Good morning, and welcome to the Ormat Technologies Third Quarter 2023 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 that time, simply press star followed by the number one on your telephone keypad. If you want to withdraw your question, again, press star one. Please note, this event is being recorded. I would now like to turn the conference over to Alex Steinberg with Alpha IR. Please go ahead.
Thank you. 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, 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, 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's 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'd 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 all yours.
Thank you, Alec. Good morning, everyone, and thank you for joining us today. Ormat reported another quarter of strong financial results and achieved significant milestones that emphasize its commitment to growth and sustainability. The strong results in the third quarter are demonstrated by the company's significant top-line expansion of 18.3%, which was successfully translated into 15.8% growth in adjusted EBITDA and 84.4% growth in earnings per share. All three of our segments showed revenue growth in the quarter. The product segment continues to impress as our backlog has consistently grown throughout the year, with year-to-date revenues more than doubling versus 2022. In the storage segment, we overcame lower energy rates at PJM and Kaiser and delivered growth from the new facilities that came online in the second quarter this year.
In the electricity segment, this quarter, revenues and margins were impacted by lower generation and lower energy rates at Puna compared to last year. We are making progress in our ongoing drilling efforts at Puna and Olkaria, with Puna now generating over 30 MW and Olkaria steadily increasing its capacity. Both are expected to support our future performance in the electricity segment. In October, we announced a strategic acquisition of three geothermal and two solar power plants from Enel in the U.S. We expect to close this acquisition by the first quarter 2024. We are confident that this accretive acquisition will support both our short- and long-term growth plans.
After the end of the quarter, we raised $166 million through a combination of tax equity transactions to monetize PTC, commercial paper, and a long-term corporate loan that strengthens our balance sheet and solidifies our financial position. We've achieved significant growth in 2023, adding 127 MW year to date, expanding global demand for renewable resources, and established our market position as one of the largest providers of geothermal energy globally. We continue to be confident in our ability to achieve our long-term capacity expansion goals and our financial targets for 2023 and beyond, and expect to increase our capacity to approximately 1.9-2 GW by year-end 2025. Now, before I provide further updates on our operation and future 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. Total revenue for the third quarter was $208.1 million, up 18.3% year-over-year, reflecting strong growth demonstrated across each of our operating segments, with notable revenue growth in our product segment during this period. Third quarter, 2023, total gross profit was $60 million versus $61.1 million. This resulted in a gross margin of 28.8%, down approximately 600 basis points from a very strong gross margin of 34.7 in the third quarter of 2022.
In 2022, gross margin included $4 million of business interruption income related to Heber 1, and was impacted by a better performance of our Puna power plant, that generated $5.6 million higher revenue than in Q3 2023. In addition, during the third quarter of 2023, our product segment delivered significantly higher revenue versus last year, which, due to the lower overall margin of the segment, is negatively impact our combined reported gross margin. Since the end of the quarter, we improved performance at our Puna power plant following a successful drilling campaign, and in general, with the higher backlog of the product segment, we expect to see improvement in margin going forward.
Net income attributed to the company's stockholders was $35.5 million or $0.59 per diluted share in the quarter, compared to $18.1 million or $0.32 per diluted share delivered in the third quarter of the prior year. The increase was driven by higher contribution of our product segment, as well as higher benefits within the IRA, including PTC benefits recorded under income attributed to sale of tax benefits, and ITC benefits recorded under income tax provision. In addition, we recorded a $9.4 million tax income related to a recent change in the Kenya tax law.
On an adjusted basis, net income attributable to the company's stockholders was $28.2 million or $0.47 per diluted share, with adjusted net income attributed to the stockholders up 50.4% and diluted adjusted EPS up 42.4% versus the same period last year. Net income attributable to the company's stockholders and diluted EPS were adjusted to exclude a $9.4 million one-time benefit associated with the changes in the Kenya Finance Act 2023, and a $1.8 million after-tax write-off unsuccessful exploration activity. Adjusted EBITDA of $118.3 million increased 16.8% in the third quarter, compared to $102.2 million in the third quarter of last year.
