Barclays has upgraded Ormat Technologies (NYSE: ORA) from “Equal Weight” to “Overweight,” raising its price target from $80 to $86. This strategic move comes as the United States faces a looming electricity shortage, driven by the explosive growth of power-hungry data centers and heightened demand for reliable, clean baseload power. With its leadership in geothermal energy, Ormat is positioned as a key beneficiary of these secular trends.

Surging Power Demand from Data Centers
America’s data center boom—fueled by the rapid rise of AI and digital transformation—has dramatically increased national electricity consumption. According to industry projections, the U.S. will need to add 300–400 gigawatts (GW) of new power capacity by 2030, equivalent to 40% of today’s grid, to keep pace with anticipated data center growth. Yet with manufacturing constraints and supply chain bottlenecks, analysts estimate that only 70–75 GW can realistically be added by that time, leaving a massive supply gap.

Geothermal Energy: The Reliable Baseload Solution
Unlike intermittent renewables such as wind and solar, geothermal energy provides stable, 24/7 power—making it one of the few clean energy sources suitable for critical infrastructure like data centers. As the grid faces stress from both demand and renewables’ variability, geothermal’s reliability has come under renewed focus. PPAs (power purchase agreements) for geothermal electricity have recently reached $100/MWh, highlighting its rising value in today’s constrained market.

Ormat’s Strategic Position and Direct Industry Engagement
Ormat Technologies is the largest owner and operator of geothermal power plants in the United States and the world’s leading manufacturer of binary geothermal equipment. The company is currently negotiating directly with hyperscale data center operators to provide long-term geothermal supply. While most of Ormat’s current output is under existing long-term PPAs, a number of contracts are set for repricing by decade’s end, offering a major earnings visibility boost and upside potential. Ormat’s reputation for reliability is making it a preferred supplier as hyperscalers race to secure dedicated, clean energy lines for future growth.

Government Support and Regulatory Tailwinds
The U.S. government has recently introduced fast-track permitting for geothermal projects to address the national power crunch and support grid reliability. Several Ormat-led projects in Nevada have been prioritized under these new rules. Federal and state incentives, along with the urgency to diversify America’s energy mix, provide further momentum for the company’s expansion plans.

Financial Performance and Expansion Outlook
Ormat reported revenues of approximately $880 million in 2024, reflecting 6.1% year-over-year growth. Management plans to expand installed capacity to 2.6–2.8 GW by the end of 2028, leveraging acquisitions and new development projects in high-demand regions. The company’s defensive business model, with over five years of visible contracted cash flow, positions it well to outperform more cyclical power sector peers during uncertain periods.

Market Implications and Strategic Outlook
Barclays’ upgrade reflects a broader market recognition: as the U.S. power system faces an historic supply challenge, only a handful of scalable, reliable, and clean energy solutions—like geothermal—can close the gap. Ormat, as the market leader, is poised to capture significant new growth, while the repricing of PPAs and direct data center contracts could further boost profitability.

Conclusion
With data center demand surging and grid constraints tightening, Ormat’s leadership in geothermal power is more relevant than ever. Backed by favorable market dynamics, government support, and robust financial performance, the company is positioned at the nexus of the clean energy transition and digital infrastructure boom. Investors and analysts alike are taking notice, as evidenced by Barclays’ upgraded rating and bullish price target.