UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, ~~2016~~2017

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For transition period ~~_______~~_______to to _______

Commission File Number 001-34023

U.S. GEOTHERMAL INC.
(Exact name of Registrant as specified in its charter)

Delaware	84-1472231
(State or Other Jurisdiction of	(I.R.S. Employer
Incorporation or Organization)	Identification No.)
390 Parkcenter Blvd, Suite 250
Boise, Idaho	83706
(Address of Principal Executive Offices)	(Zip Code)
Registrant’s Telephone Number, Including Area Code	208-424-1027

390 Parkcenter Blvd, Suite 250
Boise, Idaho	83706
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code 208-424-1027

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value	NYSE ~~MKT~~American LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act
[ ] Yes [X] No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.
[ ] Yes [X] No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
[X] Yes [ ] No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
[X] Yes [ ] No

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, ~~and~~ “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer [ ] Accelerated filer [ X] Non-accelerated filer [ ] (Do not check if a smaller reporting company) Smaller reporting company [X ] Emerging growth company [ ]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act [ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
[ ] Yes [X] No

The aggregate market value of the voting and non-voting common equity held by non-affiliates as of the end of the registrant’s most recent second quarter based upon the closing sale price of the registrant’s common stock as reported by the NYSE ~~MKT~~American LLC on June 30, ~~2016~~2017, was $9272,~~730~~659,~~531~~ 755.

The number of shares outstanding of the registrant’s common stock as of March 61, ~~2017~~2018 was 19,~~017~~494,~~157~~566.

DOCUMENTS INCORPORATED BY REFERENCE

None

U.S. Geothermal Inc. ~~and Subsidiaries~~ Form 10-K INDEX For the Year Ended December 31, ~~2016~~2017

		Page		~~Page~~
PART I
Item 1	Business	5		5
	Development of Business	~~Development of Business~~6		6
	History	6	~~History~~	6
	Plan of Operations	6	~~Plan of Operations~~	6
			Projects in Operation	8
	Project Overview	10
			Material Projects Under Development/Exploration	11
	Projects in Operation	11
			Employees	20
	Material Projects Under Development/Exploration	13
			Principal Products	21
	Employees	22
			Sources and Availability of Raw Materials	21
	Principal Products	22
			Significant Government Permits	22
	Sources and Availability of Raw Materials	23
			Seasonality of Business	23
	Significant Government Permits	23
			Industry Practices/Needs for Working Capital	23
	Seasonality of Business	24
			Dependence on a Few Customers	23
	Industry Practices/Needs for Working Capital	25
			Competitive Conditions	24
	Dependence on a Few Customers	25
			Environmental Compliance	24
	Competitive Conditions	25
		Financial Information about Geographic Areas		27
	Environmental Compliance	26
		Financial Information abou Business Segments		27
	Financial Information about Geographic Areas	29
		Available Information		27
	Financial Information about Business Segments	29
		Governmental Approvals and Regulations		28
	Available Information	29
			Environmental Credits	30
	Governmental Approvals and Regulations	30
Item 1A	Risk Factors	34		32
	Risks Related to Our Business	~~Risks Related to Our Business~~34		32
	Risks Related to Our Growth	~~Risks Related to Our Growth~~40		38
	Risks Related to Our Power Purchase Agreements	~~Risks Related to Our Power Purchase Agreements~~46		44
	Risks Related to Our Liquidity and Capital Resources	~~Risks Related to Our Liquidity and Capital Resources~~48		46
	Risks Related to Government Regulation	~~Risks Related to Government Regulation~~51		49
	Risks Related to Ownership of Our Common Stock	~~Risks Related to Ownership of Our Common Stock~~53		51
Item 1B	Unresolved Staff Comments			54
	Risks Related to the Merger	56
Item 2	Property			55
Item 1B	Unresolved Staff Comments	58
	Land and Leases			65
Item 2	Property	59
Item 3	Legal Proceedings			67
	Land and Leases	69
Item 4	Mine Safety Disclosures			68
Item 3	Legal Proceedings	71
PART II
Item 4	Mine Safety Disclosures	72
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities			69
PART II
Item 6	Selected Financial Data			70
Item 5	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	73
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations			71
Item 6	Selected Financial Data	74
Item 7	Management’s Discussion and Analysis of Financial Condition and Results of Operations	75

U.S. Geothermal Inc. ~~and Subsidiaries~~ Form 10-K INDEX For the Year Ended December 31, ~~2016~~2017

		Page		~~Page~~
	Historical Overview	~~Historical Overview~~75		71
	Factors Affecting Our Results of Operations	~~Factors Affecting Our Results of Operations~~76		73
	Operating Results	~~Operating Results~~78		75
	Non-Controlling Interests	93	~~Non-Controlling Interests~~	81
	Liquidity and Capital Resources	~~Liquidity and Capital Resources~~95		83
	Potential Acquisitions	~~Potential Acquisitions~~96		84
	Critical Accounting Policies	~~Critical Accounting Policies~~96		85
	Contractual Obligations	~~Contractual Obligations~~98		86
	Off Balance Sheet Arrangements	~~Off Balance Sheet Arrangements~~98		86
Item 7A	Quantitative and Qualitative Disclosures about Market Risk	98		86
Item 8	Financial Statements and Supplementary Data	98		86
Item 9	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	99		87
Item 9A	Controls and Procedures	99		87
	Report of Independent Registered Public Accounting Firm	100		89
Item 9B	Other Information	102		89
PART III				90
Item 10	Directors, Executive Officers and Corporate Governance	103		90
Item 11	Executive Compensation	107		94
	Summary Compensation Table	~~Summary Compensation Table~~114		~~101~~
		Outstanding Equity Awards at Fiscal Year-End		102
	Grants of Plan-Based Awards Table	115
		Potential Payments Upon Termination or Change-in-Control		102
	Options Exercises and Stock Vested Table	115
		Director Compensation		104
	Outstanding Equity Awards at Fiscal Year-End	116
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters			105
	Potential Payments Upon Termination or Change-in-Control	116
		Securities Authorized for Issuance under Equity Compensation Plans		105
	Director Compensation	118
		Security Ownership of Certain Beneficial Owners and Management		105
	CEO Pay Ratio	118
Item 13	Certain Relationships and Related Transactions, and Director Independence			107
Item 12	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	120
Item 14	Principal Accountant Fees and Services			108
	Securities Authorized for Issuance under Equity Compensation Plans	120
PART IV				109
	Security Ownership of Certain Beneficial Owners and Management	121
Item 15	Exhibits and Financial Statement Schedules			109
Item 13	Certain Relationships and Related Transactions, and Director Independence	122
Item 16	Form 10-K Summary			113
Item 14	Principal Accountant Fees and Services	123
PART IV
Item 15	Exhibits and Financial Statement Schedules	124
Item 16	Form 10-K Summary	124

Introduction

On January 24, 2018, the Company announced that it had entered into a Merger Agreement, as defined below, with a wholly-owned subsidiary of Ormat Technologies, Inc., a public company incorporated under the laws of the State of Delaware. Unless stated otherwise, all forward-looking information contained in this report does not take into account or give any effect to the impact of the Merger, as defined below. For additional details regarding the Merger, see “Development of the Business” contained in Part I, Item 1, of this report, “Risk Factors”contained in Part I, Item 1A, of this report, and Note 17 to the Company’s consolidated financial statements, contained in Part II, Item 8, of this report.

PART I

Item 1.

Business

Information Regarding Forward Looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve a number of risks and uncertainties. We caution readers that any forward-looking statement is not a guarantee of future performance and that actual results could differ materially from those contained in the forward-looking statement. These statements are based on current expectations of future events. You can find many of these statements by looking for words like “believes,” “expects,” “anticipates,” “intend,” “estimates,” “may,” “should,” “will,” “could,” “plan,” “predict,” “potential,” or similar expressions in this document or in documents incorporated by reference in this document. These forward-looking statements are based on the current beliefs and expectations of our management and are subject to significant risks and uncertainties. If underlying assumptions prove inaccurate or unknown risks or uncertainties materialize, actual results may differ materially from current expectations and projections.