The double-digit increase was largely driven by the product segment recovery, as well as higher tax equity contribution from PTC credit and a lower G&A expense versus the prior year period. Moving to Slide six. Breaking the revenue down at the segment level. The revenues in our electricity segment increased 2.9% to $167.2 million compared to the prior year period. The increase was driven by the COD at the North Valley facility and the resumption of operation at Heber 1. The increase in revenue was partially offset by lower electricity prices and generation at Puna. In the product segment, revenues increased 180.2% to $38.8 million, representing over 19% of our total consolidated revenue in the third quarter, compared to only 8% in the same period during 2022.
The growth in the product segment revenue was primarily due to new signed contracts we successfully secured, which also increased our product backlog. Energy storage segment revenue increased by 24.5% to $11 million. This increase was driven primarily by the start of operation of 5 new facilities since the beginning of the year, including Pomona 2, which came online this quarter, coupled with a very strong prices at Rabbit Hill and our new Upton facility in Texas. This increase was partially offset by lower energy rates received at our Kaiser and PJM facilities. Moving to Slide seven. The gross margin of the electricity segment was 31.8%. Electricity gross margin were impacted mainly by the low revenue at Puna and the absence of business interruption at Heber 1 this quarter, as discussed earlier.
In the product segment, gross margin was 18.7% this quarter, compared to 18% in the same period last year. The energy storage segment reported a gross margin of 22.9%, compared to a gross margin of 31.5% in the same period last year. The decline in margin compared to the prior year period, was mainly due to a significantly higher energy rate seen on the East Coast last year. However, this year, we saw a more normalized rate environment with higher prices in ERCOT. Looking at Slide eight, electricity segments generated 90% of our total consolidated adjusted EBITDA in the third quarter. The product segment generated 6%, and the energy segment reported adjusted EBITDA of $5 million, representing almost 4% of total adjusted EBITDA. Reconciliation of EBITDA and adjusted EBITDA are provided in the appendix slide.
Moving to Slide nine. In the third quarter, we recorded $14.9 million in income related to tax benefits, of which $12.5 million was income related to five active tax equity transactions, while the remaining $2.4 million is related to transferable PTC, which were recorded in 2023 under the provision of the Inflation Reduction Act. Also, in the third quarter, we reported $6.6 million ITC benefits in the income tax line, mainly related to the Pomona 2 storage facility that came online in July and is eligible for 40% ITC. We don't anticipate additional ITC benefits during Q4 2023, but as we said before, in the next few years, in line with our growth plan to increase our energy storage portfolio, we expect to continue reporting a lower tax rate overall.
Looking at Slide 10, our net debt as of September 30, 2023, was approximately $1.8 billion. Cash and cash equivalent, and restricted cash and cash equivalent as of September 30, 2023, was approximately $186 million, compared to $227 million as of December 31, 2022. The slide breaks down the use of cash for the nine months, illustrating our ability to reinvest in the business and service our debt. We note that these uses of cash have been funded from our equity offering, cash generated by our operation, and the strong liquidity profile we maintain. Our total debt as of September 30, 2023, was approximately $2 billion, net of deferred financing costs, and its payment schedule is presented on slide 33 in the appendix.
The average cost of our debt portfolio stands at 4.15%, with all of our debt liabilities carry fixed rate, which we believe will help continue position Ormat competitively in the rising global interest rate environment. Moving to Slide 11. As Doron mentioned, in October, we raised $166 million, which include a $43 million sale of tax benefits related to the North Valley, through a tax equity transaction. $73 million short-term commercial paper and $50 million long-term corporate loan. The proceeds from these sources will enable us to finance the newly announced acquisition, as well as support our CapEx requirements to continue with our growth plan. With respect to the new acquisition, we are planning to raise additional long-term corporate debt by the closing of the transaction.
