Ormat is a leading company that is engaged in the geothermal and recovered energy power businesses. The company is also expanding into the solar Photovoltaic (PV), energy storage and management services business. Ormat designs, develops, builds, sells, owns, and operates geothermal and recovered energy-based power plants. The company owns and operates 25 geothermal, REG and solar sites globally with an aggregate generating capacity of 914 MW. Geothermal comprises 93% of Ormat´s generating capacity. In 2019, geothermal and REG power plants of the company generated at a capacity factor of 87% and 74%, respectively, which is higher than typical capacity factors for wind and solar producers that are usually at 20% to 30%.
The company conducts business activities in three business segments: Electricity Segment, Product Segment, and the Energy Storage and Management Services Segment. The three business segments contributed 72.4% (70.9% in 2018), 25.6% (28.0% in 2018) and 2% (1.1% in 2018) of the total revenues in 2019, respectively. In 2019, Ormat delivered 61.8% of Electricity segment revenues from operations in the U.S. and 38.2% from the rest of the world. 16% of Product Segment revenues derived from the USA and 84% from the rest of the world. The Energy Storage and Managements Services Segment contributed 92.5% of segment revenue from operations in the USA.
According to the company´s Annual Report, total revenue increased by 3.7% from $719.3 million in 2018 to $746.0 million in 2019. Operating income for 2019 was $193.8 million, compared to $185.1 million in 2018, representing a 4.7% increase from the prior period.
Net income for 2019 was $93.5 million, compared to $110.1 million in 2018, representing a decrease of $16.6 million or 15% from the prior period. This decrease in net income was primarily attributable to an increase in income tax provision of $10.9 million, an increase of $9.5 million in interest expense.
Adjusted EBITDA for the year 2019 was $384.3 million, compared to $368.0 million in 2018 and $343.8 million in 2017.
During 2019 and 2018, consolidated power plants of the company generated 6,238,272 MWh and 5,857,963 MWh, respectively, and increased by 6.5%, primarily because of an increase in generation due to operations of the McGinness Hills Complex in Nevada, Plant 1 expansion in Kenya and the acquisition of USG.
Research and development expenses for the year 2019 were $4.6 million compared to $4.2 million in 2018 and $3.2 million in 2017.
In 2019, Electricity segment revenues were $540.3 million, compared to $509.9 million in 2018 and increased by 6.0%. This increase was primarily attributable to operations of the McGinness Hills Complex in Nevada, which generated total complex revenues of $96.9 million in 2019, compared to $65.1 million in 2018. Operating income attributable to the Electricity segment was $177.2 million in 2019, compared to $155.5 million in 2018. Electricity segment domestic revenues were approximately 62%, 60% and 64% of total electricity segment for the years 2019, 2018 and 2017, respectively. However, domestic operations in the Electricity segment have higher revenue costs and expenses than the foreign operations. Foreign power plants are located in lower-cost regions, like Kenya, Guatemala, Honduras and Guadeloupe, which favourably impact maintenance expenses. Consequently, in 2019 the international operations of the segment accounted for 52% of total gross profits, 59% of net income and 48% of EBITDA.
Product segment revenues in 2019 were $191.0 million, compared to $201.7 million in 2018 and decreased by 5.3%. The decrease in Product segment revenues was mainly due to projects that were completed in Turkey in 2018, which accounted for $91.1, and the start of new projects in Turkey and the U.S. which provided $72.2 million in revenue in 2019, compared to $90.0 million in 2018. Operating income attributable to the Product segment was $23.2 million in 2019, compared to $38.1 million in 2018 and decreased by 40%. Product segment foreign revenues were 84%, 93% and 99% of total Product segment revenues for the years 2019, 2018 and 2017, respectively. Product segment foreign activity also benefits from lower costs of revenues and expenses than Product segment domestic activity such as labour and transportation costs. Accordingly, Product segment foreign activity contributes more than Product segment domestic activity to the pre-tax income from operations.
Revenues attributable to the Energy Storage and Management Services segment in 2019 were $14.7 million in 2019, compared to $7.6 million in 2018 and redoubled from the previous year. This increase was mainly driven by the start of operation of two energy storage facilities in the PJM market. The Energy Storage and Management Services segment includes revenues from the delivery of energy storage demand response and energy management services. Operating loss attributable to the Energy Storage and Management Services segment for the year 2019 was $6.6 million, compared to $8.5 million in 2018, and decreased by almost 23%.
Ormat´s objective is to become a leading global provider of renewable energy. The company is accelerating its efforts to expand business development activities in developing countries where geothermal is considered a local resource that can provide a stable and cost-effective solution to increase access to power.