All subsequent written or oral forward-looking statements attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this section. We do not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date of this document or to reflect the occurrence of unanticipated events, except as may be required under applicable U.S. securities law. If we do update one or more forward-looking statements, no inference should be drawn that we will make additional updates with respect to those or other forward-looking statements.

U.S. Geothermal Inc. (the “Company,” “we” or “us” or words of similar import) is in the renewable “green” energy business. Through our subsidiary, U.S. Geothermal Inc., an Idaho corporation (“Geo-Idaho,” although our references to the Company include and refer to our operations through Geo-Idaho), we are engaged in the acquisition, development and utilization of geothermal resources in the Western United States and the Republic of Guatemala. Geothermal energy is the natural heat energy stored within the earth’s crust. In some areas of the earth, economic concentrations of heat energy result from a combination of geological conditions that allow water to penetrate into hot rocks at depth, become heated, and then circulate to a near surface environment. In these settings, commercially viable extraction of the geothermal energy and its conversion to electricity become possible and a “geothermal resource” is present.

-5-

Development of Business

U.S. Geothermal Inc. was originally incorporated on March 10, 2000 in the State of Delaware. The Company constructs, manages and operates power plants that utilize geothermal resources to produce electricity. The Company’s operations have been, primarily, focused in the Western United States.

The Company currently owns and operates the following geothermal power plant projects: Raft River, Idaho; San Emidio, Nevada; and Neal Hot Springs, Oregon. The Company also has geothermal property interests in the Republic of Guatemala; the Geysers in California; Vale, Oregon; Crescent Valley, Nevada; Ruby Hot Springs, Nevada; Lee Hot Springs, Nevada; and Gerlach, Nevada, some of which are under development or exploration.

History

Geo-Idaho was formed as an Idaho corporation in February 2002 to conduct geothermal resource development.

U.S. Cobalt Inc. entered into a merger agreement with Geo-Idaho on February 28, 2002, which was amended and restated on November 30, 2003, and closed on the reverse take-over on December 19, 2003. In accordance with the merger agreement, the Company acquired Geo-Idaho through the merger of Geo-Idaho with a subsidiary, EverGreen Power Inc., an Idaho corporation formed for that purpose. Geo-Idaho was the surviving corporation and is the subsidiary through which the Company conducts operations. As part of this acquisition, the Company name was changed to U.S. Geothermal Inc.

Plan of Operations

Our business strategy is to identify, evaluate, acquire, develop, and operate geothermal assets and resources economically, safely and efficiently. Our management evaluates our operating projects based on revenues and expenses, and our projects under development, based on costs attributable to each project. We examine different factors when assessing projects at different stages of development or potential acquisitions, such as the internal rate of return of the investment, technical and geological matters and other relevant business considerations.

We intend to execute this strategy in several steps outlined below:

• Maximize Our Operations – Our operating power plants and operations team provide revenue to the Company through both power sales and Operations & Maintenance contracts. We strive to optimize plant operations ~~though~~ through high safety standards, quality preventative maintenance programs, operator education, equipment selection and by exceeding our annual budgetary goals.

~~Leverage Management Team Capabilities and Experience – Our strategy is focused on the identification and acquisition of resources that can be developed in a cost~~-effective manner to produce attractive returns. In particular, we seek to acquire projects that have already undergone geothermal resource discovery. In addition, we intend to operate and manage construction of the projects, while using internal personnel and third6-~~party~~ contractors to efficiently and cost-effectively develop those resources. We believe that we have the strategic personnel in place to determine which resources provide the greatest opportunity for efficient development and operation. We have developed relationships and employed personnel that will allow us to develop and utilize geothermal resources as efficiently as possible.

• Leverage Management Team Capabilities and Experience – Our strategy is focused on the identification and acquisition of resources that can be developed in a cost-6effective manner to produce attractive returns. In particular, we seek to acquire projects that have already undergone geothermal resource discovery. In addition, we intend to operate and manage construction of the projects, while using internal personnel and third-party contractors to efficiently and cost-effectively develop those resources. We believe that we have the strategic personnel in place to determine which resources provide the greatest opportunity for efficient development and operation. We have developed relationships and employed personnel that will allow us to develop and utilize geothermal resources as efficiently as possible. • Develop Our Pipeline of Quality Projects – Our project pipeline currently consists of several projects that we believe are aligned with our growth strategy. These projects typically have consulting reports from various industry experts supporting our belief in those projects’ potential. We are evaluating the potential of those projects and expect to negotiate Power Purchase Agreements (“PPAs”) for power deliveries with counterparties for some of these growth opportunities. If realized, our identified project pipeline will greatly expand our renewable power generation capacity as we move forward with the development of those opportunities. • Utilize Production Tax Credits, Investment Tax Credits and Other Incentives – Although geothermal power production can be cost competitive with fossil fuel power generating facilities on a life cycle cost basis, government incentives such as production tax credits (“PTC”) and Investment Tax Credits (“ITC”) available to geothermal power producers help offset the high upfront project capital cost by enhancing the project economics and attracting capital investment. For the Raft River Unit I project, we partnered with Goldman Sachs as a tax equity partner to fully utilize production tax credits available to the project. Our strategy is to structure project ownership to optimize project economics. Under current legislation, a company may elect to take 30% ITC for certain qualified investments (or the PTC) provided construction of the project was started prior to the end of 2017. We believe that the second phase of our San Emidio project, our WGP Geysers project, and our Crescent Valley project each qualify for this credit. • Pursue Acquisition Strategy – The geothermal market, particularly in the United States, is fragmented and characterized by a few large players and a number of smaller ones. Geothermal exploration and development is capital intensive, technically challenging and requires long lead times before a project will produce revenue. We believe that geothermal technical and managerial talent is limited in the industry and that access to capital to develop projects will not be equally available to all participants. As a result, we believe that there will be opportunities in the future to pursue acquisitions of geothermal projects and/or geothermal development companies with attractive project pipelines.

~~Develop~~-7- Our Pipeline of Quality Projects – Our project pipeline currently consists of several projects that we believe are aligned with our growth strategy. These projects typically have consulting reports from various industry experts supporting our belief in those projects’ potential. We are evaluating the potential of those projects and expect to negotiate Power Purchase Agreements (“PPAs”) for power deliveries with counterparties for some of these growth opportunities. If realized, our identified project pipeline will greatly expand our renewable power generation capacity as we move forward with the development of those opportunities.

~~Utilize~~• ~~Production~~Evaluate ~~Tax~~Other ~~Credits,~~Potential ~~Investment~~Revenue ~~Tax~~Streams ~~Credits~~from ~~and~~Geothermal ~~Other Incentives~~Resources – ~~Although~~In ~~geothermal~~addition ~~power~~to ~~production~~electricity ~~can~~generation, bewe ~~cost~~may ~~competitive with~~evaluate ~~fossil~~additional ~~fuel~~applications ~~power~~for ~~generating~~our ~~facilities~~geothermal onresources aincluding ~~life~~industrial, ~~cycle cost basis~~agriculture, ~~government~~ ~~incentives~~and ~~such~~aquaculture aspurposes. ~~production~~These ~~tax~~uses ~~credits~~generally ~~(“PTC”)~~constitute ~~and~~lower ~~Investment Tax~~temperature ~~Credits~~applications ~~(“ITC”)~~where, ~~available~~after todriving ~~geothermal~~a ~~power~~turbine ~~producers~~generator, ~~help~~residual ~~offset~~hot ~~the high~~water ~~upfront~~can ~~project~~be ~~capital~~cycled ~~cost~~for bysecondary ~~enhancing~~processes ~~the~~before ~~project~~being ~~economics~~returned ~~and attracting~~to ~~capital investment. For~~ the ~~Raft~~geothermal ~~River~~reservoir ~~Unit~~by Iinjection ~~project~~wells, wewhich ~~partnered with~~can ~~Goldman~~provide ~~Sachs~~incremental asrevenue astreams. ~~tax~~We ~~equity~~may ~~partner~~evaluate ~~to fully utilize production tax credits available to~~ the ~~project.~~optimal ~~Our~~use ~~strategy~~for iseach togeothermal ~~structure~~resource ~~project ownership~~and todetermine ~~optimize~~whether ~~project~~selling ~~economics.~~heat ~~Under current legislation, a company may elect to take 30% ITC~~ for ~~certain~~industrial ~~qualified~~purposes ~~investments (~~or ~~the~~generating ~~PTC) provided~~and ~~construction~~subsequently ofselling ~~the~~power ~~project~~to ~~was~~a ~~started~~grid ~~prior~~will togenerate the ~~end~~highest ofreturn ~~2016.~~on ~~We believe that~~ the ~~second phase of our San Emidio project, our WGP Geysers project, and our Crescent Valley project each qualify for this credit~~asset.

