1

MMaammmmootthh PPaacciiffiicc,, LLPP.. Purchase Price Allocation (PPA)

****

Prepared for

OOrrmmaatt iinndduussttrriieess,, LLttdd

MMaarrcchh 22001111

2

To:

Ormat Industries Ltd. (Hereinafter: “Ormat”)

Dear Sirs,

As per your request, we have conducted a review and valuation of some of the

acquired intangible and tangible assets of Mammoth Pacific, LP. (Hereinafter:

“Mammoth” or "the company"), assisted by Duff & Phelps, LLC ("D&P"), as of

August 2nd, 2010 as a result of the acquisition of Mammoth by Ormat

Technologies, Inc (Hereinafter: ormat). The closing date of this agreement is

August 2nd, 2010 (“valuation date” and/or “transaction date”).

The objective of this valuation is to provide our opinion of the purchase price

allocation (hereinafter: “PPA”) of the intangible assets of Mammoth at the

valuation date. It should be noted that valuating the company's intangible

asset - goodwill (if such exists) is not the objective of this valuation but rather a

byproduct of this opinion and other purchase information (purchase price,

accounting owner's equity at purchase date and more).

We understand that our findings will serve to aid your management in

allocating the purchase price determined in the transaction to tangible and

intangible assets purchased, for the purpose of financial reporting in

conjunction with generally accepted accounting practices. This valuation report

is intended solely for information and use by Ormat’s management, its

independent auditors and legal counsels of companies involved. This opinion

should not be used, distributed, quoted or referred to in any manner for any

other purpose, including for listing, purchase or sale of securities, however it

may be submitted or referred to, in whole or in part, in any registration report

or in documents submitted to stock exchange authorities, subject to our explicit

written consent. With regard to this matter, we are aware that findings in our

opinion can be used for public reports submitted to the Securities Authority in

Israel.

The fair value estimate must take into consideration the price of similar assets

and the result of valuation method, if they were available in this case. The

3

method selected to set the fair value must be at par with the IFRS definition of

fair value. The method must include assumptions that the market participants

would use their own estimates for fair value, future revenues, future expenses

and discount rates (if applicable).

For the purpose of financial reporting, the fair value of an asset is defined as

the amount at which the asset may be purchased or sold in a transaction

between willing parties, as opposed to the case of forced sale or company

dissolution. Market prices bid in active markets are the best evidence to fair

value, and will be used as basis for measuring, if available. If no market price

is available, the fair value estimate should be close to the price at which the

asset would be expected to be purchased or sold in a current transaction

between willing parties, and the price will be based on the best available

information under these circumstances.

Restriction of Liability

Our opinion is intended for the use of Ormat’s management. Under no

circumstances should we bare any liability to a third party that will receive our

opinion with our consent, as mentioned before.

For the purpose of this work, the Company has given us the acquisition

agreement, historical audited financial statements, unaudited financial

information and other documents and information.

In formulating its opinion, Giza-Singer-Even Ltd. (“Giza-Singer-Even”)

assumed and relied on the accuracy, completeness and currency of

information obtained from the Company, and D&P including financial data and

forward-looking information. Giza-Singer-Even is not responsible for

independent examination of the information it has obtained, and therefore has

not conducted independent examination of said information, other than

general, prima facie reasonability tests.

In this opinion we have made reference to forward-looking information

provided to us by Company’s management. Forward-looking information is

uncertain, future-oriented information based on information available to the

Company as of the valuation date, including expectations or intentions by

4

Company management as of the valuation date. Should these estimations by

company management fail to materialize, actual results may materially differ

from results estimated or inferred from this information, as much as it has been

used in the valuation.

Furthermore, the opinion itself contains forward-looking information, which

reflects our estimates for various parameters based on information available to

us. Should these estimates not materialize, actual results may materially differ.

Financial opinion is not consider an exact science, and is supposed to reflect,

in a reasonable and fair manner, the situation as of a given time, based on

known data, assumptions and estimates made. Changes to major variables

and/or to information may change the basis for these assumptions and,

therefore, may also change the conclusions accordingly.

This valuation is not a due diligence and it does not purport to include all

information, tests or any other information included in a due diligence,

including checking of company contracts and agreements. Note that this

opinion does not constitute legal advice or opinion. We have interpreted

various documents reviewed solely for the purpose of this opinion.

The information in this opinion does not presume to include the complete

information required by a potential investor, and is not intended to determine

the value of the Company or its assets for an individual investor. Different

investors may have different goals, considerations and testing methods based

on other assumptions, and accordingly the price they would be willing to pay

for the Company and/or its assets will vary.

This opinion does not constitute an overall valuation of Mammoth.

We confirm that we have no personal interest in the Company, nor do we have

any personal interest in the transaction described herein, except for the

commission paid to us for preparation of this opinion. We should note that we

were not party to negotiations in conjunction with the transaction described

herein.

From time to time we conduct various paid financial work for the buyers and

for its shareholders and/or companies held by shareholders and/or affiliated

5

there with. We have no personal interest in shares, and our fee for this work is

not contingent on the results of this valuation.

In conjunction with this opinion, the buyers has committed to Giza-Singer-Even

as follows: Should a lawsuit be filed against Giza-Singer-Even, demanding

payment of any amount to a third party by a legal proceeding with regard to a

cause which may arise, directly or indirectly, from this opinion, the buyers shall

indemnify Giza-Singer-Even for any reasonable expenses incurred by Giza-

Singer-Even for legal representation, legal counsel, professional consulting,

defense against legal proceedings, negotiations etc. The buyers shall also

indemnify Giza-Singer-Even for any amount it would be required, under legal

proceedings, to pay to any third party. The commitment to indemnify shall not

apply if Giza-Singer-Even acted with extremely fundamental negligence and/or

malice aforethought with regard to provision of services in conjunction with this

opinion.

6

Details of valuator

Valuating company: Giza-Singer-Even Ltd. is a private business consulting

firm, established in 2004. It is the result of the merger of Giza Financial

Consulting, founded in 1985, and of Singer-Even, established in 1992. It is one

of the largest, leading, independent financial consulting companies in Israel.

Giza-Singer-Even provides consulting for its customers on: Business valuation

and analysis, complex economic and financial models, financing strategy for

companies and projects, development and implementation of innovative

financing instruments (such as securitization), assistance in business and

financing negotiations, business plan preparation, expert opinions and more.

Valuation appraiser: Prof. Kraizberg is an expert in risk management, valuation

of contingent assets, debt valuation and real estate finance. Prof. Kraizberg is

currently responsible for all methodological aspects at GSE and is a Professor

of Finance at various universities.

Sincerely yours,

Giza Singer Even Ltd.

March 17th, 2011

7

Table of Contents

Subject Page

Chapter 1 - Introduction 8

Chapter 2 - Transaction Description 10

Chapter 3 - Company's Profile 11

Chapter 4 – Analysis of Business results 15

Chapter 5 - Valuation Methodology 17

Chapter 6 - Cost of capital and discount rate 25

Chapter 7 – Summary 29

Exhibits 30

8

Chapter 1 - Introduction 1 Opinion Objective

The objective of this valuation is to provide our opinion of the purchase price

allocation (hereinafter: “PPA”) at the valuation date following Ormat's purchase

of Mammoth's shares.

1.1 Methodology of valuation

The method used for valuation of the fair value of the intangible assets is in

conformance with guidelines of the IFRS and particularly of the following

publications:

1. IFRS 3 (Revised) – “Business Combinations".

2. AICPA Practice Aid Series: "Assets Acquired in a Business

Combination to Be Used in Research and Development Activities: A

Focus on Software, Electronic Devices, and Pharmaceutical Industries".

1.2 Major information sources and work procedures

In the preparation of this opinion we had contacts with the following

management representatives of ormat and D&P:

Mr. Joseph Tenne, CFO, Ormat industries, Ltd

Mr. Eyal Hen, Ormat Technologies, Inc.

Mr. Nir Yahav, Ormat Technologies, Inc.

Mr. Joseph Omoworare, Valuation Services director, Duff & Phelps

The major information sources used in preparation of this opinion are:

Financial reports in accordance to the closing date (unaudited).

Annual financial reports of 2006 – 2009.

Clarifications and data provided to us by Ormat's management.

9

Power Purchase Agreements (“PPAs”) related to the Subject assets.

Purchase agreement.

1.3 Summary of the purchase price allocation:

Section USD (in thousands) Consideration 72,500 Original 50% interest - Fair Value 64,948 Total consideration (rounded) 137,500

Assets and Liabilities acquired Non-Operating Assets and Liabilities *7,684 Existing PP&E 23,000 Replacement PP&E 79,000 CD4 Development 28,000 Total Identified Assets (rounded) 137,500

Excess purchase price to be allocated 0

Allocation: Power Purchase Contracts 0 Goodwill ** 0

* We estimated that the Fair Value does not differ materially from book value. **Goodwill was calculated using the "residual method". The value may change after attributing deferred income taxes.

1.4 Original 50% interest - Fair Value calculation

Asset Fair Value

Purchase Price for Remaining 50% Interest 72,500

Less: Non-Operating Assets and Liabilities of 50% Interest )3,842(

Purchase Price for Operating Assets - Remaining 50% Interest 68,658

Estimated Control Premium 11%

Implied Enterprise Value of Original 50% Interest (less NWC) 61,106

Plus: Non-Operating Assets and Liabilities of 50% Interest 3,842

Implied Enterprise Value of Original 50% Interest 64,948

10

Chapter 2 - Transaction description

Description of the transaction:

Ormat's wholly owned subsidiary, Ormat Nevada Inc., signed an agreement to

acquire Constellation Energy’s 50% stake in the partnership that owns the

geothermal power plants at the Mammoth complex for a purchase price of

$72.5 million. Following the acquisition, Ormat will become the sole owner of

the land, power plants, and associated equipment comprising the Mammoth

complex, including the rights to over 10,000 acres of undeveloped federal

lands.

Holding Structure:

Ormat's holding structure (before the transaction):

OrmatTechnologies, Inc

OrmatNevada Inc.

Ormat Funding Corp

OrMammothInc. GP

OrMammothInc. LP

100%

100%

100%100%

49%1%

Mammoth‐Pacific, L.P.

CD1 +CD2

50%

Constellation Energy Inc

100%

After the transaction, Ormat wholly owns Mammoth-Pacific, L.P

11

Chapter 3 – Company's Profile

1. Description of main assets

1.1. Existing assets

Mammoth-Pacific, L.P., a California limited partnership (the

“Partnership”), owns and operates three existing geothermal electric

generation plants (located near the city of Mammoth Lakes, California),

which were completed in 1985 and 1990 and have a generating

capacity of approximately 30 MW.

The Mammoth complex comprises land, power plants, and associated

equipment, including the rights to over 10,000 acres of undeveloped

federal lands. Leases for federal lands are maintained through annual

payments to the federal government.

The plants are designated Mammoth Pacific I (“G1”), Mammoth Pacific

II (“G2”), and Pacific Lighting Energy Services (“G3”). G1 has a gross

output rating of 9 MW and G2 and G3 are rated at 13 MW each for a

total gross capacity of 35 megawatts (“MW”). However, in recent years,

the actual net capacity produced has been closer to 30 MW. G1 began

operation in 1985 and G1 and G2 began operation in 1990. All three

plants utilize isobutene binary power cycles to convert geothermal

energy to electrical energy.

The Partnership’s power plant facilities are Qualifying Facilities under

the Public Utility Regulatory Policies Act of 1978 (“PURPA”). The power

purchase agreements (“PPAs”) for certain such facilities are dependent

upon their maintaining Qualifying Facility status.

12

1.2. Replacement Geothermal Power Plant

Beginning in 2012, Ormat plans to spend approximately $64 million to

replace the Existing PP&E. The project will replace equipment which is

approximately thirty years old, and is expected to increase the capacity

of the Existing PP&E to approximately 32 MW. This Replacement PP&E

is expected to add significant operational life to the facility. As a result of

our analysis, we estimate the RUL of the Replacement PP&E to be

approximately 30 years.

