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Note 8 - Property, Plant and Equipment and Construction-in-process

12 Months Ended

Dec. 31, 2017

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

NOTE

8

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

Property, plant and equipment

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

		December 31 ,
		2017				2016
		(Dollars in thousands )
Land owned by the Company where the geothermal resource is located		$	32,178			$	31,904
Leasehold improvements			3,984				3,848
Machinery and equipment			182,121				152,821
Land, buildings and office equipment			31,128				28,634
Automobiles			12,596				11,161
Geothermal and recovered energy generation power plants, including geothermal wells and exploration and resource development costs:
United States of America, net of cash grants and impairment charges			1,744,728				1,658,195
Foreign countries			700,498				541,626
Asset retirement cost			10,563				8,669
			2,717,797				2,436,858
Less accumulated depreciation			(983,106	)			(880,480	)
Property, plant and equipment, net		$	1,734,691			$	1,556,378

Depreciation expense for the years ended

December 31, 2017,

2016,

and

2015

amounted to

$98.8

million,

$94.8

million and

$95.2

million, respectively. Depreciation expense for the years ended

December 31, 2017,

2016

and

2015

is net of the impact of the cash grant in the amount of

$5.5

million for each of those years.

U.S. Operations

The net book value of the property, plant and equipment, including construction-in-process, located in the U.S. was approximately

$1,447.4

million and

$1,376.1

million as of

December 31, 2017

and

2016,

respectively. These amounts as of

December 31, 2017

and

2016

are net of cash grants in the amount of

$133.2

million and

$138.7

million, respectively.

Foreign Operations

The net book value of property, plant and equipment, including construction-in-process, located outside of the U.S. was approximately

$580.8

million and

$487.0

million as of

December 31, 2017

and

2016,

respectively.

The Company, through its wholly owned subsidiary, OrPower

4,

Inc. (“OrPower

4”

), owns and operates geothermal power plants in Kenya. The net book value of assets associated with the power plants was

$326.1

million and

$315.0

million as of

December 31, 2017

and

2016,

respectively. The Company sells the electricity produced by the power plants to Kenya Power and Lighting Co. Ltd. (“KPLC”) under a

20

-year PPA.

The Company, through its wholly owned subsidiary, Orzunil I de Electricidad, Limitada (“Orzunil”), owns a power plant in Guatemala. On

January 22, 2014,

Orzunil signed an amendment to the PPA with Instituto Nacional de Electrificacion (“INDE”), a Guatemalan power company, for its Zunil geothermal power plant in Guatemala. The amendment extends the term of the PPA from

2019

to

2034.

The PPA amendment also transfers operation and management responsibilities of the Zunil geothermal field from INDE to the Company for the term of the amended PPA in exchange for a tariff increase. Additionally, INDE exercised its right under the PPA to become a partner in the Zunil power plant with

a

3%

equity interest. The net book value of the assets related to the power plant was

$9.9

million and

$12.2

million at

December 31, 2017

and

2016,

respectively.

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

$40.7

million and

$40.3

million at

December 31, 2017

and

2016,

respectively.

The Company, through its wholly owned subsidiary, GeoPlatanares, signed a Build, Operate and Transfer (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 a

30

-year PPA. The net book value of the assets related to the power plant was

$140.3

million and

$67.5

million at

December 31, 2017

and

2016,

respectively.

The Company, through its subsidiary, GB, owns a power plant in Guadeloupe. The net book value of the assets related to the power plant was

$24.9

million and

$20.3

million at

December 31, 2017

and

2016,

respectively.

GB sells the electricity produced by the power plants to EDF, the French electric utility, under a

15

-year PPA.

Construction-in-process

Construction-in-process consists of the following:

		December 31,
		2017				2016
		(Dollars in thousands)
Projects under exploration and development:
Up-front bonus lease costs		$	17,018			$	17,385
Exploration and development costs			46,154				36,359
Interest capitalized			703				703
			63,875				54,447
Projects under construction:
Up-front bonus lease costs			27,473				37,713
Drilling and construction costs			198,943				202,211
Interest capitalized			3,251				12,338
			229,667				252,262
Total		$	293,542			$	306,709

		Projects under Exploration and Development
		Up-front Bonus Lease Costs				Exploration and Development Costs				Interest Capitalized				Total
		(Dollars in thousands)
Balance at December 31, 2014		$	26,618			$	45,977			$	836			$	73,431
Cost incurred during the year			37				10,104				869				11,010
Write off of unsuccessful exploration costs			(164	)			(1,415	)			—				(1,579	)
Transfer of projects under exploration and development to projects under construction			—				(18,940	)			(1,002	)			(19,942	)
Balance at December 31, 2015			26,491				35,726				703				62,920
Cost incurred during the year			1,514				25,165				—				26,679
Write off of unsuccessful exploration costs			(380	)			(2,637	)			—				(3,017	)
Transfer of projects under exploration and development to projects under construction			(10,240	)			(21,895	)			—				(32,135	)
Balance at December 31, 2016			17,385				36,359				703				54,447
Cost incurred during the year			—				11,224				—				11,224
Write off of unsuccessful exploration costs			(367	)			(1,429	)			—				(1,796	)
Balance at December 31, 2017		$	17,018			$	46,154			$	703			$	63,875

		Projects under Construction
		Up-front Bonus Lease Costs				Drilling and Construction Costs				Interest Capitalized				Total
		(Dollars in thousands)
Balance at December 31, 2014		$	27,473			$	187,545			$	8,273			$	223,291
Cost incurred during the year			—				140,977				3,556				144,533
Transfer of projects under exploration and development to projects under construction			—				18,940				1,002				19,942
Transfer of completed projects to property, plant and equipment			—				(196,995	)			(4,856	)			(201,851	)
Balance at December 31, 2015			27,473				150,467				7,975				185,915
Cost incurred during the year			—				116,247				6,510				122,757
Transfer of exploration and development projects to projects under construction			10,240				21,895				—				32,135
Transfer of completed projects to property, plant and equipment			—				(86,398	)			(2,147	)			(88,545	)
Balance at December 31, 2016			37,713				202,211				12,338				252,262
Cost incurred during the year			—				231,926				7,300				239,226
Transfer of completed projects to property, plant and equipment			(10,240	)			(235,194	)			(16,387	)			(261,821	)
Balance at December 31, 2017		$	27,473			$	198,943			$	3,251			$	229,667

X

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X

- Definition

The entire disclosure for long-lived, physical assets used in the normal conduct of business and not intended for resale. Includes, but is not limited to, accounting policies and methodology, roll forwards, depreciation, depletion and amortization expense, including composite depreciation, accumulated depreciation, depletion and amortization expense, useful lives and method used, income statement disclosures, assets held for sale and public utility disclosures.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 360
-URI http://asc.fasb.org/topic&trid=2155823

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