~~Pursue~~For ~~Acquisition Strategy – The geothermal market, particularly in~~ the ~~United~~year ~~States,~~ended isDecember ~~fragmented and characterized by a few large players and a number of smaller ones. Geothermal exploration and development is capital intensive~~31, technically challenging and requires long lead times before a project will produce revenue. We believe that geothermal technical and managerial talent is limited in the industry and that access to capital to develop projects will not be equally available to all participants. As a result2017, ~~we believe that there will be opportunities in~~ the ~~future~~Company towas ~~pursue~~focused ~~acquisitions of geothermal projects and/or geothermal development companies with attractive project pipelines.~~ on:

~~Evaluate~~• ~~Other~~operating ~~Potential~~and ~~Revenue~~optimizing ~~Streams~~the ~~from~~Neal ~~Geothermal~~Hot ~~Resources~~Springs, ~~– In~~San ~~addition~~Emidio toand ~~electricity~~Raft ~~generation,~~River wepower ~~may~~plants; ~~evaluate~~• ~~additional~~continuing ~~applications for~~detailed ~~our~~engineering ~~geothermal~~and ~~resources~~pursuing ~~including~~PPA ~~industrial,~~opportunities ~~agriculture,~~for ~~and aquaculture~~the ~~purposes.~~WGP ~~These~~Geysers ~~uses~~project; ~~generally~~• ~~constitute~~continuing ~~lower~~permitting ~~temperature applications~~and ~~where,~~engineering ~~after~~for ~~driving~~the aSan ~~turbine~~Emidio ~~generator,~~II ~~residual~~project; ~~hot~~• ~~water~~continuing ~~can be~~the ~~cycled~~advanced ~~for~~resource ~~secondary~~evaluation ~~processes~~portion ~~before~~of ~~being~~the ~~returned~~$1.5 tomillion ~~the~~SubTER ~~geothermal reservoir~~grant byfrom ~~injection~~the ~~wells,~~Department ~~which~~of ~~can~~Energy ~~provide~~at ~~incremental~~San ~~revenue~~Emidio ~~streams. We~~and ~~may~~Crescent ~~evaluate~~Valley; ~~the~~• ~~optimal~~continuing ~~use~~engineering for ~~each~~the ~~geothermal~~Neal ~~resource~~Hot ~~and~~Springs ~~determine whether~~hybrid ~~selling~~cooling ~~heat~~system ~~for~~and ~~industrial purposes~~injection orpump ~~generating~~system; and ~~subsequently~~• ~~selling~~evaluating ~~power~~potential tonew ageothermal ~~grid~~projects ~~will~~and ~~generate the~~acquisition ~~highest return on the asset~~opportunities.

~~-7-~~The Board of Directors is focused on the strategic direction of the Company, including review of the Company’s overall development plan as well as reviewing strategic alternatives. The Board has established committees to assist the Board with this process. There can be no assurance that this ongoing strategic review will result in any specific action or transaction or that any action taken or transaction we may enter into will prove to be beneficial to stockholders.

~~During~~On January 24, 2018, U.S. Geothermal Inc. (the ~~year~~“Company”) entered ~~ended~~into ~~December~~an 31Agreement and Plan of Merger (the “Merger Agreement”) by and among Ormat Nevada Inc., ~~2016~~a Delaware corporation (“Ormat”), OGP Holding Corp., a Delaware corporation and a wholly-owned subsidiary of Ormat (“Merger Sub”) and the Company. ~~was~~Pursuant to the Merger Agreement, Merger Sub will be merged with ~~focused~~and oninto ~~these~~the ~~specific~~Company ~~items:~~(the “Merger”), the separate corporate existence of Merger Sub will cease and the Company will continue its corporate existence under the Delaware General Corporation Law as the surviving company in the Merger and a subsidiary of Ormat.

~~operating~~Subject to the terms and ~~optimizing~~conditions set forth in the ~~Neal~~Merger Agreement, ~~Hot~~at ~~Springs~~the effective time of the Merger (the “Effective Time”), ~~San~~each share ~~Emidio~~of common stock, par value $0.001, of the Company (“Company Shares”) issued and ~~Raft~~outstanding ~~River~~immediately prior to the Effective Time of the Merger ~~power~~(other ~~plants;~~than Company Shares owned by Ormat, Merger Sub or the Company (as treasury stock or otherwise), or any of their respective direct or indirect wholly-owned subsidiaries, in each case, not Company Shares owned by shareholders who have exercised their rights as dissenting owners under Delaware law) will be automatically converted into the right to receive $5.45 per Company Share in cash, without interest.

~~conducting~~-8- ~~annual maintenance outages at all three projects;~~

~~drilling~~The Merger Agreement provides that, at the Effective Time, each of the Company’s then outstanding stock options will be treated as follows: (i) the accelerated vesting and ~~flow~~settlement ~~testing~~of ~~two~~all ~~wells~~then-outstanding atOptions immediately ~~San~~prior ~~Emidio~~to ~~II;~~and contingent on the closing of the Merger, (ii) the cash-out of such Options providing for payment of an amount equal to the excess, if any,of the Merger Consideration per Company Share over the exercise price of such Options and (iii) the cancellation, as of the Effective Time, of each Option that is outstanding and unexercised as of immediately prior to the Effective Time. Certain optionholders, such as directors and officers, will be required to sign an Option Holder Acknowledgement Form, attached as an exhibit to the Merger Agreement, in order to be automatically cashed-out as noted above in subsection (ii).

~~permitting~~The Merger Agreement contains customary representations and warranties of the ~~deepening~~Company, Ormat and Merger Sub relating to their respective businesses and organizations, in appropriate cases subject to materiality qualifiers. Additionally, the Merger Agreement provides forcustomary pre-closing covenants of ~~three~~the ~~additional~~Company, ~~temperature~~including ~~gradient~~covenants ~~wells~~relating atto conducting its ~~San~~business ~~Emidio~~in ~~II;~~the ordinary course consistent with past practice and refraining from taking certain actions without Ormat’s consent, covenants not to solicit proposals relating to alternative transactions or, subject to certain exceptions, enter into discussions concerning or provide information in connection with alternative transactions and covenants requiring the Company’s board of directors (the “Board”), subject to certain exceptions, to recommend that the Company's shareholders approve the Merger Agreement. In the event that the Board receives an alternative acquisition proposal that it determines is a Superior Proposal (as defined in the Merger Agreement) in accordance with the terms of the Merger Agreement, the Company may, subject to compliance with requirements to provide notice to and a period for Ormat to match such proposal, and subject to payment of the termination fee payable by the Company to Ormat and other conditions and requirements set forth in the Merger Agreement, terminate the Merger Agreement to accept the applicable Superior Proposal.

~~continuing~~The toCompany, ~~optimize~~Ormat and ~~engineer~~Merger ~~the~~Sub ~~power~~have ~~plant/hybrid~~agreed ~~cooling~~to ~~design~~use their respective commercially reasonable efforts, subject to certain exceptions, to, ~~obtaining~~among other things, consummate the ~~Conditional~~transactions ~~Use~~contemplated ~~Permit~~by the Merger Agreement as promptly as reasonably practicable and make all required filings and obtain all required consents, permits, regulatory approvals and ~~pursuing~~expirations or ~~PPA~~terminations ~~opportunities~~of ~~for~~waiting periods. None of the Company, Ormat or Merger Sub is ~~WGP~~required ~~Geysers~~to ~~project;~~divest any of its businesses, product lines or assets, or to take or agree to take any other action or to agree to any limitation or restriction of any kind on its business, operations, properties or assets.