1.3. Power purchase agreements

The plants operate under three separate power sales agreements and

the geothermal fluid is supplied pursuant to a resource lease held by

Mammoth. Mammoth entered into an Amended and Restated Power

Purchase Agreement with Southern California Edison (“SCE”) in

December 1986. The term for the G1 contract to sell energy and

capacity is 30 years, which ends in 2015.

Mammoth entered into a Long Term Power Purchase Agreement with

SCE in April 1985 for the purchase and sale of the capacity and net

electrical output of G2. The term for the G2 contract to sell energy and

capacity is 30 years, which ends in February 2020.

Mammoth entered into a Long Term Power Purchase Agreement with

SCE in April 1985 for the purchase and sale of the capacity and net

electrical output of G3. The term for the G3 contract to sell energy and

capacity is 30 years, which ends in February 2020.

1.4. CD4 Geothermal Development Project

Mammoth also owns the CD4 geothermal project, which is a 33 MW

geothermal development near the existing Mammoth power plant.

Ormat plans to spend approximately $116 million to develop the project,

which is scheduled to begin commercial operations mid 2013

13

2. Geothermal activity

2.1. General

Geo (earth) thermal (heat) energy is a replacement product of fossil

fuels. The Partnership's geothermal power plants use the earth’s natural

heat to generate electricity that is environmentally sound and

sustainable.

The production process starts with Water from rain and snow melt flows

into the ground and is heated by hot rocks that lie beneath the earth’s

surface. This steam and hot water then collects in underground

reservoirs, if the proper geologic conditions are present. Geothermal

reservoirs are common along areas where the earth’s tectonic plates

meet or an area referred to as the “Ring of Fire". In order to use this hot

water and steam to generate electricity, wells are drilled into the

reservoirs which might be hundreds or thousands of feet under the

earth’s surface.

The geothermal production wells then move the hot fluid to the power plant

and convert the thermal energy of the water to electrical energy. After

providing its heat for production, the geothermal fluid is injected into the

reservoir.

2.2. Industry`s Trends and Future Development

The Geothermal Energy Association (“GEA”) expects geothermal

industry growth to continue for the foreseeable future. Although the

amount of geothermal capacity in 2010 is not expected to reach 2009

levels, geothermal projects in advanced phases of development

abound. GEA estimates that 500 to 700 MW of geothermal projects will

enter advanced phases of construction between the end of 2010 and

through 2011. An increasing number of these projects are located in

California and especially Nevada, where strong state policies and a

geothermal friendly regulatory structure support strong industry growth.

14

Overall, strong state renewable portfolio standards, federal tax

incentives, and stimulus funding continue to drive growth in the

geothermal industry. Nevada and California are clear leaders in

geothermal power development and have substantial renewable

standards.

Recovery and Reinvestment Act (“ARRA”) funding still being less than

50% complete, GEA anticipates that stimulus funding will continue to be

a significant driver behind geothermal development through 2011.

2.3. Mammoth-Pacific`s Geothermal Resources

Mono County, California is the home of the Long Valley Caldera, which

covers an area of approximately 10 miles by 20 miles. The caldera was

formed about 730,000 years ago by a cataclysmic volcanic eruption.

This eruption ejected an estimated 150 cubic miles of material (This can

be compared to the more recent eruption of Mount St. Helens in

Washington State, which ejected an estimated 0.67 cubic miles of

material).

The geothermal system in the caldera is most noticeable in surface

expressions such as steam fumaroles and mud pots on the flanks of the

resurgent dome. The Casa Diablo Geothermal Field supplies the

Mammoth Pacific Power Plants with hot geothermal fluid and is located

at the southwest edge of the resurgent dome. It is thought that the heat

source for this geothermal system is under the volcanic domes in the

northwest part of the caldera.

15

Chapter 4 – Analysis of business results

1 Balance sheet

Below are details from Mammoth’s balance sheet as of 31.07.10 (unaudited)

and as of 31.12.09 (audited) U.S. dollars in thousands:

Statement of financial position - Consolidated 31/07/2010 31/12/2009

(unaudited) (audited)

Assets

Current assets Cash and cash equivalents 7,983 16,257 Trade receivables 3,239 2,800 Prepaid expenses and other 254 200

Total current assets 11,476 19,257 Non-current assets Deposits and other 622 621 Property, plant and equipment, net 60,029 63,707 Construction -in-progress 445 399

Total non-current assets 61,096 64,727

Total assets 72,572 83,984 Liabilities

Current liabilities Accounts payable and accrued expenses 845 401 Due to related entities 227 257

Total current liabilities 1,072 658 Non-current liabilities Asset retirement obligation 3,342 3,196

Total non-current liabilities 3,342 3,196 Total liabilities 4,414 3,854 Net assets 68,158 80,130

Equity Partners' capital 68,158 80,130

Total equity 68,158 80,130

16

2 Statement of operations:

Below are details from Mammoth’s statement of operations for the period

1-7/2009 and 1-7/2010 (unaudited), U.S. dollars in thousands:

Income statement Seven Months Ended July 31,

2010 2009

Revenues Energy 9,079 8,619 Capacity 2,270 2,416 Bonus 135 167 Total revenues 11,484 11,202

Cost of revenues Operating expenses 4,794 4,239 Operator fees 175 175 Depreciation and accretion 3,845 3,755

Total cost of revenues 8,814 8,169 Gross Margin 2,670 3,033 General and administrative expenses 146 146

Operating income 2,524 2,887 Other income (expense)

Interest income 5 14 Other -1 3 Total other income (expense) 4 17 Net income 2,528 2,904

17

Chapter 5 – Valuation Methodology

1 Overview

In general, accounting standards regarding “business combinations” provide

examples for assets which meet requirements for recognition as intangible

assets separate from goodwill, as follows:

1. Base (or core) technologies and process technologies.

2. Intangible assets associated with customers (usually, customer base).

3. Brand, trademarks, trade names and intellectual property associated

there with.

4. Commercial agreements which are not at market conditions, as at the

acquisition date.

5. Non-competition agreements.

In determining the fair value for each intangible asset, valuations must account

for specific asset factors, including:

1. The economic benefit arising from the asset.

2. The asset's remaining economic life.

3. The asset's risk profile (relative to the company’s overall operation risk).

2 Measurement of fair value

IFRS 3 (Revised) does not provide guidance on how to measure fair

value. According to IFRS 3 (Revised), fair value is the amount for which

an asset could be exchanged, or a liability settled, between

knowledgeable, willing parties in an arm’s length transaction.

18

3 Summary of intangible assets valuated

The designated assets were valuated based on their fair value, as defined

in the introduction to this report. Before determining our opinion of the fair

value of intangible assets, the following had been considered, along with

other relevant factors:

1. Scope, nature and usefulness of the intangible assets.

2. Revenue generation or cost reduction attributes of the intangible assets.

3. Nature and timing of functional or economic obsolescence for each

intangible asset.

4. The relative risk and uncertainty associated with investment in

intangible assets.

In selecting the proper method for valuation of the intangible assets, we

have accounted for the three traditional methods for such valuation: The

market approach, revenue approach and cost approach (for further

explanation see the following section).

As a result of our review, we did not identify any intangible assets which

meet the criteria for separate recognition (as required by applicable

accounting standards).

The following potential categories of intangible assets were reviewed and

met substantial or accounting criteria in order to form an asset:

Purchase power agreements which are not at market conditions

The partnership has three power purchase agreements (PPAs) - one

that expires in 2015 and other two that expire in 2020. The PPAs are

structured with Short Run Avoided Cost (“SRAC”) pricing, which is based

on a fixed gas price assumption through April 2012. After April 2012, the

SRAC pricing assumes a floating, market based gas price assumption,

which is expected to be significantly lower than the fixed gas price

assumption. As such, as of the Valuation Date, less than two years are

left in the fixed energy price period, and consequently, the overall effect

of the higher energy prices is offset by a lower expected power price after

19

April 2012. In addition to the energy payments under the SRAC pricing

regime, Ormat also receives certain firm capacity and bonus payments

established by the contracts. Bonus capacity payments are earned based

on actual capacity available during certain peak hours.

Based on a comparison between the pricing in the Southern California

Edison (SCE) agreements and pricing in new contracts being negotiated

by Ormat proximate to the Valuation Date, these contracts are at or near

market terms, and therefore have no Fair Value. Accordingly, the PPAs

were considered as separable intangible assets but have not been

assigned a Fair Value.

Bureau of Land Management Leases

Mammoth also operates under certain geothermal leases with the Bureau

of Land Management (“BLM”). These parcels, typically obtained through

sealed bids or competitive auctions, are purchased primarily for their

anticipated geothermal energy resource potential. The purchasing entity

pays an initial fee, the bonus payment, and then pays annual rents on the

property until the operation shifts to a production phase when its converts

to pre-determined royalty payments. This process is akin to a power

generation development project at an early stage of development. It is

typically very difficult to find good comparable transactions for these

types of geothermal leases, as each resource is different (e.g. energy

potential, resource life, etc). Additionally, even if sufficient information

were available, the value and life of the lease is tied to that of the PP&E,

as it would be hard to imagine either having any value without the other.

As such, we have assumed that the BLM leases are at market terms

(indicating $0 Fair Value) or have a de-minimus Fair Value as of the

Valuation Date.

Operation and Maintenance Agreement

20

Mammoth also operates under an operating and maintenance (“O&M”)

agreement, dated January 1, 1995, which provides for the operation and

maintenance of G1, G2, and G3 by Ormat Nevada, Inc. The initial term of

the agreement was three years, and the agreement is subject to

automatic three-year extensions unless notice of termination is provided

no later than 30 days prior to end of the term by Mammoth or 180 days

prior to the end of the term by Ormat Nevada, Inc. Additionally, either

party can terminate the agreement with 60 days notice, subject to

requirements for extension if necessary to allow for retention of a new

operator. As such, because of the bilateral nature of this agreement, and

because is it very difficult to find market comparable pricing, we have

assumed that the O&M Agreement is at market terms (indicating $0 Fair

Value) or has a de-minimus Fair Value as of the Valuation Date.

4 Methodology of valuation

According IFRS 3 (Revised), a business combination may involve the

purchase of the net assets, including any goodwill of another entity rather

than the purchase of the equity of the other entity. Such a combination

does not result in a parent-subsidiary relationship

Acquiring assets in a business combination requires ascertaining of the

cost of the acquired company (that is, purchase price) and assigning that

cost to the assets acquired and liabilities assumed on the basis of their fair

value.

In accordance with the accounting publications, there are three principal

methodological approaches to valuating the tangible and intangible assets

and liabilities.

The characteristics of the asset must be carefully considered, in order to

choose which of the following approaches fits best the evaluated asset:

1. The market approach – in accordance with this approach, the fair

value is best valued by the prices recently paid for similar assets.

Adjustments to the quoted market prices are made in order to reflect the

21

differences in condition and use period between the evaluated asset

and the similar assets.

2. The income approach – in accordance with this approach, the fair

value is dependent on the current value of the future economical

usefulness derived from ownership of the asset. In the center of this

approach lies the analysis of the potential profits represented by the

asset and the basic risks involved in receiving these profits. The

economical value of this futuristic economical usefulness is evaluating

the net DCF using the acceptable return rates for similar assets in the

market.

3. The cost approach – in accordance with this method, the fair value is

evaluated using the replacement costs of the asset net of the

depreciation, which expresses the functional, economical or

technological depreciation of the current asset in comparison to the new

asset. The valuation results from the cost method can be considered as

the upper boundary of the value in the cases where the asset can easily

be replaced or renewed; since no careful investor will purchase an

existing asset for more than the price it costs to produce a new

equivalent asset.