Year to date in 2023, we invested $450 million in CapEx. To advance our growth initiative, we have $673 million available of liquidity to our cash and available undrawn lines of credit. Our total expected capital expenditure for the last quarter of 2023 is $110 million, and it's detailed on slide 34 in the appendix. Overall, Ormat is well-positioned from a capital resource perspective, with access to capital, liquid resources, and additional capital to opportunistically fund accelerated growth. On November 8, 2023, our board of directors declared, approved, and authorized payment of a quarterly dividend of $0.12 per share to all holders of the company, issued and outstanding shares of common stock on November 22, 2023, payable on December 6, 2023. That conclude 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 electricity segment operating portfolio. Generation growth was positively supported by the inclusion of North Valley, the higher generation in our Guadalupe power plant, and the resumption of operation at Heber 1. This increased generation was partially offset by lower generation at Puna. We added 45 MW since the beginning of the year to the electricity segment portfolio, reflecting a 4% increase in total generation capacity. Moving to Slide 14 and 15. In October, we signed the accretive acquisition of Enel assets in the U.S. Upon closing, we will acquire the Cove Fort geothermal power plant in Utah, the Salt Wells geothermal power plant in Nevada, and the Stillwater Triple Hybrid geothermal, Solar PV, and Solar Thermal power plant in Nevada. These three power plants sell approximately 43 MW to the grid.
In addition, we will acquire two solar assets with a total nameplate capacity of 40 MW and two greenfield development assets. For all of these assets, we will pay approximately $271 million. The acquisition is expected to close by the first quarter of 2024, subject to regulatory approvals and customary closing conditions. These assets have collectively generated an annual revenue of approximately $35 million and an annual EBITDA of approximately $24 million for the years 2020 to 2022. Our immediate plan is to enhance and optimize the three geothermal assets by installing Ormat equipment. We expect that the plan on surface upgrade, which will require approximately $55 million dollar capital, will add approximately 17 MW and generate an additional 15 MW of EBITDA by the end of 2025.
In the long term, our plans are to expand the Cove Fort power plant by 20 MW and to explore and potentially develop another greenfield project. Turning to Slide 16 for an update on our product segment backlog, that is currently standing at $192 million. The backlog increased 60% compared to the second quarter of this year and 40% compared to the third quarter of 2022. We were able to sign contracts and orders totaling approximately $150 million since the beginning of the year, including a large contract for the Nga Tamariki project in New Zealand, bringing our backlog to pre-COVID levels, a testament to the resilience and adaptability of our business. Moving to Slide 17. The energy storage segment delivered another strong quarter, supported by the new facilities that came online during the year.
This quarter, we commenced the operation of Pomona 2 in California. We currently have six projects under construction that will contribute 275 MW, or 740 MWh. This quarter, we also signed a multi-year battery supply agreement with Gotion to secure batteries for up to 750 MWh. This contract solidifies our supply chain and gives us confidence in our ability to successfully advance our projects, including the projects that are currently under construction, and achieve our long-term capacity goals. Moving to Slides 19 and 20. The demand outlook for our electricity and storage segments remains strong, and we are well positioned to achieve our multi-year growth plan. We still expect to increase our total electricity portfolio generation by roughly 69% year-over-year.
Additionally, our approximately 1.9-2 GW portfolio target for the year end of 2025 is well on track. Slide 21 and 22 displays the six geothermal and six Solar PV projects currently underway. We completed the repower of the Heber complex that currently is running at 89 MW. We are progressing with the Beowawe and Ijen that will come online next year. In our Solar PV portfolio, we expect Steamboat and Steamboat Hills solar facilities to come online by the end of the year, and the North Valley Solar is now expected in the first half of 2024. Moving to slides 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. Please turn to slide 25 for a discussion of our 2023 guidance.
In the first 9 months of 2023, Ormat has delivered meaningful year-over-year growth across our revenues and Adjusted EBITDA. Heading into the close of the year, we are narrowing our guidance ranges to reflect our performance through 3 quarters and expectations for the fourth quarter. We now expect full-year revenue to range between $825 million to $838 million. Electricity segment revenue is expected to be between $670 million-$675 million, following Puna running at lower capacity and lower energy rates in Q2 and Q3 this year. Product segment revenues are expected to be between $125 million-$130 million, and storage revenues between $30 million-$33 million.
We are also slightly narrowing Adjusted EBITDA guidance with the previous communicated range, anticipating results to be between $480 million-$495 million. We remain confident in our ability to manage our business and assets, to deliver on our guidance, and to drive further growth in 2024 and beyond as we execute our integrated business model. Moving to slides 27-29. We are proud to announce the release this quarter of our 2022 sustainability report. In 2022, our renewable energy portfolio effectively prevented 2.2 million metric tons of CO₂ emissions. This number of avoided emissions is expected to increase every year as we plan to add new clean power plants.