~~drilling~~Consummation of the Merger is subject to various conditions, including, among others, customary conditions relating to the approval of the Merger Agreement by the requisite vote of the Company's shareholders, expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and ~~flow~~any ~~testing~~other aapplicable antitrust ~~well~~laws, atany Elrequired ~~Ceibillo;~~approvals from the Federal Energy Regulatory Commission and any other applicable filings with or authorizations, consents or waivers from third parties. The obligation of each party to consummate the Merger is also conditioned on the other parties’ representations and warranties being true and correct (subject to certain materiality exceptions) and the other parties having performed in all material respects its obligations and complied in all material respects with the agreements and covenants under the Merger Agreement. The transaction is not conditioned on Ormat’s receipt of financing.

~~drilling~~-9- ~~a second leg on a production well at Raft River~~

~~preparing~~The Merger Agreement contains termination rights for each of the Company and ~~drilling~~Ormat, aincluding, ~~water~~among ~~well~~others, if the Merger has not been consummated by May 24, 2018. Either party may also terminate the Merger Agreement if the Company's stockholder approval has not been obtained at ~~Neal~~a ~~Hot~~duly convened ~~Springs;~~meeting of the Company's stockholders or an order permanently restraining, enjoining, or otherwise prohibiting consummation of the Merger becomes final and non-appealable. Upon termination of the Merger Agreement under specified circumstances, generally relating to alternative acquisition proposals, an adverse change in the Board’s recommendation in favor of the Merger, a knowing and intentional breach of the Company representations or warranties, or a failure by the Company to consummate the Merger when required to do so pursuant to the terms of the Merger Agreement, the Company would be required to pay Ormat a termination fee equal to 3% of the Merger Consideration (approximately $3.2 million). Upon termination of the Merger Agreement under specified circumstances, generally relating to a knowing and intentional breach of Ormat’s representations or warranties, or a failure by Ormat to consummate the Merger when required to do so pursuant to the terms of the Merger Agreement, Ormat would be required to pay the Company a reverse termination fee equal to 3% of the Merger Consideration (approximately $3.2 million).

~~evaluating~~The ~~potential~~foregoing ~~new~~description ~~geothermal~~of ~~projects~~the Merger Agreement is qualified in its entirety by the full text of the Merger Agreement, which is attached as Exhibit 2.1 to the Company’s Current Report on Form 8-K filed with the U.S. Securities and ~~acquisition~~Exchange Commission (“SEC”) on January 25, 2018, which is ~~opportunities~~incorporated by reference herein.

Project Overview

The following ~~are~~is ~~lists~~a list of projects that are in operation ~~and~~, ~~projects that are~~ under development or under exploration. Projects in operation currently have producing geothermal power plants. Projects under development have a geothermal resource discovery ~~and~~or may have wells in place, but require the drilling of new or additional production and injection wells in order to supply enough geothermal fluid sufficient to operate a commercial power plant. Projects under exploration ~~may have a discovery well or~~ do not have a geothermal resource discovery occurrence yet, but have significant thermal and other physical evidence that warrants the expenditure of capital in search of the discovery of a geothermal resource. Due to inflation and marketplace increases in the costs of labor and construction materials, estimates provided for project development costs could understate actual costs.

~~Projects~~-10- ~~in Operation~~

~~Although~~Projects ~~other~~in ~~factors~~Operation may impact our operations and financial condition, including many that we do not or cannot foresee, we believe that our results of operations and financial condition for the foreseeable future will be affected by the factors discussed below. A summary of the Company’s operations is as follows:

Projects in Operation
			Generating		Contract
Project	Location	Ownership	Capacity (megawatts)	Power Purchaser	Expiration
Neal Hot Springs	Oregon	JV(1)	22.0	Idaho Power	2036
San Emidio (Unit I)	Nevada	100%	10.0	Sierra Pacific	2038
Raft River (Unit I)	Idaho	JV(2)	13.0(3)	Idaho Power	2032

Although other factors may impact our operations and financial condition, including many that we do not or cannot foresee, we believe that our results of operations and financial condition for the foreseeable future will be affected by the factors discussed below. A summary of the Company’s operations is as follows:

(1)

The Company’s equity interest in the project is 60% and Enbridge’s equity interest is 40%.

Projects in Operation

(2)

The Company’s membership interest in the project to 95%. Goldman Sachs Group retains a 5% membership interest, and is the tax equity partner.

Generation

(3)

The annual average net output design for the plant is 13 megawatts. The output of the Raft River Unit I plant currently is approximately 9.4 megawatts annual average.

Ownership

(Ave. Net

PPA Limit

Power

Contract

Project

Location

MWs)(3)

(megawatts)

Purchaser

Expiration

Neal Hot Springs

Oregon

60(1)

21.2

25.0

Idaho Power

2036

San Emidio (Unit I)

Nevada

100

8.4

9.9(4)

NV Energy

2038

Raft River (Unit I)

Idaho

95(2)

9.4

13.0

Idaho Power

2032

-8-

⁽¹⁾	Neal Hot Springs is a joint venture with a 40% interest held by Enbridge.
⁽²⁾	Raft River is a joint venture with a subsidiary of Goldman Sachs as the tax equity partner owning a 5% interest. On January 2, 2018, US Geothermal acquired the remaining 5% interest and now owns 100% of the project.
⁽³⁾	Average of 3 years generation.
⁽⁴⁾	Generation eligible for full PPA price. Generation from 9.9 MW up to 14.7 MW is eligible for excess energy payment of $50 per megawatt-hour within the terms of the PPA.

~~Neal~~Facility ~~Hot~~Generation Springs, Oregon Neal Hot Springs is located in Eastern Oregon near the town of Vale, the county seat of Malheur County. The Neal Hot Springs facility achieved commercial operation on November 16, 2012, and is designed as a 22 megawatt net annual average power plant. The facility consists of three separate 12.2 megawatt (gross) modules, with each module having a design output of 7.33 megawatts (net) annual average, based on a specific flowrate and temperature of the geothermal brine.

~~For~~Generation ~~the~~from ~~fourth~~all ~~quarter~~facilities oftotaled ~~2016~~323,832 ~~generation was 57,036~~ megawatt~~-hours~~ ~~with an average of 26.3 net megawatts per hour of operation and~~hours ~~plant~~for ~~availability was 98~~2017.2% . For 2016, the ~~same~~total ~~period~~generation inwas ~~2015~~326,601 ~~the plant generated 52,641~~ megawatt~~-hours~~ ~~with an average of 24~~hours.1 ~~net~~For ~~megawatts per hour and plant~~the ~~availability~~fourth ~~was~~quarter ~~97.6%~~of .2017, ~~The total annual~~ generation ~~for~~from ~~2016~~all ~~was~~facilities ~~179~~totaled 95,~~559~~ 417 megawatt- hours compared to ~~176~~97,~~871~~879 megawatt- hours ~~for~~during ~~2015~~the same period in 2016.

~~All~~Neal ~~three~~Hot high pressure refrigerant pumps were replaced by the manufacturer under warranty and 70% of the Air Cooled Condenser (ACC) fan motors were rebuilt under the terms of the ESA settlement agreement during the year. The remainder of the ACC motors are scheduled to be rebuilt by the end of the second quarter 2017. The Unit 3 annual maintenance outage was taken in September. Scale was cleaned out of the vaporizersSprings, ~~and~~Oregon the pump in production well NHS-8 was replaced due to declining output. With the replacement of the pump in NHS-8, brine flow was increased through the plant by 7% resulting in an increase in generation.

ANeal ~~third~~Hot ~~water~~Springs ~~supply~~is ~~well~~located ~~for~~in ~~the~~Eastern ~~project~~Oregon ~~was~~near ~~drilled~~the intown of ~~December~~Vale, ~~but~~the ~~due~~county toseat ~~extreme~~of ~~winter~~Malheur ~~weather~~County, ~~has~~and ~~not~~achieved ~~been~~commercial ~~completed~~operation ~~and tested~~on toNovember ~~date~~16, 2012. ~~Productive~~The ~~water~~Neal ~~zones~~Hot ~~were~~Springs ~~intersected~~facility inis ~~the~~designed ~~well,~~as ~~but~~ a ~~liner~~22 ~~must~~megawatt benet ~~installed~~annual ~~before~~average ~~the~~power ~~well~~plant, ~~can~~consisting beof ~~flow~~three ~~tested.~~separate ~~A fourth site has been selected and will be drilled once weather allows~~12.2 ~~The project currently has one well~~megawatt ~~available~~(gross) ~~from~~modules, ~~drilling~~with ineach ~~2015~~module ~~that~~having ~~can~~a ~~supply~~design ~~approximately~~output ~~170~~of ~~gallons per minute~~7.33 ~~The~~megawatts ~~minimum~~(net) annual ~~amount~~average ofbased ~~water~~on ~~needed for~~ a ~~hybrid~~specific ~~cooling~~flow ~~system~~and ~~is approximately~~temperature ~~200-300~~of ~~gallons~~geothermal ~~per minute for each unit~~brine.