5 Application of the Income Approach

We used the income approach to evaluate the partnership`s assets. To

estimate the Fair Value of the existing and replacement PP&E, a DCF

analysis was utilized. In order to estimate the Fair Value of just the Existing

PP&E (and assuming no replacement), we created a DCF analysis using

Management’s cash flows solely attributed to the Existing PP&E.

Consequently, we estimated the Fair Value of the replacement PP&E by

subtracting the Fair Value of the Existing PP&E from the Fair Value of the

Existing and Replacement PP&E combined. As such, we were able to

estimate the Fair Value of both components of the PP&E that will service

the SCE contract requirements and use the base geothermal resource at

Mammoth.

22

Existing & Replacement PP&E assumptions:

o Production - Management provided forecasted annual production

estimates which were considered to be reasonable and appropriate

and in line with independent engineering reports.

o Revenues - Renewable energy power purchase contract prices in

California are based on the market price referent (“MPR”), the most

recent published price of which was for 2009, as of the Valuation Date.

As new market contract prices would be based on the 2010 MPR price,

we derived an estimated 2010 market contract price by discounting the

applicable 2009 25-year (longest published term) MPR contract price

for a project commencing operations in 2011 by 15 percent in order to

estimate the 2010 MPR price for the same term. The discount

represents the effect of the lower gas prices, the primary driver of MPR

prices, observed in 2010 compared to those of 2009. The derived 2010

market contract price was then inflated by 1 percent for the period

2010 and thereafter.

o Operating Costs and Capital Expenditures - Management provided

a forecast operating expenses and capital expenditures; however we

made certain additional adjustments to the forecast. We inflated the

forecasted operating expenses by 2.5 percent each year, and

increased the forecasted capital expenditures by 10 percent in order to

account for contingency costs.

o Production Tax Credits - We estimated annual production tax credit

cash flows by multiplying annual production, as applicable, by

Management’s provided forecast production tax credit prices. These

cash flows were included in the 10 years following Ormat’s planned

capital expenditures in the DCF analysis of the Existing and

Replacement PP&E.

o Existing Power Plant - The DCF analysis of the Existing PP&E was

performed in substantially the same manner as the DCF for the

Existing and Replacement PP&E described above, however production

23

tax credits were not applicable to the Existing PP&E and the RUL

reflects the useful life without the capital improvements.

CD4 Geothermal Development Project assumptions:

o Forecasting Revenues and Production - Management provided

forecasted annual production estimates which were considered to be

reasonable and appropriate and in line with independent engineering

reports. To estimate annual revenues for the CD4 geothermal

development project, we multiplied the estimated annual production by

market contract all-in prices, that is, a prices including elements of both

energy and capacity pricing. As the CD4 geothermal development

project currently does not have a contract but is expected to operate

under a contract environment, our contract all-in price represents an

estimate of the contract price level the CD4 geothermal development

project could expect to receive.

Similar to the Existing and Replacement PP&E, we also estimated an

MPR contract price for CD4. Given that CD4 is expected to commence

operations in 2013, our 2013 market contract price was derived by

discounting the applicable 2009 25-year MPR contract price for

projects beginning in 2013 by 15 percent in order to estimate the 2010

MPR price for the same term. The discount represents the effect of the

lower gas prices, the primary driver of MPR prices, observed in 2010

compared to those of 2009. The derived 2013 market contract price

was then inflated by 1 percent for the period 2010 and thereafter.

o Forecasting Operating Costs & Capital Expenditures -

Management provided forecast operating expenses and capital

expenditures, however we made certain additional adjustments to the

forecast. We inflated the forecasted operating expenses by 2.5 percent

each year, and increased the forecasted capital expenditures by 10

percent in order to account for contingency costs.

o Production Tax Credits - We estimated annual production tax credit

cash flows by multiplying annual production, as applicable, by

24

Management’s provided forecast production tax credit prices. These

cash flows were included in the 10 years following Ormat’s planned

capital expenditures in the DCF analysis of the CD4 geothermal

development project.

6 Tangible assets and liabilities

Tangible assets and liabilities include the following:

o Current assets, excluding inventory (cash, negotiable securities, trade

receivables, other receivables etc.);

o Fixed Assets;

o Other assets;

o Current liabilities (credit from banks, suppliers, payables etc.);

o Long-term liabilities (debentures, long-term loans, convertible

debentures).

In setting the fair value for all tangible assets and liabilities, any valuation

should account for asset-specific factors, including its economic benefit

and remaining economic life.

25

Chapter 6 – Cost of capital and discount rate

The cost of capital reflects, among others, the business-operating risk of the

company's operations. The risk is partly the market risk and partly the risk

derived from the company's activities.

The weighted average cost of capital was calculated by weighting the required

returns on interest-bearing debt and common equity capital in proportion to

their estimated percentages in an expected capital structure.

The valuation model assumes a base weighted average cost of capital (WACC)

of 9.5%.

The Base WACC was used to discount the cash flows relating to the Existing

PP&E, as well for the Existing and Replacement PP&E where it was used in

the years prior to extended life associated with the Replacement PP&E.

While we have used 9.5% for the Existing PP&E, we also added premiums to

the WACC when discounting cash flows associated with Replacement PP&E

and the CD4 geothermal development project.

Below is a summary of the discount rates used in our DCF analyses:

Existing PP&E 9.5%

Replacement PP&E 13.0%

CD4 Development 14.0%

Return of Equity (Re)

The following table includes the main parameters applied assessing the proper

return on equity of the company (using CAPM model):

Parameter Value Comment Risk free Interest Rate 4.51% 1 Specific risk Rate 0.0% Market Premium 5.50% 2 Beta 2.1 3 Return on Equity 16.1%

26

1. The risk-free rate was based on the yield on long-term U.S Treasury

bonds, since these securities are regarded as essentially default free.

2. The equity risk is unobservable in the market; thus, it must be estimated

using a combination of historical data, forward-looking survey data, and

benchmarks announced by other valuation professionals.

3. In order to determine the Beta of the company we examined several

companies which operate in the company’s industry1. The following

table details the main results of our examine process and the Beta

calculation:

Company Beta

leveraged D/V Beta

unleveraged

Calpine Corp. 1.15 62.5% 0.58

Magma Energy Corp. 0.84 14.3% 0.77

Ram Power, Corp. 0.77 12.2% 0.71

US Geothermal Inc. 1.79 0.4% 1.78

Nevada Geothermal Power Inc. 1.05 72.4% 0.41

Mirant Corporation 1.72 61.4% 0.88

NRG Energy, Inc. 1.18 61.9% 0.60

The AES Corporation 1.49 70.1% 0.62

NextEra Energy, Inc. 0.71 47.5% 0.46

Average 1.19 44.8% 0.76

The betas reported were adjusted to unleveraged betas. This process is

accomplished by deleveraging the reported betas so that the effect of

financial risk is removed, leaving betas reflective of only business risk.

We unlevered each guideline company’s levered beta according to the

following standard formula:

1 We relied on global predicted betas derived from BARRA’s Global Equity Model (GEM1) database. BARR global predicted betas represent a forecast of a stock’s sensitivity to the global market.

27

The unleveraged betas are then leveraged to reflect the target capital

structure, as follows:

Unleveraged Beta 0.76

Industry Debt-to-Equity Ratio 300%

Effective Income Tax Rate 40.7%

leveraged Beta 2.10

The capital structure deemed appropriate for the Subject Assets was

based on target capital structures used by Market Participants to

finance geothermal projects as of the Valuation Date (see D/E detailed

explanation).

Capital structure (D/V)

The capital structure deemed appropriate for the Subject Assets was based on

target capital structures used by Market Participants to finance geothermal

projects as of the Valuation Date. Specifically, a capital structure of 25 percent

common equity, 45 percent debt, and 30 percent Tax Equity has been

reflected in the Analysis. Since the characteristics and risk profile for the Tax

Equity and debt financings were similar, they have been combined into one

Fixed Income portion to yield a capital structure for the Subject Assets of 75

percent Fixed Income and 25 percent equity.

Tax equity

Due to regulations involving tax depreciation and amortization as well as the

availability of production tax credits, cash grants etc, much of the value of a

geothermal generating facility can be attributed to its derived tax benefits. An

appropriate discount rate for these benefits should reflect their unique risk and

characteristics. As the WACC calculated based on the Guideline Companies

did not reflect the unique aspects and the risk profile related to the tax

benefits, we incorporated an appropriate discount rate for these assets as well.

Specifically, Management provided us with a typical tax equity partner rate of

return assumption of a 9% - 10% range. We have therefore assumed a cost of

tax equity of 10% which reasonably reflects the risk profile of the tax benefits.

28

Cost of Debt (Rd)

Since the interest on debt capital is deductible for income tax purposes, we

used the after-tax interest rate in our calculation. In order to estimate the cost

of debt capital we utilized debt ratings as provided by Capital IQ, Standard &

Poor’s (“S&P”) Ratings Direct, and bond yield information provided by

Bloomberg Finance.

Debt ratings for each of the guideline companies were obtained from review of

information available from the aforementioned sources. As a result, we used a

20-year Industrial BB- rate, as published by Bloomberg, for our cost of debt.

Base WACC Summary

Based on the data above (based on examine of similar companies), the

WACC resulted in 9.5%.

The following table describes the WACC calculation:

Parameter Value Comment Risk free Interest Rate 4.51% 1 Beta 2.1 3

Market Premium 5.50% 2

Return on Equity 16.1%

Return on Debt 7.1%

Tax Rate 40.70%

D/V 75%

WACC 9.5%

Other WACC Conclusions

While we have used 9.5 percent for the Existing PP&E, we also added

premiums to the WACC when discounting cash flows associated with

Replacement PP&E and the CD4 geothermal development project.

More specifically, for the replacement PP&E, we added a 2 percent premium

for the lack of a current PPA associated with the Replacement PP&E, and a

1.5 percent premium for construction risk. For CD4, we added the same 2

percent premium for the lack of a PPA, however given that the project is a

brand new development and not a replacement of existing power plant

equipment, a higher construction risk premium of 2.5 percent was added.

29

Chapter 7 - Summary

1 Summary of the purchase price allocation

Below is a summary of the purchase price allocation to tangible and intangible

assets U.S. dollars in thousands:

Section USD (in thousands) Consideration 72,500 Original 50% interest - Fair Value 64,948 Total consideration (rounded) 137,500

Assets and Liabilities acquired Non-Operating Assets and Liabilities *7,684 Existing PP&E 23,000 Replacement PP&E 79,000 CD4 Development 28,000

Total Identified Assets (rounded) 137,500

Excess purchase price to be allocated 0

Allocation: Power Purchase Contracts 0 Goodwill ** 0

* We estimated that the Fair Value does not differ materially from book value. **Goodwill was calculated using the "residual method". The value may change after attributing deferred income taxes.

North Brawley Power Plant

Asset Impairment Analysis

****

Prepared for

OOrrmmaatt iinndduussttrriieess LLttdd.. MMaarrcchh 22001111

2

TTaabbllee ooff CCoonntteennttss

Chapter A - Introduction......................................................................... 3-11

Chapter B - Executive Summary ......................................................... 12-14

Chapter C - Description of the Company & Subject Assets ............. 15-16

Chapter D - General economic outlook............................................... 17-19

Chapter E - Valuation .............................................................................20-28

Chapter F - Exhibits.................................................................................... 29

3

Chapter A - Introduction

1.1 General

Giza Singer Even ("GSE") has been mandated by Ormat Industries Ltd.

(“Ormat” or the “Company”) to assist Ormat's management with their asset

impairment analysis in connection with the North Brawley power plant

("North Brawley" or the "Subject Assets") to meet the requirements under

IFRS accounting standards ("the Report"). In order to prepare the Report

GSE and Ormat has retained the advisory services of Duff & Phelps, a

world-class global independent financial advisory firm with a strong

expertise and capabilities in the area of valuation services (D&P). This

Report was prepared by GSE in cooperation with a D&P valuation team.