Noteworthy is the impressive 19% reduction in our annual average Scope 1 and Scope 2 greenhouse gas emissions when compared to our 2019 baseline. We have also initiated a comprehensive climate risk analysis and a TCFD, Task Force on Climate-related Financial Disclosure, GAAP analysis process. Our aim is to identify and address material climate-related risks, creating mitigation strategies for each. Simultaneously, we are formalizing an action plan and expect to fully align with the TCFD recommendation. This strategic approach underscores our commitment to responsible climate management. We invite you to explore our complete sustainability report that is readily available on our website. Moving to Slide 31. While the global markets are experiencing some economic challenges, we continue to benefit from the acceleration in demand for renewables in the U.S. and globally.
We are encouraged to see growth throughout all our businesses, and we are confident in our ability to use EBITDA growth, strong returns, and a healthy balance sheet to fund potential and highly accretive acquisitions. Now, before I close, I want to briefly touch upon the war currently taking place in Israel. As you all know, while the majority of our revenues and EBITDA are outside Israel, we do have approximately 550 employees in Israel, and our main product segment, manufacturing facility, and engineering department sit in Israel. While the war has had a profound impact on everyone living in the country, including our employees, I want to assure you that we currently see no impact to the operations of our electricity and storage segment operating assets.
We have reprioritized some of our projects to accommodate our employees in Israel who have been called up to military reserve duty, primarily in our engineering department, but we believe any resulting delays will be minimal. The situation in the region is unsettled, and we will continue to monitor closely and adjust as necessary. I do want to publicly acknowledge and thank our employees in Israel and all around the world for their tremendously hard work during this daunting time. In closing, we remain confident in our business and our growth style. Our focus for the remainder of the year and beyond will be to execute against our capacity target goals, deliver strong results to close out the year, and further expand our geothermal and energy storage portfolio. We are confident we will achieve each of these goals. This concludes our prepared remarks.
Now, I would like to open the call for questions.
At this time, if you would like to ask a question, press star one on your telephone keypad. If you would like to withdraw your question, press star one again. Please hold for your first question. Your first question is from the line of Noah Kaye with Oppenheimer.
Great, thanks for taking the questions. You know, and I should start by acknowledging that, you know, in a very challenging operating environment, in many respects, you guys have executed really well. So, you know, congrats on the strong quarter, you know, the M&A, and some of the other initiatives you have going. I wanted to actually start with Puna and Hawaii. So good to see that, you know, capacity is increasing there. Can you, A, remind us where you think that can get to over coming quarters in terms of total output, and what time frame? And then, B, it looks like there is an increasingly constructive environment for development of additional assets in Hawaii. Can you comment on the development environment there? Thank you.
Okay. Thank you, Noah. Hawaii, as we said, had a lower Q3 2023. We finished drilling the last well, the KS- 22, and today we're generating about 30 megawatts. We have finished the drilling campaign at this stage, and we're monitoring the resource and the wells to see how it is going forward. These days, we're working on the work plan, you know, for next year, and obviously dealing with Puna is part of that, and what kind of workover or dealing we need to do with the well. So at this stage, we are very happy that we passed the 30 megawatt mark, and we hope that we'll be able to maintain it over time.
Other projects in Hawaii, at this stage, we are mainly focusing on our facility. We haven't tried to develop another one in Hawaii at this time.
Okay, thanks. Wanted to switch gears and talk a little bit about tax credit transferability. You know, you had a nice slide there on, on the benefits this quarter. Can you talk a bit more about the benefits that tax credit transferability has brought you in terms of, you know, financing and capital recycling, and what you might expect to see in coming quarters and, and perhaps next year in terms of additional proceeds from, from the credit transfers? Thank you.
So, Noah, this is Assi. Good morning. When we look at this quarter, we see the benefit on the tax transferability in two places. One is on the income attributed to tax equity transaction, where we generated the PTCs, that we later on, we already signed and entered them into a tax equity transaction. But at this point, we can sell them, and as I told you before, we are recording them at 0.090 per dollar. And this quarter, it was slightly over $2 million of benefit. The bigger benefit is coming through the impact on the tax rate. This quarter, we recorded $6.6 million of ITC benefits. All of those transferable ITCs, right now we are in final negotiation to sell them and collect money before year-end.