~~Subsequent~~For to the ~~end~~fourth quarter of ~~the year~~2017, ongeneration ~~January~~was 556, ~~2017 the~~100 ~~facility~~megawatt-hours ~~tripped~~with ~~off~~an ~~line~~average ~~during~~of ~~extreme~~25.6 ~~cold~~net ~~weather~~megawatts ~~conditions~~per ~~and~~hour ~~Unit~~of 1operation and ~~suffered~~plant ~~frozen~~availability ~~tubes~~was in99.3% ~~the vaporizers~~. ~~The~~For ~~failed~~the ~~and~~same ~~damaged~~period ~~tubes~~in ~~were plugged~~2016, ~~and~~ the ~~unit~~plant ~~was restarted on February 12~~generated 57,038 ~~2017.~~megawatt-hours ~~Insurance~~with ~~coverage~~an ~~is in~~average ~~place~~of to26.3 ~~cover~~net ~~equipment~~megawatts ~~repairs~~per ~~with~~hour aand ~~deductible~~plant availability ~~level~~was of98.2% ~~$50,000~~. ~~Lost generation~~Warmer iswinter ~~also~~temperatures ~~covered~~reduced bygeneration ~~insurance once~~ during the ~~unit~~fourth ~~was~~quarter ~~out~~ of ~~service for over 30 days~~2017.

The PPA for the project was signed on December 11, 2009 with the Idaho Power Company. It has a 25-year term, and a variable percentage annual price escalation. The PPA has a seasonal pricing structure that pays 120% of the average price for four months (July, August, November, December), 100% of the average price for five months (January, February, June, September, October) and 73.3% of the average price for three months (March, April, May). The annual average price paid under the PPA for ~~2016~~2017 ~~was~~is $~~109~~111.2783 per megawatt-hour. ~~and for~~For ~~2017~~2018, the average price ~~has~~will ~~increased~~increase to $~~111~~114.8349 per megawatt-hour.

~~San Emidio Unit I, Nevada The Unit I power plant at San Emidio is located approximately 100 miles north~~-~~east~~11- of Reno, Nevada near the town of Gerlach, and achieved commercial operation on May 25, 2012. The San Emidio facility is a single 14.7 megawatt (gross) module, with a design output of 9 megawatts (net) annual average based on a specific flow and temperature of geothermal brine.

~~-9-~~San Emidio Unit I, Nevada

~~For~~The ~~the~~Unit ~~fourth~~I ~~quarter~~power ofplant ~~2016,~~at ~~generation~~San ~~was~~Emidio ~~20,803 megawatt-hours~~is ~~with~~located anapproximately 100 ~~average~~miles north-east of ~~9.6~~Reno, ~~net~~Nevada ~~megawatts~~near ~~per~~the ~~hour~~town of ~~operation~~Gerlach, and achieved ~~plant~~commercial ~~availability~~operation ~~was~~on ~~98.2%~~May 25, 2012. ~~For~~The ~~the~~San ~~same~~Emidio ~~period~~facility inis ~~2015,~~a ~~the~~single ~~plant generated~~14.7 ~~20,369~~ megawatt~~-hours~~ (gross) module with ana ~~average~~design output of 9.4 ~~net~~ megawatts ~~per~~(net) ~~hour~~annual ~~and plant~~average ~~availability~~based ~~was~~on ~~98.2%~~a .specific ~~The~~flow ~~total~~and ~~annual~~temperature ~~generation~~of ~~for~~geothermal ~~2016 was 75,049 megawatt-hours compared to 79,539 megawatt-hours for 2015~~brine.

~~The~~For ~~high~~the ~~pressure~~fourth ~~refrigerant~~quarter ~~pump~~of 2017, ~~which~~generation ~~had~~was ~~been replaced~~18,097 ~~under~~megawatt-hours ~~warranty~~with ~~during~~an ~~the~~average ~~scheduled~~of ~~spring~~8.2 ~~maintenance~~net ~~outage~~megawatts ~~experienced~~per ~~high vibrations~~hour ~~shorty~~of ~~after~~operation ~~starting. The~~ and plant availability was ~~able~~89.3% to. ~~operate~~For atthe asame ~~reduced generation~~period ~~level~~in ~~for~~2016, 19the ~~days~~plant ~~and~~generated 20,803 ~~required~~megawatt-hours awith ~~second~~an ~~outage~~average toof ~~replace the faulty pump~~9.4 ~~The~~net ~~plant~~megawatts ~~went~~per ~~back~~hour ~~on line July 1st~~ and ~~has~~plant availability ~~run~~was ~~without incident~~98.2% ~~since~~.

OnIn ~~June~~mid-December 12017, ~~2011,~~the anplant ~~amended~~was ~~and~~shut ~~restated~~down ~~PPA~~for ~~was~~7 ~~signed~~days ~~with~~to ~~Sierra~~repair ~~Pacific~~leaks ~~Power~~that ~~Company~~were ~~d/b/a~~found NVin ~~Energy for~~ the ~~sale~~vaporizer oftubes. upThe todamaged ~~19.9~~tubes were ~~megawatts~~plugged ofand ~~electricity~~will onbe anreplaced ~~annual~~during ~~average~~the ~~basis~~spring ~~from~~2018 ~~two~~scheduled ~~units~~maintenance outage. The ~~option for~~pump ~~the second unit expired~~ in ~~December~~production ~~2015.~~well ~~The~~75B-16 ~~PPA~~was ~~has~~shut adown ~~25-year~~on ~~term~~December ~~with~~29, a2017 ~~base~~after ~~price~~7.8 ofyears ~~$89~~in service.75 ~~per~~The ~~megawatt-hour,~~pump ~~and~~was anreplaced ~~annual~~and ~~escalation~~returned ~~rate~~to ~~of 1 percent~~service. Standby ~~The~~production ~~annual~~well ~~average~~75-16 ~~price~~was ~~paid~~brought ~~under~~on ~~the~~line ~~PPA~~to ~~for~~supplement ~~2016~~brine ~~was~~flow ~~$93.01 per~~to ~~megawatt-hour and for 2017~~ the ~~price~~plant ~~has~~while ~~increased~~75B-16 towas ~~$93~~off line.~~94.~~

~~Raft~~On ~~River~~May 31, ~~Idaho~~2011, ~~Raft~~an ~~River~~amended ~~Unit~~and Irestated isPPA ~~located~~was insigned with ~~Southern~~Sierra ~~Idaho,~~Pacific ~~near~~Power ~~the~~Company ~~town~~d/b/a ofNV ~~Malta,~~Energy ~~and~~for ~~achieved~~the ~~commercial~~sale ~~operation~~of ~~on January~~up 3,to ~~2008~~10 megawatts annual average. The ~~Raft~~PPA ~~River~~has ~~facility~~a is25-year aterm ~~single~~with 18an ~~megawatt~~annual ~~(gross)~~escalation ~~module,~~rate of 1 ~~with~~percent. aThe ~~design~~annual ~~output~~average ofprice 13paid ~~megawatts~~under ~~(net)~~the ~~annual~~PPA ~~average~~for ~~based~~2017 onis a$93.94 ~~specific~~per ~~flow~~megawatt-hour. ~~and~~For ~~temperature~~2018, ofthe ~~geothermal~~price ~~brine~~will increase to $94.88 per megawatt-hour.