The Report includes a description of the methodology and main

assumptions and analyses used by the Company, D&P and GSE for

assessing the value of North Brawley. Having said that, the description

does not purport to provide a full and detailed breakdown of all the

procedures that we applied in formulating the opinion.

1.2 Reliance on Information Received from the Company

In formulating this Report, GSE and D&P assumed and relied on the

accuracy, completeness, and up-to-datedness of the information received

from the Company, including the financial data and any forward-looking

information. GSE is not responsible for independently verifying the

information it has received, and accordingly, did not conduct an

independent examination of this information, other than general and

superficial reasonability tests.

In conducting this valuation, we also addressed, among other things,

forecasts that were submitted to us by the Company. These projections

are uncertain suppositions and expectations regarding the future, partly

based on information existing in the Company as of the date of the

valuation ("Valuation Date"), as well as various assumptions and

expectations pertaining to the Company and to numerous extraneous

4

factors, including the situation in the market segment in which the

Company operates, potential competitors, and the general market

situation. It should therefore be emphasized that there is no certainty that

these suppositions and expectations will fully or partially materialize. The

assessments and forecasts of the Company's Management, apart from

being based on these assumptions, relate to the Company's future

intentions and goals as of the valuation date. These intentions and goals

are materially influenced by the situation in the Company and in the

market and need to be continuously adjusted to the various changes in the

working assumptions, the Company's situation and the general economic

situation. Any such change stands to influence the chance that these

estimations will materialize. If the estimations of the Company's

Management do not materialize, the actual results may vary materially

from the results projected or inferred from these estimations, insofar as

they were used in this opinion, noting that the Fair Value was appraised in

this Report, as set out in the accounting standard chapter.

1.3 Forward-looking Information

In this report, we also addressed forward-looking information that was

submitted to us by the Company's management. Forward-looking

information is uncertain information concerning the future, which is based

on information available to the Company on the Valuation Date and

includes management's estimations or intentions as of the Valuation Date.

If management's projections do not materialize, the actual results may

vary materially from the results estimated or implied from this information,

insofar as they were used in this Report.

1.4 Limitations in the Application of the Report

An economic assessment is not an exact science, and is intended to

reflect in a reasonable and fair manner the situation at a given time, based

on known data, basic assumptions and forecasts. Changes in key

variables and/or other information may alter the basis for the basic

assumptions and alter the conclusions accordingly.

This Report does not constitute a due diligence study and does not purport

to contain the information, investigations and tests or any other information

5

contained in a due diligence study, including an examination of the

Company's contracts and engagements.

We emphasize that this Report does not constitute legal advice or a legal

opinion. The interpretation of various documents that we reviewed was

done exclusively for the purpose of forming and providing this Report.

The information appearing in the Report does not presume to include all

the information required by a potential investor, and is not meant to

determine the value for a specific investor. Different investors may have

different objectives and methods of examination based on other

assumptions, and accordingly, the price they would be willing to pay will

vary.

1.5 Personal and Financial Relationship with the Company

We hereby confirm that we have no personal interest in the company,

other than the fact that we receive a fee for providing this Report, and our

professional fees are not contingent on the results of this Report.

It should be noted that last year, GSE prepared a report for the Company,

in connection with a Purchase Price Allocation (PPA) analysis of the

"Mammoth" complex, one of the Company's geothermal assets.

In connection with this Report, we should note that GSE will receive a

letter of indemnity from the Company in the event that GSE is sued in a

legal proceeding for the payment of any amount to the Company or to a

third party for a cause of action that could stem, directly or indirectly, from

this Report. In such case, the Company shall indemnify GSE for any

expense that GSE shall incur or be required to pay for legal

representation, legal advice, professional consulting, defense against

legal proceedings, negotiations, etc. The Company shall also indemnify

GSE for the amount that it shall be ordered to pay to a third party in a

legal proceeding.

1.6 Reference to the Report

6

We consent that this Report will be included in the 2010 annual report of

Ormat Industries Ltd.

This Report may not be used for any other purpose without receiving

explicit prior and written permission from GSE. Anyone using the Report,

in whole or in part, other than for the purposes for which it was submitted,

and without the prior written approval of GSE, may be sued therefore.

1.7 Limitation of Liability

This Report is intended for the use of the Company's Management and for

the purpose described above, and it may not be used for any other

purpose, including transferring the Report to a third party or citing it,

without our prior written consent. In no event, whether we have given our

consent or not, will we assume any responsibility toward any third party

which was forwarded the Report.

In the course of our work, we received information, explanations, data and

representations from the Company and/or from D&P and/or someone on

the Company's behalf (the “Information”). The responsibility for the

information lies with whoever provided such information. The ambit of our

work does not include an examination and/or verification of said

Information. Consequently, our work shall not be considered and will not

constitute a confirmation of the veracity, completeness or accuracy of the

information provided to us. In no event will we be liable for any loss,

damage, cost or expenditure that might be caused in any manner or form

from acts of fraud, misrepresentation, deception, submission of information

that is not true or complete or obstruction of information on the part of the

Company and/or D&P and/or anyone on the Company's behalf, or any

other reliance on the Information, subject to the aforesaid.

In general, forecasts tend to relate to future events and are based on

reasonable assumptions made on the date of the forecast. Such

assumptions may change over the forecasted period, and consequently

forecasts made at the time of the valuation may differ from actual financial

results and/or from estimates made at a later date. Therefore, these

forecasts may not be treated with the same level of confidence attributed

7

to data appearing in audited financial statements. We offer no opinion

regarding the correctness of the forecasts made by the Company, D&P

and/or by anyone on their behalf with the financial results that will actually

be obtained.

The Report does not constitute a due diligence study and should not be

relied on as such.

Moreover, financial assessments do not presume to be an exact science,

and their conclusions are often contingent on the subjective judgment

exercised by the valuator. Although we believe that the value that we have

set is reasonable based on the information submitted to us, another value

appraiser may reach a different value.

1.8 Sources of Information

In the course of the Report, we relied upon financial and other information,

including prospective financial information, obtained from the Company,

D&P and from various public, financial, and industry sources. Our

conclusion is dependent on such information being complete and accurate

in all material respects. We will not accept responsibility for the accuracy

and completeness of such provided information.

The principal sources of information used in performing our valuation

include:

Discussions with the Company's management and D&P as follows:

Mrs. Dita Bronicki, CEO, Ormat Industries Ltd. and Ormat

Technologies, Inc

Yoram Bronicki, President and COO, Ormat Technologies Inc.

Mr. Joseph Tenne, CFO, Ormat Industries Ltd. and Ormat

Technologies Inc.

Mr. Eyal Hen, Controller, U.S. Operations, Ormat Technologies

Inc.

Mr. Nir Yehuda, Controller, Ormat Industries Ltd.

Mr. Joseph Omoworare, Valuation Services Director, Duff &

Phelps

8

Historical cost and financial statement information provided by Ormat

Technologies Inc and Ormat Industries Ltd.

Ormat Technologies Inc. Management’s financial projections for North

Brawley

North Brawley Plant Status Memo as of 4/2/11

Treasury Grant Application as of the Valuation Date

Tax Basis Memo as of the Valuation Date

Power Purchase Agreements (“PPAs”) related to North Brawley

Federal Reserve Statistical Release. H.15 (519) Selected Interest

Rates

Bloomberg historical rates for corporate bonds as of the valuation Date

Other publicly available information from sources, but not limited to,

Capital IQ, and SNL, deemed relevant to preparation of this Report

Financial models and analysis received from D&P

1.9 The Accounting Standard

At the request of the Company, the valuation will be used for

implementing International Accounting Standard No. 36 regarding asset

impairment (hereinafter: the "Standard" or "IAS 36") in its financial

statements.

The purpose of the Standard is to prescribe the procedures that an

enterprise must apply to ensure that its assets are carried at no more than

their recoverable amount. An asset is carried at more than its recoverable

amount when the carrying value of the asset exceeds the amount to be

recovered through use or sale of the asset. In this case, the asset value

has been impaired, and the Standard requires the corporation to

recognize an impairment loss. The Standard also specifies when a

corporation should reverse an impairment loss and requires certain

disclosures for impaired assets, and for investments in investee

companies that are not subsidiaries, which are carried in the financial

9

statements in an amount that significantly exceeds their market value or

net sale price.

The Standard prescribes the accounting treatment and statement required

in the event of asset impairment. If an enterprise prepares consolidated

financial statements (including proportionate consolidation), the Standard

will be applied to the accounting treatment of the impairment of all the

assets appearing in the enterprise's consolidated balance sheet, including

investments in investee companies that are not subsidiaries, goodwill

stemming from the acquisition of subsidiaries and fair value adjustments.

In effect, this Standard applies to investments in subsidiaries and jointly

controlled companies, so that provisions for impairment loss, which are

recognized in the consolidated financial statements with respect to assets

of the subsidiary or the jointly-controlled company, including goodwill and

fair value adjustments, will be stated in the separate financial statements

of the parent company as a reduction of the investment account in the

subsidiary or jointly-controlled company.

The Standard prescribes that the recoverable amount of an asset should

be estimated whenever there are indications that an asset may be

impaired.

The Standard requires recognizing the impairment loss of an asset (i.e.

the value of the asset has declined) whenever the carrying amount of the

asset exceeds its recoverable amount. An impairment loss will be

recognized in the statement of profit and loss for those assets stated at

cost and should be treated as a revaluation decrease, and only for those

assets carried at a revalued amount in accordance with other accounting

standards or in accordance with the provisions of any law.

The Standard prescribes that a recoverable amount shall be calculated as

the Fair Value less costs to sell or Value in Use, whichever is higher:

1. The Value in Use of the asset is the estimate of the present value of

future cash flows to be derived from use and disposal of the asset at

the end of its useful life

10

2. Fair value less costs to sell is the amount obtainable from the sale of

an asset or cash-generating unit in an arm’s length transaction

between knowledgeable, willing parties, less the costs of disposal

The Standard states that the best evidence of an asset’s Fair Value less

costs to sell is a price in a binding sale agreement in an arm’s length

transaction, adjusted for incremental costs that would be directly

attributable to the disposal of the asset.

If there is no binding sale agreement but an asset is traded in an active

market, Fair Value less costs to sell is the asset’s market price less the

costs of disposal. The appropriate market price is usually the current bid

price. When current bid prices are unavailable, the price of the most

recent transaction may provide a basis from which to estimate Fair Value

less costs to sell, provided that there has not been a significant change in

economic circumstances between the transaction date and the date as at

which the estimate is made.

If there is no binding sale agreement or active market for an asset, Fair

Value less costs to sell is based on the best information available to

reflect the amount that an entity could obtain, at the balance sheet date,

from the disposal of the asset in an arm’s length transaction between

knowledgeable, willing parties, after deducting the costs of disposal. In

determining this amount, an entity considers the outcome of recent

transactions for similar assets within the same industry. Fair Value less

costs to sell does not reflect a forced sale, unless management is

compelled to sell immediately.

1.10 Details on the Valuating Company

GSE is the leading non-affiliated economic and financial advisory firm in

Israel. The firm has been in business for over 25 years.

GSE advisory services are divided into four fields: Consulting to

corporations and government authorities; mergers and acquisitions;

issues; tenders and infrastructure products.

11

GSE provides its services through several departments: value economics,

financing and capital market, applied economic research, financial

accounting and risk management, project and infrastructure finance, and

a professional department.

The partners heading the firm: Chairman of the firm Yechiel Even and

CEO Yariv Philosoph, together with Prof. Eli Kraisberg, Yuval Zilberstein,

Eli Goldberg, Avshalom Herscovici and Udi Rosenberg, who also heads

the firm's professional department. Other partners of the firm are Eyal

Jedwab, Yuval Lapidot, Yuval Barak and Hila Himi from the Corporate

Finance Department, Asher Shakler from the Financial Accounting and

Risk Management Department, Varda Stern from the Project Finance and

National Infrastructures Department, and Alex Shechter from the

Economic Valuation Department.