If we'll do so, we'll collect somewhere around $25 million of, say, ITC and PTC that are transferable. In addition to the tax equity proceeds that we already have in Q4. When we look at the Q4 through the P&L, we expect not to have any ITC benefit because there is no new storage facilities coming online. We do expect to have additional PTC transferable benefit of approximately $2 million as a result of Heber 1 operation. When we look at the next year, 2024, the biggest project that is coming online is the Bottleneck project, that has a total cost of over $100 million. We're still looking today to see what's the better usage of the tax benefits under this asset.
Is it better to enter into a tax equity transaction, or is it better to do an ITC transferable? It depends on the bids that we'll see, because we basically offered it to a few places, I think. Bottom line, in the past, tax benefits that Ormat had, we could not utilize them unless it was a tax equity transaction, and storage had no tax benefit at all. And as we look at it now, this year, only the storage brought us close to $20 million. Next year, it should bring us over $40 million, just the storage benefit. So bottom line, the ITC benefits are bringing us cash and improve net income, and the PTC just allow us to continue and develop assets with much better return than otherwise. So IRA, for us, is quite big.
Very helpful. I'll leave it there. Thank you.
Thank you.
Your next question is from the line of Justin Clare with Roth MKM.
Yeah, thanks for taking our questions. So just wanted to follow up on the improvement you're seeing at Puna, as well as the capacity expansion at Heber, and then it sounds like you're increasing the capacity at Olkaria as well. Can you give us a sense for how this could impact the margin profile? You know, whether in Q4 or just on a kind of run rate basis, what kind of uplift is possible as a result of the improvements here?
Hi, so I will touch each one of them superficially. So, Olkaria, we've been steadily increasing the capacity and the generation over there. We've done a new capacity test in Olkaria. The PPA there is split between capacity and energy. As time passes, we're able to increase revenue. And as you can expect, when we increase revenues, the costs associated with the marginal revenue increase are very low, so the impact to gross margin is very high. And the same goes with Puna. So the same amount of people, you know, can generate 20 MW or 30+ MW, and that's what we're seeing today.
We're almost in the middle of the quarter, and Puna is performing very well. Heber, the 89 MW, as we mentioned, so the last part of the construction in Heber came online the beginning of September. So we expect to enjoy before the full benefit to Heber.
Got it. Okay. And then just on Olkaria, I think earlier in the year, it was at 127 megawatts. Can you share where the capacity stands today? And then, you know, based on your drilling campaign, where do you think the capacity could go for Olkaria, and over what time frame?
Olkaria has been delivering over the last few weeks between 130 to 135, 136 megawatts, depends on the ambient temperature and others, so this is why it is moving along. We are drilling today, unlike Puna, that we finished the drilling campaign in, in Olkaria, we're still drilling another well that we plan to finish in Q1 of next year. Then it needs to be heated up and connected, so it should come online sometime Q2. Then we have a third well that in here that we are also in the process of drilling. I believe that in the second half of next year, we'll see another improvement on top of what we see already now.
Okay. Okay, got it. And then maybe one more just on the, on the product segment. The, the backlog moved up meaningfully here to $192 million. Was wondering if you could just give us a sense for what is the time frame in which you could deliver that backlog and recognize the revenues? And then is the margin profile there in a, you know, 15% to 20% range? I think that's what you've previously talked about, but wanted to check in there.
In general, I would say that the backlog should translate to revenue over 18 months. You know, there might be some projects that a bit shorter or later, but in general, it's, it should be over 18 months. And margins can be a bit higher than the 15 to 20 that you alluded to.
Okay, thank you.
Your next question is from the line of Mark Strouse with JPMorgan.
Yes, thank you very much for taking our questions. I just had one kind of clarification question. The 1.9 to 2 gig 2025 portfolio target, that didn't increase from last quarter, despite the acquisition. I would assume that that's just a function of the acquisition not closing yet, but just wanted to make sure that's the case and something else hadn't slipped out maybe.
