The majority owner of the geothermal power plant idled by lava on Hawaii island recently reported that it is stuck with an initial $3 million revenue loss but expects further losses will be covered by insurance.
Ormat Technologies Inc., the Nevada-based firm heading Puna Geothermal Venture, also said it has already received $7.2 million in insurance proceeds for a drilling rig destroyed by lava.
The company provided updates on PGV in an earnings report and conference call with stock analysts last week.
The $3 million in lost revenue reflected the first 30 days of the power plant’s shutdown, which was triggered by the eruption that began May 3.
Lava covered three of six PGV energy production wells and burned a substation along with an adjacent warehouse that held the drilling rig. Though the plant remains closed, Ormat has committed to retain and pay its 30 full-time PGV workers for at least a year.
Insurance held by Ormat covers lost profit and property damage up to $100 million but excludes the first 30 days of lost revenue, the company said.
Overall, Ormat expects profits from electricity this year to be in line with last year if insurance payouts are obtained by the end of the year, company CEO Isaac Angel said on the conference call. PGV accounted for about $11 million of Ormat’s net income last year, the company has said previously.
Ormat owns 63 percent of PGV, and an affiliate of Canadian-based investment firm Northleaf Capital Partners owns the balance.
Before the eruption, Ormat had a plan to increase energy production at PGV by installing new equipment to boost the plant’s output capacity to 46 megawatts from 38 megawatts. That project was expected to happen by late 2019 or early 2020 but now is on hold.
It remains unclear whether Ormat can restore and restart PGV, which produced nearly 30 percent of the electricity on the Big Island. Hawaii Electric Light Co. has been making up for the PGV loss from other sources but at a higher cost.
Ormat has the capability to drill new surface connections to the wells that were sealed before they were buried by lava. However, all roads leading to the power plant have been covered or blocked by lava. Hawaii island Mayor Harry Kim previously told the Honolulu Star-Advertiser that the county will not attempt to clear or fix government roads until there is a minimum six months of lava inactivity.
The lava flow from fissure 8 slowed down Aug. 2. However, the U.S. Geological Survey cautions that a slowdown could just be temporary.
“It is common for eruptions to go through periods of diminished output, or to pause completely, only to return with renewed vigor days or weeks later,” the agency noted in recent eruption status reports.
Kim previously estimated that once lava ceases for six months, it could be two to three years conservatively before any resumption of PGV electricity production is possible.
Doron Blachar, Ormat’s chief financial officer, said on the conference call that it would take at least 18 months of work to restore PGV to operating condition.