In order to prepare this Report GSE and Ormat has retained the advisory

services of D&P, a world-class global independent financial advisory firm

with a strong expertise and capabilities in the area of valuation services.

This Report was prepared by GSE in cooperation with a D&P valuation

team.

The GSE team was headed by Yechiel Even.

Mr. Even has over twenty years of experience in performing valuations. He

holds a B.A. and M.B.A. in Economics and Business Administration from

Bar-Ilan University.

Sincerely yours,

_________________

Giza Singer Even

March 17, 2011

12

Chapter B - Executive Summary

1. D

escription of the Company and Subject Assets

O

rmat is the only vertically-integrated company primarily engaged in the

geothermal and recovered energy power business. The Company designs,

develops, owns and operates geothermal and recovered energy-based

power plants around the world. Additionally, the Company designs,

manufactures and sells geothermal and recovered energy power units and

other power-generating equipment, and provides related services. With more

than four decades of experience in geothermal and recovered-energy

generation, Ormat products and systems are covered by 80 U.S. patents.

T

he North Brawley Geothermal Power Plant project is located in Brawley,

California. The power plant was placed in service on January 15, 2010 and

consists of five (5) water cooled Ormat Energy Converter (OEC)*, water

system and other auxiliary systems to produce 50 MW of electricity. Since

early 2009, however, Brawley has been hampered by certain factors (see

Chapter C) that have limited its generation capabilities. In the course of

2010, Brawley has been producing, on average, approximately 30 MW of

electricity.

2. D

escription of the Valuation Methodology

To estimate the Fair Value of North Brawley a DCF analysis was utilized.

Since the exact generation of the facility could not be calculated due to

recent construction and addition of new wells (see chapter C) we used high

probability and low probability generation assumptions to estimate the Fair

Value based on the expected cash flow approach.

The Fair Value of North Brawley was therefore estimated by:

13

Determining operational characteristics of the assets under three

scenarios; a 40MW, a 45MW and a 50MW scenario, as well as forecasting

financial performance under each such scenario

Performing a DCF analysis for each scenario. The DCF for each

case was then assigned a probability and an estimation of Fair Value was

calculated by summing the total weighted expected value of all cases

14

3. V

aluation Assumptions

For the purpose of preparing this Report Ormat Technologies

Inc's management provided historical and forecasted performance

characteristics for North Brawley, including generation output, additional

capital expenditure requirements to improve output, energy revenues, along

with plant and operating expenses. After conducting multiple interviews with

management as well as performing various reasonability checks, we have

adopted management forecasts and assumptions regarding the projected

operations of the Brawley facility (see Chapter E for further detail)

The weighted average cost of capital was calculated by

weighting the required returns on fixed income and common equity capital in

proportion to their estimated percentages in an expected capital structure.

The valuation model assumes a weighted average cost of capital (WACC) of

8%

4. V

aluation Conclusion

4.1 Fair Value

Based on probabilities provided by the Company's Management, the Fair Value

of North Brawley is estimated at $140.4 million (pre disposal costs), as

exemplified below:

Case Value ($K) Probability Relative Value ($K)

40 MW 116,283 20% 23,257

45 MW 142,467 40% 56,987

50 MW 150,425 40% 60,170

Total 100% 140,414

4.2 Disposal Costs

Based on discussions with the management we assumed disposal costs estimated

at 1% of the Fair Value, totaling $1.4 million

15

4.3 Conclusion

We estimate that the Fair Value of North Brawley, less costs to sell, is $139

million

4.4 Sensitivity Analysis

We have performed a sensitivity analysis for the value of North Brawley, less

costs to sell, with respect to the weighted average cost of capital as follows:

WACC 7.00% 7.50% 8.00% 8.50% 9.00%

Fair Value (less costs to sell) 156,062 147,678 139,009 130,642 122,545

16

Chapter C - Description of the Company and Subject Assets

Ormat Technologies, Inc.

Ormat is the only vertically-integrated company primarily engaged in the

geothermal and recovered energy power business. The Company designs,

develops, owns and operates geothermal and recovered energy-based power

plants around the world. Additionally, the Company designs, manufactures and

sells geothermal and recovered energy power units and other power-generating

equipment, and provides related services. With more than four decades of

experience in geothermal and recovered-energy generation, Ormat products

and systems are covered by 80 U.S. patents. Ormat has engineered and built

power plants totaling approximately 1,300 MW of gross capacity. Ormat's

current generating portfolio includes the following geothermal and recovered

energy-based power plants: in the United States – Brady complex, Brawley,

Heber complex, Jersey Valley, Mammoth complex, Ormesa complex, Puna,

Steamboat complex, OREG 1, OREG 2, OREG 3 and OREG 4; in Guatemala -

Zunil and Amatitlan ; in Kenya – Olkaria III; and, in Nicaragua - Momotombo.

Description of Subject Assets1

The North Brawley Geothermal Power Plant project (hereinafter: "The plant" is

located in Brawley, California. The plant was placed in service on January 15,

2010 and consists of five (5) water cooled Ormat Energy Converter (OEC)*,

water system and other auxiliary systems to produce 50 MW of electricity. The

Plant is an addition to the expanding network of geothermal Type Power Plants

in the area, which make use of the high temperature fluid beneath the surface to

produce steam or brine and induce rotation in a turbine / generator

configuration.

Since early 2009, Brawley has been hampered by five major factors:

1 Information concerning North Brawley collected from North Brawley Power Plant status as of

02.04.2011.

17

Reduced production from the Geothermal field due to injection restrictions

that were caused by solids accumulation in the injection wells and in the

near-well bore reservoir

The mitigation of the solids production resulted in high operating costs in

filtration of the injection flow and cleanouts of the injection wells

High well field operating costs due to short run life of the production pumps

Additional capital expenditure investment in pursuit of solutions to the

injection and the production issues, including filtration and separation

systems, drilling or modifying the injection wells drilling production wells,

adding injection pumps and constructing pipelines for the new wells; and

Once more injection capacity was secured, the plant has been affected by a

lack of production fluids due to the conversion of some production wells into

injection wells

18

Chapter D – General economic outlook Introduction2

In performing our analysis, we considered the general economic outlook as of

the Valuation Date and its potential impact on the Subject Assets. An

assessment of the general economy can often identify underlying causes for

fluctuations in the financial and operating performance of a company. This

overview of the general economic outlook is based on our examination of

various economic analyses and the consensus forecasts of Blue Chip Economic

Indicators and Blue Chip Financial Forecasts (collectively, the “consensus”).

Economic Growth

The United States’ real gross domestic product (“GDP”) (i.e., output adjusted for

the impact of inflation) decreased 6.4% during the first quarter of 2009, and

0.7% in the second quarter. These declines were primarily attributable to sharp

decreases in residential and non-residential fixed investments, business

inventories, and, to a lesser extent, real personal consumption expenditures

(“PCE”). The decline in inventories over the first half of 2009 was the largest on

record.

In contrast, real GDP grew by 2.2% in the third quarter of 2009, and by 5.6% in

the fourth quarter, the latter being the highest level observed in over six years.

This recovery was primarily attributable to the highest increase in real PCE

since the first quarter of 2007, a rise in residential investment, continued federal

spending, and a significant reduction in the rate of business inventory

liquidation.

Despite its recovery in the third and fourth quarters, real PCE still declined by

an overall 0.6% in 2009. This followed a decline of 0.2% in 2008, thereby

2 The General Economic Outlook section is based off resources including: Blue Chip Economic Indicators, December 1, 2010; Blue Chip Financial Forecasts, December 1, 2010; economic data supplied by the U.S. Department of Commerce Bureau of Economic Analysis, http://www.bea.gov; economic data supplied by U.S. Department of Labor Bureau of Labor Statistics, http://www.bls.gov; economic data compiled by the U.S. Census Bureau, http://www.census.gov/; economic data supplied by U.S. Department of Housing and Urban Development, http://www.hud.gov/; and economic data and research supplied by the Federal Reserve, http://www.federalreserve.gov/.

19

representing the first uninterrupted two-year contraction since 1932-1933.

Industrial production also continued the third-quarter recovery trend into the

final quarter of 2009, but still declined by an overall 9.8% during 2009. While the

recession was declared over in September 2009, it was of greater duration than

the recessions of 1974-1975 and 1981-1982. The Bureau of Economic Analysis

estimates that real GDP contracted by 2.4% in 2009 on a year-over-year basis,

the biggest decline since 1946.

For the first quarter of 2010, real GDP grew by 2.7% due to gains in real PCE

and industrial production. Real PCE increased by 3.0% during the quarter

because of an increase in purchases of consumer durables, purchases of

nondurables, and services. During the first quarter, industrial production

increased by 6.9%, continuing the pattern of strong quarterly growth that has

now reached three consecutive quarters. The growth in industrial demand is

explained by efforts to rebuild business inventories, signs of recovery in

consumer and business demand, and growth in exports.

For the second quarter of 2010, the consensus estimates that real GDP grew by

3.2%, which is lower than originally estimated due to downward revisions on

growth contributions by real PCE, residential investment, and net exports. Real

PCE is expected to have grown by 2.8% during the quarter, while industrial

production is estimated to have risen by 6.3%.

Economic growth is expected to continue into the second half of the year,

although some economists are starting to fear the possibility of a double dip

recession. The consensus predicts growth to continue in real PCE and business

investment, but government spending will decrease during the second half of

2010, as the contribution from the fiscal stimulus continues to erode. Growth in

industrial production is also expected to moderate, as business inventories have

been replenished and are more in line with market demand. To put it into

perspective, rebuilding of inventories contributed to approximately 57% of real

GDP growth over the latter half of 2009 and first quarter of 2010.

20

-6 .4%

-0 .7%

2.2%

5.6%

2.7%3.2%

2.7% 2.8% 2.8%3.0% 3.1% 3.2%

-8 .0%

-6 .0%

-4 .0%

-2 .0%

0.0%

2.0%

4.0%

6.0%

8.0%

2009A-Q 1

2009A-Q 2

2009A-Q 3

2009A-Q 4

2010A-Q 1

2010F -Q 2

2010F -Q 3

2010F -Q 4

2011F -Q 1

2011F -Q 2

2011F -Q 3

2011F -Q 4

Re a l G DP G row th C o n sen su s F o r ecast % C h an g e F r o m P r io r Q u ar ter

Overall, the consensus has a positive outlook for 2010, with an estimated real

GDP growth of 3.1%. The expected recovery still falls short of the rebound

observed in other post-World War II recessions. For instance, real GDP growth

in the year following the recessions of 1957-58, 1973-75, and 1981-82 was on

average 5.6%. The consensus believes that real PCE will grow at a healthy

2.4% during 2010. However, additional gains in the remainder of 2010 and

during 2011 are being constrained by slowly recovering labor markets,

household deleveraging, tight credit markets, softness in home values and,

more recently, weak equity prices. On a positive note, the consensus estimates

industrial production to expand by 5.4% in 2010. Regarding 2011, the

consensus estimates real GDP growth of 3.0%, assisted by projected increases

in real PCE and industrial production of 2.6% and 4.7%, respectively. A long-

term (ten-year) average real GDP growth rate of 2.8% was projected in a recent

survey published by the Federal Reserve Bank of Philadelphia (the

“Philadelphia Fed”).3

3 Source: “The Livingston Survey – December 2010,” Federal Reserve Bank of Philadelphia, December 9, 2010.

21

Chapter E - Valuation

1. Valuation methodology

1.1 General In our estimation of Fair Value we consider the income approach. The

income approach is a valuation technique that provides an estimation of the

Fair Value of an asset based on market participant expectations about the

cash flows that an asset would generate over its remaining useful life. The

Income Approach begins with an estimation of the annual cash flows a

market participant would expect the subject asset (or business) to generate

over a discrete projection period. The estimated cash flows for each of the

years in the discrete projection period are then converted to their present

value equivalent using a rate of return appropriate for the risk of achieving

the projected cash flows. The present value of the estimated cash flows are

then added to the present value equivalent of the residual value of the

asset (if any) or the business at the end of the discrete projection period to

arrive at an estimate of Fair Value.

