go up, and drilling costs due to the boom in the oil industry, you know, drilling costs went up a bit. Now they are going down a little bit more. Shipment pricing went very high, now they're going down. All in all, I think this is balances and the reality is that since we are a vertically integrated company and we do absolutely everything that is required to build a facility, we're able to manage between these and cost to build the facility might go up or down by 5%, but in general, it's the same area.
Appreciate the time. Thank you.
Thank you.
Thank you. Gentlemen, it appears we have no further questions this morning. Mr. Blachar, I'll hand things back to you for any closing comments.
Okay. Thank you. Thank you everyone for joining us. 2022 was a very strong year, and we're looking at 2023 with a 14% increase in revenue and EBITDA, Adjusted EBITDA, and continuing to invest and build our portfolio. I'm confident that as the year passes, we'll be able to give you more and more insight on the growth plan that we have and making them. Thank you very much.
Thank you again, ladies and gentlemen. That will conclude Ormat Technologies' Q4 and Full Year 2022 Earnings Call. Again, I'd like to thank you all so much for joining us and wish you all a great day. Goodbye.