~~For~~Raft ~~the fourth quarter of 2016~~River, ~~generation~~Idaho was 20,039 megawatt-hours with an average of 9.1 net megawatts per hour of operation and plant availability was 100%. For the same period in 2015, the plant generated 21,755 megawatt-hours with an average of 9.8 net megawatt hours and plant availability was 99.9% . Total annual generation for 2016 was 71,991 megawatt-hours compared to 75,599 megawatt-hours for 2015.

~~The~~Raft ~~lower~~River ~~year~~Energy ~~over~~I ~~year production~~ is ~~primarily~~located ~~due to the breakdown of the production pump~~ in ~~well~~Southern ~~RRG-2 on February 9~~Idaho, ~~2016~~near ~~and~~ the ~~extended~~ ~~length of time the well was kept out of service to allow the planned~~town ~~drilling~~ of ~~a second production leg. Due to a delay in financing~~Malta, ~~drilling~~and ~~of the~~achieved ~~second~~commercial ~~leg~~operation ~~began~~ on ~~June~~January ~~13th and was completed on July 29th to a depth of 5~~3,~~605~~ ~~feet~~2008. ~~Several~~The ~~small~~Raft ~~zones of~~River ~~permeability~~facility ~~were~~is ~~encountered in the new production leg. After testing the well,~~ a ~~new pump was installed and the well resumed production in early September. The well temperature has plateaued at approximately 277°F~~single, ~~down~~18 ~~from~~megawatt ~~the~~(gross) ~~original production temperature of 283°F~~module, ~~and~~with ~~the~~a ~~well~~design isoutput ~~now producing approximately 180 gallons per minute less flow than before drilling. It is believed that during drilling operations, the original production leg~~ of ~~the well was damaged by~~13 ~~scale~~megawatts ~~formation,~~(net) ~~which~~annual ~~blinded~~average ~~off~~based its producing fractures. Current production is believed to be coming mostly from the newly drilled production leg. Operations to recover the damaged production leg with an industry standard chemical treatment will be considered in the future. Additionally, on ~~September 27, 2016 the pump in well RRG-1 suffered~~ a ~~sheared~~specific ~~coupling~~flow and ~~was~~temperature ~~back on line~~of ingeothermal ~~early November~~brine.

For the fourth quarter of 2017, generation was 21,220 megawatt-hours with an average of 10.8 net megawatts per hour of operation and plant availability was 100%. For the same period in 2016, the plant generated 20,039 megawatt-hours with an average of 9.2 net megawatt hours and plant availability was 100%.

~~Additional~~Production ~~production~~pump ~~is now planned from well~~ RRG-5,7 anwas ~~idle well~~off ~~with~~line ~~significant permeability that has been used~~ for ~~injection~~79 indays ~~the past. Flow testing and reservoir modeling was performed during the 4th quarter of 2016~~ to ~~evaluate~~replace the ~~well for conversion to production. Flow test~~ ~~results showed an initial flowing temperature of over 249°F~~pump, ~~which~~build isa ~~expected to~~new increase to approximately 265°F once under production. Reservoir modeling shows that RRG-5 is capable of producing up to 1,000 gpm, yielding approximately 1.5 to 2 additional net megawatts of generation from the plant. A production pump ~~has~~support ~~been~~structure ~~ordered,~~ and ismake ~~expected~~a repair to ~~be installed by~~ the ~~end of the first~~surface ~~quarter 2017~~casing. ~~Generation~~The iswell ~~expected~~was toshut ~~ramp~~down upin ~~during~~late ~~the~~September ~~second~~2017 ~~quarter~~when as the ~~production~~ ~~wellfield~~pump isfailed ~~rebalanced to maximize its output. Additional sources of~~after ~~geothermal~~8 ~~fluid~~years ~~from~~in ~~other~~service ~~wells~~and onwas ~~the~~restarted ~~project~~in ~~are~~mid-December ~~also under study to further increase the generation level of the plant~~2017.

~~Well~~Subsequent ~~RRG-9,~~to ~~which~~the ~~has~~end ~~been~~of ~~used~~the asyear, ~~part~~the ofremaining an5% ~~$11.4~~of ~~million~~the ~~thermal~~project ~~stimulation~~owned ~~grant funded primarily~~ by ~~the~~GFSF ~~Department~~Investments ofI ~~Energy~~Corp, ~~has significantly~~a ~~increased~~wholly ~~the~~owned ~~injection~~subsidiary ~~capacity~~of ~~to 1~~Goldman Sachs,~~200~~ ~~gallons~~was ~~per~~purchased ~~minute~~on ~~from an~~January ~~original~~2, ~~level~~2018. ofThe 20purchase ~~gallons~~price ~~per~~was ~~minute~~$350,000. ~~This~~U.S. Geothermal ~~increase~~Inc. innow ~~injection~~owns ~~capacity can~~100% ~~provide all~~ of the ~~additional volume needed to accept the flow from well RRG-5 without requiring any new drilling~~project.

~~The~~Well ~~PPA~~RRG-9, ~~for~~which ~~the project~~ was ~~signed~~used onas ~~September~~part ~~24, 2007 with the Idaho Power Company and allows for the sale~~ of ~~up to 13 megawatts of electricity on~~ an ~~annual average basis. The PPA has a 25 year term with a starting average price for the year 2007 of~~ $5211.504 ~~that~~million ~~escalates at 2.1% per~~thermal ~~year~~stimulation ~~through~~grant ~~2020~~funded ~~and~~primarily ~~then~~by ~~at 0.6% per year until~~ the ~~end~~DOE, ofhas ~~the~~increased ~~contract~~injection incapacity ~~2034.~~to ~~The Idaho Power PPA has~~ a ~~seasonal~~current ~~pricing~~level ~~structure that pays 120%~~ of ~~the average~~over ~~price for four months (July~~1,450 ~~August,~~gpm. ~~November,~~This ~~December),~~injection ~~100%~~capacity ofis ~~the average~~sufficient ~~price for five months (January, February, June, September, October) and~~to ~~73.5%~~provide all of the ~~average~~additional ~~price~~volume ~~for~~needed ~~three~~to ~~months~~accept ~~(March, April, May). The annual average price paid under~~ the ~~PPA~~flow ~~for~~from ~~2016~~well ~~was $63.30 per megawatt~~RRG-~~hour, and for~~5 ~~2017~~without ~~the~~requiring ~~price~~any ~~has~~new ~~increased to $64~~drilling.~~63.~~

~~In addition to the price paid for energy by Idaho Power, Raft River Unit I currently receives $4.75 per megawatt~~-~~hour~~12- under a separate contract for the sale of Renewable Energy Credits (“RECs”) to Holy Cross Energy, a Colorado electric cooperative. Starting in calendar year 2018, 51% of the RECs produced by the project will be owned by the Idaho Power Company and 49% by the project. For the 49% of RECs owned by the Raft River project, a new, 10 year REC contract with the Public Utility District No. 1 of Clallam County, Washington will replace the current contract, also in 2018.

~~Material~~The ~~Projects~~PPA ~~Under~~for the project was signed on September 24, 2007 with ~~Development/Exploration~~the Idaho Power Company and allows for the sale of up to 13 megawatts of electricity on an annual average basis. The PPA has a 25 year term with a starting average price for the year 2007 of $52.50 that escalates at 2.1% per year through 2020 and then at 0.6% per year until the end of the contract in 2034. The Idaho Power PPA has a seasonal pricing structure that pays 120% of the average price for four months (July, August, November, December), 100% of the average price for five months (January, February, June, September, October) and 73.5% of the average price for three months (March, April, May). The annual average price paid under the PPA for 2017 is $64.63 per megawatt-hour. The average price for 2018, including the project’s share of the REC value, will be $74.32 per megawatt-hour.