In some situations, the expected cash flow approach is a more effective

measurement tool than the traditional approach. In developing a

measurement, the expected cash flow approach uses all expectations

about possible cash flows, taking into consideration assumed probabilities

of future events and/or future scenarios, instead of the single cash flow

scenario. We used this approach in our valuation.

1.2 Application of the Income Approach in this analysis To estimate the Fair Value of North Brawley under IAS 36, a DCF analysis

was utilized. Under IFRS - IAS 36, an asset is considered to be impaired if

the carrying value of the asset is greater than its estimated Fair Value. The

impairment is recorded in the amount by which the carrying value exceeds

the Fair Value of the asset. Since the exact generation of the facility could

not be calculated due to recent construction and addition of new wells, as

mentioned in the Subject Asset description (see chapter C), we used high

probability and low probability generation assumptions to estimate the Fair

Value (the expected cash flow approach).

22

The Fair Value of the assets of North Brawley as of the Valuation Date was

estimated by:

Determining operational characteristics of the assets under 3

scenarios; a 40MW, a 45MW, and a 50MW scenario

Forecasting revenues and variable operating costs as

applicable, including

energy prices for the electric output for each case;

Forecasting fixed expenses and capital expenditures as

applicable for each case

Performing a DCF analysis for each case. The DCF for each

case was then assigned a probability and an estimation of Fair Value was

calculated by summing the total weighted expected value of all cases.

2. North Brawley Valuation

2.1 General

For the purpose of preparing this Report, Ormat's management provided D&P

and GSE with historical and forecasted performance characteristics for North

Brawley, including generation output, additional capital expenditure requirements

to improve output, energy revenues, along with plant and operating expenses.

D&P and GSE have adopted management forecasts and assumptions. To check

the reasonability of said forecasts and assumptions, GSE and D&P have

conducted several interviews and conversations with the management and have

reviewed various relevant materials provided by the Company (as stated in

Chapter A). Also, the Company and GSE have retained the advisory services of

D&P, a world-class global independent financial advisory firm with a strong

expertise and capabilities in the area of valuation services.

D&P compared the forecasted operating results of the facility to the historical

operating characteristics of the facility as well as to the operating characteristics

for other geothermal facilities that D&P are familiar with. D&P also reviewed the

technical and operational discussions provided in the North Brawley Plant Status

Memo prepared by management and the Testing Report prepared by JFMPE, Inc

and has discussed the operating characteristics of the facility with the

management. Based on these reviews and conversations, and given the limited

historical performance of the facility, D&P based their review around the

23

reasonableness of management’s ability to add additional injection and/or

production wells and improve the functionality of the production pumps through

additional Capital expenditure and has concluded that management's forecasts

were reasonable. D&P has also compared certain management’s forecasts to

those made by third-party sources (as will specified below) and concluded that

the estimate was reasonable

2.2 Key assumptions

2.2.1 Operating Characteristics

As of the Valuation Date the facility is producing, on average, approximately

30MW of electricity. However, management believes that the North Brawley

resource can support 50 MW of electricity and expects that, with additional capital

expenditures (including drilling of additional wells), the facility can produce

between 45MW and 50MW of electricity. Therefore management has assigned

an equal probability of 40 percent to both cases. A more conservative case where

the facility only reaches 40MW of electricity was also considered by management

and was assigned a 20 percent probability.

2.2.2 Production and Revenues

North Brawley is currently under a 20-year Power Purchase Agreement (“PPA”)

to sell its electrical output to Southern California Edison. Through year 2030, the

revenue projected by Management is based on the PPA price and certain time of

day adjustments. Additionally, under the 40MW and 45MW cases, the contracted

revenue was adjusted for certain penalties per the PPA terms4.

After 2030, projected revenue is based on Management’s estimate of a market

energy price of $120 / MWh and grown at an inflationary rate of 1.5% throughout

the remaining useful life of the facility. To verify the reasonability of the market

energy price assumptions, D&P compared Management’s projected energy price

to those made by third-party sources (e.g. Wood Mackenzie) and concluded that

the estimate was reasonable.

2.2.3 Operating Costs

The Company provided D&P and GSE with forecasted fixed and variable

operating expenses, including costs such as plant operating expenses, utilities,

4 Based on Management provided information. Facility is expected to incur penalties if total output is less than 45 MW

24

insurance, tax, royalties, and administrative expenses through year 2040 for the

Subject Assets.

Management also provided additional variable O&M forecasts in light of

expanding of the generation capability and transitional operating costs of North

Brawley. The assumptions with regard to the additional O&M costs due to

expansion of the wells and to facilitate the functionality of the equipment were

deemed reasonable based on our discussions with Management and review of

the Plant Status Memo.

2.2.4 Capital Expenditures

Management also provided detailed reports in regards to the nature of additional

capital expenditures required to improve the operations of North Brawley. For the

purpose of this analysis, maintenance expenditures were fully capitalized, and

included additional near term maintenance costs for the improvement of North

Brawley based on a review of independent engineering reports of North Brawley.

At the end of the life of the Facility, the expected salvage and scrap value is

assumed to net completely against any potential removal or site cleanup costs.

To test the reasonableness of these assumptions, D&P reviewed the historical

Capital expenditure and fixed operating costs of North Brawley. D&P also

compared the forecasted amounts to capital expenditures forecasts they have

reviewed for other similar geothermal facilities and those made in the

independent engineering reports.

2.2.5 Depreciation

Depreciation expense was calculated based on a 5-year MACRS schedule

relevant for the Subject Asset. In accordance with applicable tax rules and

regulation, the plant's balance basis used to calculate the 5-year MACRS

depreciation schedule was the Fair Value of the asset. Remaining depreciation

amount was based on an annual rate of 4.55% of the fair value (in accordance

with US tax regulations)

2.2.6 Tax

We utilized the corporate tax rate that a market participant that will operate the

assets at their highest and best use would be expected to incur, and which is not

necessarily the tax rate that is incurred by Ormat or North Brawley. We also

25

adjusted for California state income taxes incurred by the Subject Assets. The tax

rate that we therefore used in our analysis was 40.7%.

2.2.7 Working Capital

We assumed 30 receivable days and 30 payable days to calculate the change in

working capital.

3. Weighted Average Cost Of Capital (WACC)

The cost of capital reflects, among others, the business-operating risk of the

company's operations. The risk is partly the market risk and partly the risk

derived from the company's activities.

The weighted average cost of capital was calculated by weighting the required

returns on fixed income and common equity capital in proportion to their

estimated percentages in an expected capital structure.

The valuation model assumes a weighted average cost of capital (WACC) of 8%.

Return on Equity (Re)

The following table includes the main parameters applied in assessing the proper

return on equity of the company (using CAPM model):

Parameter Value Comment Risk Free Rate 4.18% 1 Specific Risk Premium 0.0% Equity Risk Premium 5.50% 2 Beta 1.2 3 Return on Equity 10.8%

1. The risk-free rate was based on the yield on long-term U.S Treasury

bonds, since these securities are regarded as essentially default free. When

valuing assets that are long-term in nature, the horizon of the Treasury

security selected should be measured accordingly. Thus, for purposes of this

study, the risk-free rate was based on the yield on long-term Treasury bonds.

2. The equity risk premium (“ERP”) is the additional return an investor

expects to receive to compensate for the additional risk associated with

investing in equities as opposed to investing in riskless assets. It is

unobservable in the market; thus, it must be estimated using a combination

26

of historical data, forward-looking survey data, and benchmarks announced

by other valuation professionals.

3. In order to determine the Beta of the company we examined several

companies which operate in the company’s industry5. The following table

details the main results of our study and Beta calculation:

Company Beta

levered D/V

Beta unleveraged

Calpine Corp. 1.15 65.1% 0.55

Magma Energy Corp. 0.84 48% 0.54

Ram Power, Corp. 0.77 16.7% 0.67

US Geothermal Inc. 1.79 12.9% 1.64

Nevada Geothermal Power Inc. 1.05 68.7% 0.46

NRG Energy, Inc. 1.18 68.5% 0.52

Ormat Technologies Inc. 1.23 34.9% 0.93

Average 1.19 45% 0.76

The betas reported were adjusted to unlevered betas. This process is

accomplished by deleveraging the reported betas so that the effect of

financial risk is removed, leaving betas reflective of only business risk.

We unlevered each guideline company’s levered beta according to the

following standard formula:

The unlevered betas are then re-levered to reflect the target capital structure,

as follows:

Unlevered Beta 0.76

Industry Debt-to-Equity Ratio 100%

Effective Income Tax Rate 40.7%

Re-levered Beta 1.21

5 We relied on global predicted betas derived from BARRA’s Global Equity Model (GEM1)

database. BARR global predicted betas represent a forecast of a stock’s sensitivity to the global market.

27

The capital structure deemed appropriate for the Subject Assets was based

on target capital structures used by market participants to finance

geothermal projects as of the Valuation Date (see capital structure

explanation below).

Capital structure (D/V)

The capital structure deemed appropriate for the Subject Assets was based on

target capital structures used by market participants to finance geothermal

projects as of the Valuation Date. Specifically, a capital structure of 50 percent

common equity, 37.5 percent debt, and 12.5 percent tax equity (further explained

below) has been reflected in the Report. Since the characteristics and risk profile

for the tax equity and debt financings were similar, they have been combined into

one fixed income portion to yield a capital structure for the Subject Assets of 50

percent fixed income and 50 percent equity.

Tax Equity

Due to regulations involving tax depreciation and amortization as well as the

availability of production tax credits, cash grants etc, much of the value of a

geothermal generating facility can be attributed to its derived tax benefits. An

appropriate discount rate for these benefits should reflect their unique risk and

characteristics. As the WACC calculated based on the guideline companies did

not reflect the unique aspects and the risk profile related to the tax benefits, we

incorporated an appropriate discount rate for these assets as well. Specifically,

Management provided us with a typical tax equity partner rate of return

assumption of a 9% - 10% range. We have therefore assumed a cost of tax

equity of 10% which reasonably reflects the risk profile of the tax benefits.

Cost of Debt (Rd)

Since the interest on debt capital is deductible for income tax purposes, we used

the after-tax interest rate in our calculation. In order to estimate the cost of debt

capital we utilized debt ratings as provided by Capital IQ, Standard & Poor’s

(“S&P”) Ratings Direct, and bond yield information provided by Bloomberg

Finance. Debt ratings for each of the guideline companies were obtained from

review of information available from the aforementioned sources. As a result, and

28

considering the specific risk profile of the Plant, we used a 20-year Industrial

BBB+ rate, as published by Bloomberg, for our cost of debt.

WACC Calculation Summary

Based on the data above the cost of capital calculation resulted in WACC of 8%

The following table describes the WACC calculation:

Parameter Value Risk free Interest Rate 4.18% Beta 1.21 Market Premium 5.50% Return on Equity 10.8% Fixed Income (tax equity and debt) 5.1% Tax Rate 40.70% Equity 50% Fixed Income (tax equity and debt) 50%

WACC 8%

4 Valuation Conclusion

4.1 Fair Value

The full DCF analysis used to calculate Fair Value of North Brawley (in the three

scenarios) is shown in the exhibits (Chapter F).