Obviously, as you said, until the acquisition doesn't close, it's not counted in any of our numbers. We usually update, unless something changes in February, the guidance on the megawatts we will have. So in February, we'll update. I hope that by that time, we'll already close the Enel acquisition, so the numbers we'll give in February will include the impact of Enel.
Okay. Yeah, that makes sense. Okay, I'll take the rest offline. Thank you.
Thank you.
Your next question is from the line of Julien Dumoulin-Smith with Bank of America.
Hey, good morning, team. Thank you guys very much for the opportunity. Hey, just following up on a couple different questions here. First off, tax credit transferability, just to clarify this, when you think about the opportunity created there, are you rethinking how you think about leverage and appropriate leverage? We've seen some of the folks in the renewable space kind of capitalizing on the credit rating agency latitude, but not sure that's necessarily the same direction for you guys. Love to hear your thoughts on that in terms of rethinking leverage, A, and then B, just as you think about the backdrop of the market on financing, you know, how do you think about financing the latest acquisition here?
Just obviously, with the cash balance at quarter end, the latest acquisition, and the projections over the next few months, so just how do you think about just the timing of capital raises here, and how do you think about the levers, if you will, over the next about six months?
Julian, this is Assi. Good morning. I'll start with the second part of the question. Since the end of the quarter, we already raised $166 million, of which $73 million, which is the commercial paper, at a rate of around just over 6%. We raised $50 million of corporate loan at a rate of around 7%, and we also closed the tax equity transaction for $43 million. Basically, we sold the PTCs of North Valley facilities. So basically, out of the $270 million, $166 million was already financed. The remaining will be done through two corporate loans that we plan to take before closing of the Enel transaction, and those will be at similar rate, the loans that I spoke before.
I think, because of the lower leverage versus many of our U.S. peers that are currently at 5x and 6x EBITDA, and the fact that our future cash flow, the next 14-15 years is already tied to a known PPA, allow us to be very aggressive on the financing of the acquisition and do the financing even before year-end, if we close the deal before year-end. With respect to your first question, when we sell and do tax equity transaction, it does reduce our leverage as it was before. On the other hand, the ITCs that we sell through ITCs, those are basically reducing our overall debt. They are not part of our EBITDA. We have seen some of our peers adding ITCs benefit to the EBITDA calculation.
We did not do it so far. We are looking into it, but that's not part of what we're doing so far. That's why we don't have any disagreement with the rating agencies, because we never included ITC benefits as part of our EBITDA. So overall, we are lower leverage. The financing for the acquisition is most of it already done, and the remaining is on track, and we will still be in the 4x leverage, which is significantly below our U.S. peers.
Indeed, I get your lower leverage strategy. That's why I asked if any of this matters, right? You guys just maintaining leverage. Now, with that said, just to clarify, on the acquisition, it sounds like you're gonna do this fully levered. There's not necessarily an expectation for kind of to rebuild the equity balance for the time being, from what I hear in your response, right?
Correct . As you see, our EBITDA this year is up significantly over last year, which allow us to continue and borrow under the current business. That's why the earlier equity raise that we did already this year allow us to do this transaction without any additional equity plan.
Excellent. If I could just squeeze one more in on contracted storage, just real quickly. I mean, we're seeing some of your peers in the West really pushing forward on the strategy of co-located geothermal and storage, like Coso the other day. How do you think about, you know, potential opportunities to expand interconnect and add storage at existing sites? Just, you know, obviously very, very robust contracting environment in the West, and do you have any comments around that?
Thanks, Julian. It's Doron. So I will say two things. One, there's definitely a very, very strong demand for renewable and specifically geothermal assets in the West. Today, all of our assets are 100% contracted. Whatever electricity we're able to generate from our geothermal facilities, we're able to sell under our existing PPA. So effectively, there's no benefit to store and then to sell later. So this is something that we haven't combined it to. It's something that is always someplace on the table to look into, but so far, economic-wise, we haven't seen the benefits if we can't sell whatever we generate. And playing between the hours with storage doesn't seem to us very economic.
I would say that what we do see from the energy storage in the West are many RFPs for tolling agreements or PPA agreements for storage facilities, like the Bottleneck that we've signed the PPA. And we are bidding into these RFPs, and I hope, and we plan to win some of them. And once we win, we'll obviously update the market.