In addition to ~~our~~the ~~projects~~price inpaid ~~operation,~~for weenergy ~~have~~by ~~projects~~Idaho Power, Raft ~~under~~River ~~development~~Unit ~~and~~I ~~under~~used ~~exploration~~to receive $4.75 ~~Projects~~per megawatt-hour under ~~development~~a ~~have~~separate atcontract ~~least~~for athe ~~geothermal~~sale ~~resource~~of ~~discovery~~RECs orto ~~may~~Holy ~~have~~Cross ~~wells~~Energy, ina ~~place,~~Colorado ~~but~~electric ~~require~~cooperative. As ~~the~~of ~~drilling~~January of2018, a new, or10-year ~~additional~~REC ~~production~~contract ~~and~~with ~~injection~~the ~~wells~~Public inUtility ~~order to~~District ~~supply~~No. ~~enough~~1 ~~geothermal~~of ~~fluid~~Clallam ~~sufficient~~County, toWashington ~~operate~~has areplaced ~~commercial~~the ~~power~~Holy ~~plant~~Cross Energy contract. ~~Projects~~This ~~under~~REC ~~exploration~~contract doonly ~~not~~includes ~~have~~the asale ~~geothermal~~of ~~resource~~the ~~discovery occurrence~~RECs ~~yet,~~owned ~~but~~by ~~have~~the ~~significant~~Raft ~~thermal and other physical evidence that~~River ~~warrants~~project. Under the ~~expenditure~~terms of ~~capital~~our inPPA, ~~search~~starting ofin ~~the~~2018, ~~discovery~~49% of athe ~~geothermal~~RECs ~~resource. Due to inflation and~~produced ~~marketplace~~will ~~increases~~be inowned by the ~~costs~~Raft ofRiver ~~labor~~Project, and ~~construction~~the ~~materials, estimates~~Idaho ofPower ~~property~~Company ~~development~~will ~~costs~~own the ~~may~~remaining ~~be low~~51%.

~~-11-~~Material Projects Under Development/Exploration

AIn ~~summary~~addition ofto our projects in operation, we have projects under development and under exploration. Projects under development have at isleast asa ~~follows:~~geothermal resource discovery or may have wells in place, but require the drilling of new or additional production and injection wells in order to supply enough geothermal fluid sufficient to operate a commercial power plant. Projects under exploration do not have a geothermal resource discovery occurrence yet, but have significant thermal and other physical evidence that warrants the expenditure of capital in search of the discovery of a geothermal resource. Due to inflation and marketplace increases in the costs of labor and construction materials, estimates of property development costs may be low.

Projects Under Development
					Estimated
			Target	Projected	Capital
			Development	Commercial	Required	Power
Project	Location	Ownership	(Megawatts)	Operation Date	($million)	Purchaser
Raft River	Idaho	100%	1-3	1st Quarter 2017	4	IDPC
Neal Hot Springs	Oregon	60%	3	3rd Quarter 2017	10	IDPC
San Emidio Phase II	Nevada	100%	35-45	4th Quarter 2019*	145	TBD
WGP Geysers	California	100%	30	4th Quarter 2018*	150	TBD
El Ceibillo Phase I	Guatemala	100%	25	2nd Quarter 2019*	140	TBD
Crescent Valley Phase I	Nevada	100%	25	2nd Quarter 2020*	130	TBD

A summary of projects under development and under exploration is as follows:

* - Commercial operation dates are projections only. Actual dates can only be provided after power purchase agreements have been obtained.

Development Projects

Target

Projected

Estimated

Development

Commercial

Capital Required

Power

Project

Ownership

(Megawatts)

Operation Date

($million)

Purchaser

Neal Hot Springs - upgrade

60%

1-2

4^thQuarter 2018

1.6

Idaho Power

San Emidio I - upgrade

100%

1-2

3^rdQuarter 2018

NV Energy

Raft River – upgrade

100%

0.5

3^rdQuarter 2018

Idaho Power

WGP Geysers

100%

4^thQuarter 2022

148

TBD

San Emidio Phase II

100%

25-35

4^thQuarter 2020

126-168

TBD

El Ceibillo Phase I

100%

TBD

140

TBD

Crescent Valley Phase I

100%

TBD

130

TBD

Properties Under Exploration
			Target Development
Project	Location	Ownership	*(Megawatts)
Gerlach	Nevada	67.4%	10
Vale	Oregon	100%	15
El Ceibillo Phase II	Guatemala	100%	25
Neal Hot Springs II	Oregon	100%	10
Raft River Phase II	Idaho	100%	13
Crescent Valley Phase II	Nevada	100%	25
Crescent Valley Phase III	Nevada	100%	25
Lee Hot Springs	Nevada	100%	20
Ruby Hot Springs Phase I	Nevada	100%	20

- Commercial operation dates are projections only. The actual commercial operation date can only be provided after a PPA has been obtained for the project.

* -13- Target development sizes are predevelopment estimates of resource potential of unproven resources. The estimates are based on our evaluation of available information regarding temperature, and where available, flow.

-12-

	Exploration Properties
			Target Development
Project	Location	Ownership	*(Megawatts)
Gerlach	Nevada	67.4%	10
Vale	Oregon	100%	15
El Ceibillo Phase II	Guatemala	100%	25
Neal Hot Springs II	Oregon	100%	10
Raft River Phase II	Idaho	100%	13
Crescent Valley Phase II	Nevada	100%	25
Crescent Valley Phase III	Nevada	100%	25
Lee Hot Springs	Nevada	100%	20

Property Details
	Property Size
	(square
Property	miles)	Temperature (ºF)	Depth (Ft)	Technology
Neal Hot Springs	9.6	286-311	2,500-3,000	Binary
San Emidio	27.9	289-316	1,500-3,000	Binary
Raft River	10.8	275-302	4,500-6,000	Binary
Gerlach	4.7	338-352	2,000-3,000	Binary
El Ceibillo	38.6	410-526	1,800-TBD	Steam/Flash
WGP Geysers	6.0	380-598	6,000-10,000	Steam
Crescent Valley	33.3	326-351	2,000-3,000	Binary
Lee Hot Springs	4.0	280-320	1,250-5,000	Binary
Ruby Hot Springs	3.3	315-340	1,670-4,500	Binary
Vale	0.6	290-300	2,450-5,000	Binary

- Target development sizes are predevelopment estimates of resource potential of unproven resources. The estimates are based on our evaluation of available information regarding temperature, and where available, flow.

Binary Cycle Geothermal Power Plants In a binary cycle geothermal power plant hot water is produced to a piping and gathering system from wells drilled into the geothermal reservoir. The hot water flows, with to a heat exchanger called a vaporizer where it vaporizes a secondary working fluid, with its heat extracted, causing the original hot water to become cool. All of the cooled water is then pumped to injection wells where it is injected back into the reservoir to help recharge the geothermal reservoir. The vaporized working fluid passes through a turbine which drives an electrical generator that is tied into the electrical transmission grid. Upon discharging the turbine the secondary working fluid is condensed before piping it back to the vaporizer where the process is repeated.

Property Details
	Property Size
	(square
Property	miles)	Temperature (^ºF)	Depth (Ft)	Technology
Neal Hot Springs	9.6	286-311	2,500-3,000	Binary
San Emidio	27.9	289-316	1,500-3,000	Binary
Raft River	10.8	275-302	4,500-6,000	Binary
Gerlach	4.7	338-352	2,000-3,000	Binary
El Ceibillo	38.6	410-526	1,800-TBD	Steam/Flash
WGP Geysers	6.0	380-598	6,000-10,000	Steam
Crescent Valley	33.3	326-351	2,000-3,000	Binary
Lee Hot Springs	4.0	280-320	1,250-5,000	Binary
Vale	0.6	290-300	2,450-5,000	Binary

~~Dry~~Binary ~~Steam~~Cycle Geothermal Power Plants An example of a vapor dominated geothermal system is at The Geysers in central California. Dry super-heated steam is produced from wells through a piping system and run directly through a turbine. The turbine drives an electrical generator that delivers power to the electrical transmission grid. Steam discharges from the turbine into a condenser where it is condensed forming water. The water is pumped to a cooling tower where it can be used as water for the cooling process. The cooled water from the cooling tower is recycled back to the condenser to repeat the process. Any excess water from the cooling tower is pumped through a piping system to injection wells where it is injected back into the reservoir which helps to recharge the geothermal reservoir.

~~-13-~~In a binary cycle geothermal power plant hot water is produced to a piping and gathering system from wells drilled into the geothermal reservoir. The hot water flows, with to a heat exchanger called a vaporizer where it vaporizes a secondary working fluid, with its heat extracted, causing the original hot water to become cool. All of the cooled water is then pumped to injection wells where it is injected back into the reservoir to help recharge the geothermal reservoir. The vaporized working fluid passes through a turbine which drives an electrical generator that is tied into the electrical transmission grid. Upon discharging the turbine the secondary working fluid is condensed before piping it back to the vaporizer where the process is repeated.