Based on the Income Approach and based on probabilities provided by the

Company's Management, the Fair Value of North Brawley, as of the Valuation

Date, is estimated at $155.4 million (pre disposal costs), as exemplified below:

Scenario Value ($K) Probability Expected Value ($K)

40 MW 116,283 20% 23,257

45 MW 142,467 40% 56,987

50 MW 150,425 40% 60,170

Total 100% 140,414

4.2 Disposal Costs

Based on discussions with the Company's Management we assumed disposal

costs estimated at 1% of the Fair Value, totaling $1.4 million

29

4.3 Conclusion

We estimate that the Fair Value of North Brawley, less costs to sell, is $139

million

4.4 Sensitivity Analysis

We have performed a sensitivity analysis for the value of North Brawley, less

costs to sell, with respect to the weighted average cost of capital as follows:

WACC 7.00% 7.50% 8.00% 8.50% 9.00%

Fair Value (less costs to sell) 156,062 147,678 139,009 130,642 122,545

Chapter F – Exhibits 1. Discounted Cash Flow Analysis – 40 MW Scenario

North Brawley Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 40 MW

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total Revenue 27,989 27,849 27,710 27,572 27,434 27,297 27,160 27,024 26,889 26,755 26,621 26,488 26,355 26,224 26,093 Less PPA penalties (202) (210) (219) (227) (235) (243) (251) (259) (268) (276) (284) (291) (299) (307) (315)

Adjusted Revenue 27,788 27,639 27,492 27,345 27,199 27,053 26,909 26,765 26,622 26,479 26,338 26,196 26,056 25,916 25,778

O&M 19,363 8,451 8,557 8,663 8,770 8,876 8,982 9,206 9,436 9,672 9,914 10,162 10,416 10,676 10,943 Insurance 609 609 584 583 598 565 579 577 575 573 571 569 567 565 563 Property Tax 1,382 1,341 1,300 1,261 1,223 1,187 1,151 1,117 1,083 1,051 1,019 989 959 930 902 Royalties 1,120 1,114 1,108 1,103 1,097 1,092 1,086 1,081 1,076 1,070 1,065 1,060 1,054 1,049 1,044 G&A 870 822 843 864 885 908 930 954 977 1,002 1,027 1,053 1,079 1,106 1,133 Utilities, Environmental, Others 3,362 2,488 2,550 2,614 2,679 2,746 2,815 2,885 2,957 3,031 3,107 3,185 3,264 3,346 3,430

Total Operating Costs 26,706 14,825 14,943 15,088 15,253 15,373 15,543 15,820 16,105 16,399 16,703 17,017 17,340 17,673 18,016 Operating Costs ($/kW-year) 667.64 372.48 377.34 382.92 389.05 394.09 400.45 409.61 419.10 428.91 439.05 449.53 460.37 471.57 483.14

EBITDA 1,082 12,815 12,549 12,257 11,946 11,680 11,366 10,945 10,517 10,080 9,634 9,180 8,716 8,244 7,762

Depreciation 29,676 44,506 29,225 20,067 20,200 13,915 7,335 6,978 6,775 6,803 6,660 6,517 6,548 6,579 6,611

EBIT (28,594) (31,692) (16,677) (7,810) (8,255) (2,235) 4,031 3,968 3,742 3,276 2,974 2,663 2,169 1,665 1,151

Income Tax 40.7% (11,651) (12,913) (6,795) (3,182) (3,364) (910) 1,642 1,617 1,525 1,335 1,212 1,085 884 678 469 After-tax Operating Profit (16,943) (18,778) (9,882) (4,628) (4,891) (1,324) 2,388 2,351 2,217 1,941 1,762 1,578 1,285 986 682

Plus: (Increase)/Decrease in Working Capital (90) (978) 22 24 26 22 26 35 36 36 37 38 39 39 40 Less: CAPEX (5,620) (1,000) (1,025) (1,051) (1,077) (4,104) (1,131) (1,160) (1,189) (1,218) (1,249) (1,280) (1,312) (1,345) (1,379) Plus: Depreciation Benefit 29,676 44,506 29,225 20,067 20,200 13,915 7,335 6,978 6,775 6,803 6,660 6,517 6,548 6,579 6,611 Free Cash Flow from Operations 7,023 23,750 18,341 14,413 14,258 8,509 8,618 8,204 7,839 7,563 7,211 6,853 6,559 6,260 5,955

PV Periods 6.0 18.0 30.0 42.0 54.0 66.0 78.0 90.0 102.0 114.0 126.0 138.0 150.0 162.0 174.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.9623 0.8910 0.8250 0.7639 0.7073 0.6549 0.6064 0.5615 0.5199 0.4814 0.4457 0.4127 0.3821 0.3538 0.3276 PV of Free Cash Flow from Operations 6,758 21,160 15,131 11,009 10,085 5,572 5,226 4,606 4,075 3,640 3,214 2,828 2,506 2,215 1,951

Sum of PV of Free Cash Flow from Operations 116,283

31

North Brawley Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 40 MW

2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Total Revenue 25,962 25,832 25,703 25,575 24,887 30,765 30,905 31,046 31,190 31,336 31,484 31,634 31,786 31,941 32,100 Less PPA penalties (323) (331) (338) (346) - - - - - - - - - - -

Adjusted Revenue 25,639 25,502 25,365 25,229 24,887 30,765 30,905 31,046 31,190 31,336 31,484 31,634 31,786 31,941 32,100

O&M 11,217 11,497 11,785 12,079 12,381 12,691 13,008 13,333 13,667 14,008 14,359 14,718 15,085 15,463 15,849 Insurance 561 559 557 555 549 593 593 593 593 593 593 593 592 592 592 Property Tax 875 849 823 799 775 752 729 707 686 665 645 626 607 589 571 Royalties 1,038 1,033 1,028 1,023 995 1,231 1,236 1,242 1,248 1,253 1,259 1,265 1,271 1,278 1,284 G&A 1,162 1,191 1,221 1,251 1,282 1,314 1,347 1,381 1,416 1,451 1,487 1,524 1,562 1,602 1,642 Utilities, Environmental, Others 3,515 3,603 3,693 3,786 3,880 3,977 4,077 4,179 4,283 4,390 4,500 4,613 4,728 4,846 4,967

Total Operating Costs 18,369 18,733 19,108 19,493 19,863 20,558 20,991 21,435 21,892 22,361 22,843 23,339 23,847 24,369 24,905 Operating Costs ($/kW-year) 495.09 507.43 520.18 533.34 546.19 568.15 583.02 598.36 614.18 630.50 647.33 664.68 682.58 701.03 720.05

EBITDA 7,270 6,769 6,257 5,736 5,024 10,207 9,914 9,611 9,298 8,975 8,641 8,296 7,939 7,572 7,194

Depreciation 6,644 6,678 6,713 6,748 6,785 6,822 6,860 6,899 6,940 6,981 7,023 7,066 7,111 7,156 10,707

EBIT 626 91 (455) (1,013) (1,760) 3,385 3,054 2,712 2,359 1,994 1,618 1,229 829 415 (3,512)

Income Tax 40.7% 255 37 (186) (413) (717) 1,379 1,244 1,105 961 812 659 501 338 169 (1,431) After-tax Operating Profit 371 54 (270) (600) (1,043) 2,006 1,809 1,607 1,398 1,182 959 728 491 246 (2,081)

Plus: (Increase)/Decrease in Working Capital 41 42 43 43 59 (432) 24 25 26 27 28 29 30 31 631 Less: CAPEX (1,413) (1,448) (1,485) (1,522) (1,560) (1,599) (1,639) (1,680) (1,722) (1,765) (1,809) (1,854) (1,900) (1,948) (1,996) Plus: Depreciation Benefit 6,644 6,678 6,713 6,748 6,785 6,822 6,860 6,899 6,940 6,981 7,023 7,066 7,111 7,156 10,707 Free Cash Flow from Operations 5,643 5,325 5,001 4,670 4,241 6,797 7,055 6,852 6,642 6,425 6,201 5,969 5,731 5,485 7,260

PV Periods 186.0 198.0 210.0 222.0 234.0 246.0 258.0 270.0 282.0 294.0 306.0 318.0 330.0 342.0 354.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.3033 0.2809 0.2601 0.2408 0.2230 0.2064 0.1912 0.1770 0.1639 0.1517 0.1405 0.1301 0.1205 0.1115 0.1033 PV of Free Cash Flow from Operations 1,712 1,496 1,301 1,125 946 1,403 1,349 1,213 1,088 975 871 777 690 612 750

Sum of PV of Free Cash Flow from Operations 116,283

32

2. Discounted Cash Flow Analysis – 45 MW Scenario

North Brawley Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 45 MW

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total Revenue 29,298 31,488 31,331 31,174 31,018 30,863 30,709 30,555 30,402 30,250 30,099 29,949 29,799 29,650 29,502 Less PPA penalties (124) - (2) (12) (21) (30) (40) (49) (58) (67) (76) (85) (94) (103) (112)

Adjusted Revenue 29,174 31,488 31,328 31,162 30,997 30,833 30,669 30,506 30,345 30,184 30,023 29,864 29,705 29,547 29,390

O&M 19,363 8,929 9,047 9,166 9,284 9,403 9,522 9,761 10,005 10,255 10,511 10,774 11,043 11,319 11,602 Insurance 609 609 610 608 623 590 604 602 600 597 595 593 591 589 587 Property Tax 1,382 1,341 1,300 1,261 1,223 1,187 1,151 1,117 1,083 1,051 1,019 989 959 930 902 Royalties 1,186 1,260 1,253 1,247 1,241 1,235 1,228 1,222 1,216 1,210 1,204 1,198 1,192 1,186 1,180 G&A 870 892 914 937 960 984 1,009 1,034 1,060 1,087 1,114 1,142 1,170 1,199 1,229 Utilities, Environmental, Others 3,362 2,747 2,816 2,886 2,958 3,032 3,108 3,186 3,265 3,347 3,431 3,516 3,604 3,694 3,787

Total Operating Costs 26,772 15,777 15,940 16,105 16,291 16,432 16,623 16,921 17,229 17,546 17,874 18,211 18,559 18,918 19,287 Operating Costs ($/kW-year) 639.41 350.60 356.01 361.50 367.50 372.54 378.77 387.50 396.53 405.87 415.52 425.50 435.81 446.46 457.46

EBITDA 2,402 15,711 15,388 15,057 14,707 14,401 14,046 13,586 13,116 12,637 12,149 11,652 11,146 10,629 10,103

Depreciation 37,308 56,002 36,600 24,968 25,102 16,961 8,527 8,170 7,967 7,996 7,852 7,709 7,740 7,771 7,803

EBIT (34,906) (40,291) (21,212) (9,912) (10,395) (2,560) 5,520 5,416 5,149 4,642 4,297 3,943 3,406 2,858 2,300

Income Tax 40.7% (14,223) (16,417) (8,643) (4,039) (4,236) (1,043) 2,249 2,207 2,098 1,891 1,751 1,607 1,388 1,165 937 After-tax Operating Profit (20,683) (23,874) (12,569) (5,873) (6,160) (1,517) 3,271 3,209 3,051 2,750 2,546 2,337 2,018 1,694 1,363

Plus: (Increase)/Decrease in Working Capital (200) (1,109) 27 28 29 25 30 38 39 40 41 41 42 43 44 Less: CAPEX (11,620) (1,000) (1,025) (1,051) (1,077) (4,104) (1,131) (1,160) (1,189) (1,218) (1,249) (1,280) (1,312) (1,345) (1,379) Plus: Depreciation Benefit 37,308 56,002 36,600 24,968 25,102 16,961 8,527 8,170 7,967 7,996 7,852 7,709 7,740 7,771 7,803 Free Cash Flow from Operations 4,805 30,019 23,033 18,072 17,895 11,366 10,696 10,258 9,868 9,567 9,190 8,807 8,488 8,163 7,831