Thank you, guys. I get what you're saying.
Your next question is from the line of Jon Windham with UBS.
Perfect. Thanks for taking the questions, and I hope you and your team are doing well. Maybe a good question would be, I'd be really interested to just get your thoughts on how ongoing conversations are going with incremental PPAs, both on the geothermal and storage side. Basically, you know, trying to get out the willingness of off-takers to take on higher rates, given the higher financing environment. Appreciate it. Be well.
What we see today is exactly what you said. There's two factors, two vectors operating in the same direction. On one hand, the demand for renewable energy and the requirement by the CPUC in California to add geothermal energy and to bring energy storage. That's on one hand. On the other hand, the increased interest rates are pushing all developers to go with higher, to bid higher pricing, and that's exactly what we see today. We see on the tolling agreement or the PPA agreement for storage, we see higher numbers in the bids that we compete in, in the bids that we are shortlisted or in some that we're not shortlisted, but we see the different numbers, which are higher than what has been over the last year or so.
And in the geothermal, there aren't any new facilities coming online. So whoever has a new facility, it can actually make a reverse bid and bid the facility between the different utilities to get very high pricing. Believe that 80 is a low number today if you have a new geothermal facility.
Appreciate it.
Your next question is from the line of Jeff Osborne with TD Cowen.
Yeah, good afternoon. Most of the questions have been addressed so far, but two that I wanted to dig into was one, on the Gotion supply arrangement. I think there's, you know, certainly been some controversy around the Michigan factory for them. I think in the recent election this week, the entire board of the town was removed. I'm just curious, is the output that you'll be receiving from that facility, or is there other backup plans in the event that the controversy around that site in rural Michigan were not to be built?
So, as far as we know, Gotion is planning to have its facility operating at the end of 2024. We are planning our site to be operating earlier or during the beginning of 2025. So, all the projects that we released for construction that are listed on our presentation will be supplied from Gotion facility in Mexico. I hope that once they will get the relevant approval and finish building their facility in the U.S., the future projects will be from the U.S. and will be entitled to an additional 10% ITC. But this is, as you said, it's in construction, so we don't have the facility yet, but the current ones are not from them.
So for 2024 and 2025, you wouldn't get the 10% adder for domestic batteries, but you could get it for energy communities. Is that the right way to think about the storage business?
Yes, that's it.
Got it. Then lastly, Are you folks testing or have any thoughts on some of the new drilling techniques that are out there, that, you know, might expand the, the addressable market for geothermal?
Look, we follow very closely all of these new drilling techniques. It is something that every few years come back into play. People are looking into investing its money into it. At this stage, we haven't seen the right technology that can expand significantly the geothermal market without other limitations that they have. But we're definitely looking closely. We hope one of them will be successful. We are in discussions, obviously, and meeting with all of them in the different conferences, and if any of them will be successful, we'll be very happy to utilize it in our product, in our future development project, as well as in our product segment. Perfect. Appreciate the thoughts. That's all I had. Thank you.
As a reminder, to ask a question, press star one on your telephone keypad. Your next question is from the line of Ryan Levine with Citi.
Hey, everybody. A couple of more specific questions. In terms of the West Coast generation, in terms of the capacity or utilization factor, are you noticing any trends in terms of what that capacity factor is over time, or what that will be on a go-forward basis?
As we said, we're operating our assets 24/7, and the main time that they have downtime is through some maintenance things that we have. And these are, you know, big power plants, so a lot of mechanical items. We do issue every year on our 10-K, the specific availability of each region. Heber just came online, you know, will increase obviously the generation that we will show this year, because it was off for almost all of last year. But per specific facility, we don't see anything different this year compared to previous years.
Okay. That's it for me today. Thank you.
At this time, there are no further questions. I will now hand the presentation back over to the presenters for any closing remarks.
Thank you all for joining us today. Q3 was a very strong quarter for us, with significant growth in the revenue, the adjusted EBITDA, and our earnings. And we look forward to deliver on our growth target as the year passes, going to 2024 and onward. Thank you.
This concludes today's call. Thank you for joining. You may now disconnect your lines.