Doron Blachar: Julien. It’s Doron. I will say this thing, one, there’s definitely a very, very strong demand for renewable and specifically geothermal assets in the West. Today, all of our assets are 100% contracted, whatever electricity were able to generate from our geothermal facilities, we are able to sell under our existing PPA effectively, there’s no benefit to store and then to sell later. So this is something that we haven’t combined it to. It’s something that is always someplace on the table to look into, but so far economic-wise we haven’t seen the benefit if we cancel whatever we generate and playing between the hours with storage doesn’t seem to us very economic. I would say that what we do see from the energy storage in the West are many RFPs for tolling agreements or PPA agreements for storage facilities, like the bottleneck that we signed the PPA.
And we are building into these RFPs and I hope and we plan to win some of them and once we win we will obviously update the balance.
Julien Dumoulin-Smith: Thank you guys. I get what you’re saying.
Operator: Your next question is from the line of Jon Windham with UBS.
Jon Windham: Perfect. Thanks for taking the questions, and I hope you and your team are doing well. Maybe a question would be, I’d be really interested to just get your thoughts on how ongoing conversations are going with incremental PPAs both on the geothermal and storage side, basically trying to get out the willingness of off-takers to take on higher rates given the higher financing environment. Appreciate it. Be well.
Doron Blachar: What we see today is exactly what you said. There’s two factors, two vessels operating in the same direction. On one hand, the demand for renewable energy and the requirement by the CPUC in California to add geothermal energy and to bring energy storage. That’s on one hand. On the other hand, the increased interest rates are pushing all developers to go with higher, to bid higher pricing. And that’s what exactly what we see today. We see the tolling agreement or the PPA agreement for storage. We see higher numbers in the bid that we compete in, in the bid that we are shortlisted or some that we are not shortlisted, but we see the different numbers which are higher than what has been over the last year or so. And in the geothermal there aren’t any new facilities coming online.
So whoever has a new facility, it can actually make a reverse bid and bid the facility between the different utilities to get very high pricing. I believe that 80 is a low number today if you have a new geothermal facility.
Jon Windham: Appreciate it.
Operator: Your next question is from the line of Jeff Osborne with TD Cowen.
Jeff Osborne: Yeah, good afternoon. Most of the questions have been addressed so far, but two that I wanted to dig into was one on the Goshen supply arrangement. I think there’s certainly been some controversy around the Michigan factory for them. I think in the recent election this week the entire board of the town was removed. I’m just curious, is the output that you’ll be receiving from that facility or is there other backup plans in the event that the controversy around that site in rural Michigan were not to be built?
Doron Blachar: No. As far as we know, Goshen is planning to have its facility operating at the end of 2024. We are planning our site to be operating earlier or during the beginning of 2025. So all the projects that we release for construction, that are listed on our presentation, will be supplied from Goshen facility in Mexico. I hope that once they will get the relevant approval and finish building the facility in the US future projects will be from the US and will be tied to an additional 10% ITC. But this is, as you said, it’s in construction. So we don’t have the facility there. But the current ones are not from there.
Jeff Osborne: So for 2024 and 2025, you wouldn’t get the 10% adder for domestic batteries, but you could get it for energy communities. Is that the right way to think about the storage business?
Doron Blachar: Yes. Definitely.
Jeff Osborne: Got it. And lastly, are you folks testing or have any thoughts on some of the new drilling techniques that are out there that might expand the addressable market for geothermal?
Doron Blachar: Look, we follow very closely all of these new drilling techniques. It is something that every few years come back into play. People are looking into investing money into it. At this stage, we haven’t seen the right technology that can expand significantly the geothermal market without other limitations that they have — but we’re definitely looking closely. We hope it will be — one of them will be successful. We are in discussions, obviously, in meeting with all of them in the different constances and if any of them will be successful, we’ll be very happy to utilize it in our product and our future development projects as well as in our product segment.
Jeff Osborne: Perfect. Appreciate the thoughts. That’s all I had.
Doron Blachar: Thank you.
Operator: [Operator Instructions] The next question is from the line of Ryan Levine with Citi.
Ryan Levine: Hey, everybody. A couple of more specific questions. In terms of the West Coast generation in terms of the capacity or utilization factor, are you noticing any trends in terms of what that capacity factor is over time or what that will be on a go-forward basis
Doron Blachar: As we said, we’re operating our assets at 24/7. The main time that the downtime is through some maintenance thing that we have, these are big power plants, a lot of mechanical items. We do issue every year on our 10-K specific availability of each region. Either this game online you know, increase, obviously, the generation that we’ve been — we will show this year, because it was up almost all of last year. But for specific facility, we don’t see anything different this year compared to previous year.