PV Periods 6.0 18.0 30.0 42.0 54.0 66.0 78.0 90.0 102.0 114.0 126.0 138.0 150.0 162.0 174.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.9623 0.8910 0.8250 0.7639 0.7073 0.6549 0.6064 0.5615 0.5199 0.4814 0.4457 0.4127 0.3821 0.3538 0.3276 PV of Free Cash Flow from Operations 4,623 26,746 19,002 13,805 12,657 7,444 6,486 5,759 5,130 4,605 4,096 3,635 3,243 2,888 2,566

Sum of PV of Free Cash Flow from Operations 142,467

34

North Brawley

Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 45 MW

2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Total Revenue 29,354 29,207 29,061 28,916 28,628 34,801 34,968 35,137 35,308 35,481 35,657 35,835 36,016 36,199 36,387 Less PPA penalties (120) (129) (138) (147) - - - - - - - - - - -

Adjusted Revenue 29,234 29,078 28,923 28,770 28,628 34,801 34,968 35,137 35,308 35,481 35,657 35,835 36,016 36,199 36,387

O&M 11,892 12,190 12,494 12,807 13,127 13,455 13,791 14,136 14,490 14,852 15,223 15,604 15,994 16,394 16,804 Insurance 584 582 580 578 574 621 621 621 621 621 621 621 621 621 621 Property Tax 875 849 823 799 775 752 729 707 686 665 645 626 607 589 571 Royalties 1,174 1,168 1,162 1,157 1,145 1,392 1,399 1,405 1,412 1,419 1,426 1,433 1,441 1,448 1,455 G&A 1,260 1,292 1,324 1,357 1,391 1,426 1,461 1,498 1,535 1,574 1,613 1,653 1,695 1,737 1,780 Utilities, Environmental, Others 3,881 3,978 4,078 4,180 4,284 4,391 4,501 4,614 4,729 4,847 4,969 5,093 5,220 5,351 5,484

Total Operating Costs 19,667 20,059 20,462 20,876 21,296 22,037 22,503 22,981 23,473 23,978 24,497 25,030 25,577 26,139 26,716 Operating Costs ($/kW-year) 468.83 480.56 492.68 505.18 517.93 538.64 552.79 567.39 582.44 597.97 613.98 630.48 647.50 665.05 683.14

EBITDA 9,566 9,019 8,462 7,893 7,332 12,765 12,465 12,155 11,835 11,503 11,160 10,805 10,438 10,060 9,671

Depreciation 7,836 7,870 7,905 7,940 7,977 8,014 8,052 8,091 8,132 3,579 1,731 1,775 1,819 1,864 5,415

EBIT 1,730 1,149 557 (47) (645) 4,751 4,413 4,064 3,703 7,924 9,428 9,030 8,620 8,195 4,256

Income Tax 40.7% 705 468 227 (19) (263) 1,936 1,798 1,656 1,509 3,229 3,842 3,680 3,512 3,339 1,734 After-tax Operating Profit 1,025 681 330 (28) (382) 2,815 2,615 2,408 2,194 4,695 5,587 5,351 5,107 4,856 2,522

Plus: (Increase)/Decrease in Working Capital 45 46 46 47 47 (453) 25 26 27 28 29 30 31 32 838 Less: CAPEX (1,413) (1,448) (1,485) (1,522) (1,560) (1,599) (1,639) (1,680) (1,722) (1,765) (1,809) (1,854) (1,900) (1,948) (1,996) Plus: Depreciation Benefit 7,836 7,870 7,905 7,940 7,977 8,014 8,052 8,091 8,132 3,579 1,731 1,775 1,819 1,864 5,415 Free Cash Flow from Operations 7,493 7,148 6,797 6,438 6,082 8,778 9,053 8,846 8,631 6,537 5,538 5,301 5,057 4,804 6,779

PV Periods 186.0 198.0 210.0 222.0 234.0 246.0 258.0 270.0 282.0 294.0 306.0 318.0 330.0 342.0 354.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.3033 0.2809 0.2601 0.2408 0.2230 0.2064 0.1912 0.1770 0.1639 0.1517 0.1405 0.1301 0.1205 0.1115 0.1033 PV of Free Cash Flow from Operations 2,273 2,008 1,768 1,550 1,356 1,812 1,731 1,566 1,414 992 778 690 609 536 700

Sum of PV of Free Cash Flow from Operations 142,467

35

3. Discounted Cash Flow Analysis – 50 MW Scenario

North Brawley Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 50 MW

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Total Revenue 29,298 34,987 34,812 34,638 34,465 34,292 34,121 33,950 33,780 33,612 33,444 33,276 33,110 32,944 32,780 Less PPA penalties - - - - - - - - - - - - - - -

Adjusted Revenue 29,298 34,987 34,812 34,638 34,465 34,292 34,121 33,950 33,780 33,612 33,444 33,276 33,110 32,944 32,780

O&M 19,363 9,406 9,536 9,667 9,798 9,930 10,062 10,314 10,572 10,836 11,107 11,384 11,669 11,961 12,260 Insurance 609 609 635 633 648 614 628 625 623 621 618 616 614 611 609 Property Tax 1,382 1,341 1,300 1,261 1,223 1,187 1,151 1,117 1,083 1,051 1,019 989 959 930 902 Royalties 1,172 1,399 1,392 1,386 1,379 1,372 1,365 1,358 1,351 1,344 1,338 1,331 1,324 1,318 1,311 G&A 870 1,028 1,053 1,080 1,107 1,134 1,163 1,192 1,222 1,252 1,284 1,316 1,349 1,382 1,417 Utilities, Environmental, Others 3,362 3,009 3,084 3,161 3,240 3,321 3,404 3,490 3,577 3,666 3,758 3,852 3,948 4,047 4,148

Total Operating Costs 26,758 16,792 17,001 17,188 17,395 17,559 17,773 18,095 18,428 18,770 19,123 19,487 19,862 20,249 20,647 Operating Costs ($/kW-year) 639.07 335.84 341.73 347.22 353.17 358.29 364.48 372.95 381.71 390.76 400.12 409.78 419.77 430.08 440.74

EBITDA 2,540 18,195 17,811 17,450 17,070 16,734 16,348 15,855 15,353 14,841 14,320 13,789 13,247 12,696 12,133

Depreciation 42,247 63,690 41,356 27,966 28,099 18,640 8,886 8,529 8,327 8,355 8,218 8,085 8,122 8,157 8,194

EBIT (39,707) (45,495) (23,545) (10,516) (11,030) (1,906) 7,461 7,326 7,026 6,486 6,103 5,704 5,126 4,538 3,939

Income Tax 40.7% (16,179) (18,537) (9,594) (4,285) (4,494) (777) 3,040 2,985 2,863 2,643 2,487 2,324 2,088 1,849 1,605 After-tax Operating Profit (23,528) (26,957) (13,952) (6,231) (6,536) (1,130) 4,421 4,341 4,163 3,843 3,616 3,380 3,037 2,689 2,334

Plus: (Increase)/Decrease in Working Capital (212) (1,305) 32 30 32 28 32 41 42 43 43 44 45 46 47 Less: CAPEX (26,620) (1,000) (1,025) (1,051) (1,077) (4,104) (1,131) (1,160) (1,189) (1,218) (1,280) (1,312) (1,345) (1,379) (1,413) Plus: Depreciation Benefit 42,247 63,690 41,356 27,966 28,099 18,640 8,886 8,529 8,327 8,355 8,218 8,085 8,122 8,157 8,194 Free Cash Flow from Operations (8,113) 34,428 26,411 20,714 20,519 13,435 12,208 11,751 11,343 11,023 10,597 10,197 9,859 9,514 9,162

PV Periods 6.0 18.0 30.0 42.0 54.0 66.0 78.0 90.0 102.0 114.0 126.0 138.0 150.0 162.0 174.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.9623 0.8910 0.8250 0.7639 0.7073 0.6549 0.6064 0.5615 0.5199 0.4814 0.4457 0.4127 0.3821 0.3538 0.3276 PV of Free Cash Flow from Operations (7,806) 30,674 21,789 15,823 14,512 8,798 7,403 6,598 5,897 5,306 4,723 4,208 3,767 3,366 3,002

Sum of PV of Free Cash Flow from Operations 150,425

36

North Brawley Depreciation Life 5-Year MACRSRemaining Life 30Existing Discount Rate 8.00%Tax Rate 40.75%Net Capacity (MW) 50 MW

2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040

Total Revenue 32,616 32,453 32,290 32,129 31,282 38,683 38,875 39,070 39,267 39,467 39,669 39,875 40,083 40,293 40,509 Less PPA penalties - - - - - - - - - - - - - - -

Adjusted Revenue 32,616 32,453 32,290 32,129 31,282 38,683 38,875 39,070 39,267 39,467 39,669 39,875 40,083 40,293 40,509

O&M 12,566 12,880 13,202 13,533 13,871 14,218 14,573 14,937 15,311 15,694 16,086 16,488 16,900 17,323 17,756 Insurance 606 604 601 599 591 647 648 648 648 648 648 648 648 648 648 Property Tax 875 849 823 799 775 752 729 707 686 665 645 626 607 589 571 Royalties 1,305 1,298 1,292 1,285 1,251 1,547 1,555 1,563 1,571 1,579 1,587 1,595 1,603 1,612 1,620 G&A 1,452 1,489 1,526 1,564 1,603 1,643 1,684 1,726 1,769 1,814 1,859 1,905 1,953 2,002 2,052 Utilities, Environmental, Others 4,252 4,358 4,467 4,579 4,693 4,810 4,931 5,054 5,180 5,310 5,442 5,579 5,718 5,861 6,007

Total Operating Costs 21,056 21,478 21,912 22,358 22,784 23,617 24,119 24,635 25,165 25,709 26,267 26,841 27,430 28,034 28,655 Operating Costs ($/kW-year) 451.74 463.10 474.83 486.93 498.70 519.54 533.25 547.39 561.97 577.01 592.51 608.49 624.96 641.95 659.46

EBITDA 11,559 10,975 10,379 9,771 8,498 15,065 14,756 14,435 14,102 13,758 13,402 13,034 12,653 12,259 11,854

Depreciation 8,222 8,246 8,274 8,306 8,338 8,373 7,461 1,608 1,648 1,689 1,731 1,775 1,819 1,864 5,415

EBIT 3,337 2,729 2,105 1,466 160 6,692 7,294 12,827 12,454 12,069 11,671 11,259 10,834 10,394 6,439

Income Tax 40.7% 1,360 1,112 858 597 65 2,727 2,972 5,226 5,075 4,918 4,755 4,588 4,414 4,235 2,624 After-tax Operating Profit 1,977 1,617 1,247 868 95 3,965 4,322 7,600 7,380 7,151 6,915 6,671 6,419 6,159 3,816

Plus: (Increase)/Decrease in Working Capital 48 49 50 51 106 (547) 26 27 28 29 30 31 32 33 1,022 Less: CAPEX (1,413) (1,448) (1,485) (1,522) (1,560) (1,599) (1,639) (1,680) (1,722) (1,765) (1,809) (1,854) (1,900) (1,948) (1,996) Plus: Depreciation Benefit 8,222 8,246 8,274 8,306 8,338 8,373 7,461 1,608 1,648 1,689 1,731 1,775 1,819 1,864 5,415 Free Cash Flow from Operations 8,835 8,463 8,086 7,703 6,979 10,193 10,171 7,555 7,334 7,104 6,868 6,623 6,370 6,108 8,256

PV Periods 186.0 198.0 210.0 222.0 234.0 246.0 258.0 270.0 282.0 294.0 306.0 318.0 330.0 342.0 354.0 Discount Rate 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00% 8.00%PV Factor 0.3033 0.2809 0.2601 0.2408 0.2230 0.2064 0.1912 0.1770 0.1639 0.1517 0.1405 0.1301 0.1205 0.1115 0.1033 PV of Free Cash Flow from Operations 2,680 2,377 2,103 1,855 1,556 2,104 1,944 1,337 1,202 1,078 965 862 767 681 853

Sum of PV of Free Cash Flow from Operations 150,425