Ormat Technologies (ORA) is favorably positioned to deliver on its longer-term targets and has an opportunity to accelerate in 2028 and beyond amid solid market demand, RBC Capital Markets said Tuesday.

RBC said strong energy demand, combined with clean energy commitments with hyperscalers, is pushing geothermal power purchase agreement prices to over $100 per megawatt-hour, which will remain an economic tailwind for Ormat.

Longer-term, the firm said it sees upside from re-contracting of existing PPAs at higher prices with renewals in 2029 to 2034, and from new PPAs supporting the expansion and development of new projects.

RBC said long-term tolling and resource adequacy agreements in California, combined with growing merchant revenues in the PJM market, are driving the company's energy storage segment.

Ormat still has a few years to move into commercial scale development for enhanced geothermal systems, though RBC thinks there is a significant long-term growth opportunity as the technology evolves.

RBC initiated coverage on Ormat with an outperform rating and a price target of $130.

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