~~Flash~~-14- Geothermal Power Plants In hot water geothermal systems (temperatures greater than approximately 400 degrees Fahrenheit), flash production systems are often used. The hot water is produced from wells drilled into the geothermal reservoir. The hot water from the various production wells is piped to a flash tank where the pressure is reduced. The reduction in pressure in the flash tank causes part of the hot water to flash to form steam and part to remain as water. The flash tank also acts a separator, separating the steam from the water. The hot water separated from the steam is pumped through a pipeline system to injection wells and injected into the reservoir for reservoir recharge. The steam coming off the flash tank/separator is piped directly to a turbine where the process is identical to that used for dry steam geothermal power plants.

~~-14-~~Dry Steam Geothermal Power Plants

ElAn ~~Ceibillo~~example ~~Phase~~of I,a ~~Republic~~vapor ofdominated ~~Guatemala~~geothermal Asystem is at The ~~geothermal~~Geysers ~~energy~~in ~~rights~~central ~~concession,~~California. ~~located~~Dry 14super-heated ~~kilometers~~steam ~~southwest~~is ofproduced from wells ~~Guatemala~~through ~~City,~~a ~~was~~piping ~~awarded~~system toand ~~U.S.~~run ~~Geothermal~~directly ~~Guatemala~~through Sa turbine.~~A.,~~ aThe ~~wholly~~turbine ~~owned~~drives ~~subsidiary~~an ofelectrical ~~the~~generator ~~Company~~that indelivers ~~April~~power ~~2010.~~to ~~The~~the ~~concession~~electrical ~~agreement~~transmission ~~contains a~~grid. ~~schedule~~Steam ~~that~~discharges ~~requires~~from the ~~development~~turbine ~~and~~into ~~construction~~a ofcondenser awhere ~~power~~it ~~plant.~~is Incondensed forming ~~July~~water. ~~2015,~~The ~~the~~water ~~Guatemalan~~is ~~Ministry~~pumped ofto ~~Energy~~a ~~and~~cooling ~~Mines~~tower ~~approved~~where ait ~~modified~~can be used as water for ~~construction~~the ~~schedule~~cooling ~~that~~process. ~~extended~~The cooled water from the ~~development~~cooling ~~and~~tower ~~construction~~is ~~period~~recycled back to ~~June~~the 1,condenser ~~2018.~~to ~~There~~repeat ~~are~~the ~~24,710~~process. ~~acres~~Any ~~(100~~excess ~~square~~water ~~kilometers)~~from in the ~~concession, which~~cooling tower is pumped atthrough ~~the~~a ~~center~~piping ofsystem to injection wells where it is injected back into the ~~Aqua~~reservoir ~~and~~which ~~Pacaya~~helps ~~twin~~to ~~volcano~~recharge ~~complex~~the geothermal reservoir.

~~Production well EC~~-~~5 was completed to a depth of 1,450 feet (442 meters) on August 20, 2016 and intersected a high permeability zone at 1,299 feet (396 meters). EC~~15-5 underwent a series of flow tests, with field wide monitoring, beginning on September 5th and ran until September 13th. Data was collected from three monitoring wells during the test (EC-2A, EC-3, and EC-4) to provide pressure data for the reservoir model. Fluid samples taken at the end of the flow test indicate a potential reservoir temperature of 450 to 523°F (232 to 273°C).

~~With~~Flash ~~the~~Geothermal ~~shallow,~~Power ~~commercial~~Plants resource now indicated, a deep well is planned in 2017 to test the producing structure down dip from well EC-5 to a projected depth of 1,970 to 2,300 feet (600-800 meters). A deeper intersection in the reservoir could increase the reservoir capacity and production temperature, and change the design of the power plant. Well EC-1, which was drilled in 2013 to a depth of 5,650 feet (1,722 meters) found a measured bottom-hole temperature of 526°F (274°C), but did not intersect permeability. The comparative geology between EC-5 and EC-1 suggests a fault or other structure feeding the reservoir may be located in the area between the two wells.

OnIn ~~January~~hot ~~10,~~water ~~2017,~~geothermal ~~the~~systems ~~Guatemalan~~(temperatures ~~government~~greater than approximately 400 degrees Fahrenheit), ~~through~~flash ~~the~~production systems are often used. ~~National~~The ~~Electrical~~hot ~~Energy~~water ~~Commission~~is ~~(COMISIÓN~~produced ~~NACIONAL~~from DEwells ~~ENERG¥A ELÉCTRICA–“CNEE”),~~drilled ~~announced~~into ~~that~~the itgeothermal reservoir. The hot water from the various production wells is ~~preparing~~piped to ~~issue~~a anflash ~~RFP~~tank ~~later~~where the pressure is reduced. ~~this~~The ~~year~~reduction ~~for~~in ~~420~~pressure ~~megawatts~~in ofthe ~~power,~~flash tank causes part of ~~which~~the 40hot ~~megawatts~~water isto flash to beform ~~reserved~~steam ~~specifically~~and ~~for~~part ~~geothermal~~to ~~energy~~remain as water. The flash tank also acts a ~~When~~separator, separating the ~~RFP~~steam isfrom ~~issued,~~the water. The hot water separated from the steam Elis ~~Ceibillo~~pumped ~~project~~through ~~will~~a bepipeline ~~bid~~system to injection wells and injected into the reservoir for reservoir recharge. The steam coming off the flash tank/separator is piped directly to a turbine where the process is identical to that used for dry steam geothermal power plants.

~~-15-~~Neal Hot Springs – Upgrade Projects

~~San~~At ~~Emidio~~our ~~Phase~~operating ~~II,~~Neal ~~Nevada~~Hot ~~The~~Springs ~~Phase~~project, IIthere ~~expansion~~are isapproximately ~~dependent~~3.9 onmegawatts ~~successful development~~ of ~~additional~~annual ~~production~~average ~~and~~generation ~~injection well capacity. We expect~~ that ~~approximately~~are ~~75%~~available under of the ~~Phase~~terms IIof ~~development may be funded by non-recourse project debt, with~~ the ~~remainder funded through equity financing~~PPA. WeEach ~~anticipate~~megawatt ~~the~~of ~~project~~increased ~~qualifying~~generation ~~for~~is ~~the 30% Federal Investment~~worth ~~Tax~~approximately ~~Credit~~$990,000 ~~which~~per ~~when~~year ~~monetized,~~at ~~can~~the ~~meet~~2019 ~~most~~contract price of ~~the equity financing requirements~~$116.45.

The ~~updated~~decision ~~reservoir~~was ~~model~~made ~~(announced~~to ~~January~~delay ~~11, 2017) resulted in a significant increase in~~ the ~~potential~~hybrid ~~size~~cooling ofsystem ~~the San Emidio Phase~~until II2019 ~~reservoir~~to ofallow upadditional time to 47firm ~~net~~up ~~megawatts.~~the ~~Data~~water ~~from~~supply ~~flow~~and ~~tests~~complete ~~that~~the ~~took place in~~final ~~late~~design ~~2016~~of ~~from~~the ~~two~~cooling ~~wells~~system. ~~were~~The ~~incorporated~~updated ~~into~~design afor ~~Probabilistic Power Density model, which estimates~~ the ~~Net~~hybrid ~~generation~~system ~~potential of a reservoir. The power~~would ~~density~~have ~~model is not~~ a ~~Monte~~single ~~Carlo~~cooling ~~style~~tower “with heat inexchangers ~~place”~~located ~~estimate.~~at ~~Based~~all onthree ~~the~~units. ~~flow~~Cooling ~~rate~~water ~~and~~would ~~temperature~~come ~~produced~~from byboth ~~the~~fresh ~~two~~groundwater wells, and ~~by measurement of~~treated ~~pressure~~geothermal ~~response~~water. ~~both~~The inengineering for the ~~wells~~hybrid ~~and~~system ~~across~~is ~~the~~completed ~~wellfield,~~to the ~~model~~bid ~~estimates~~level ~~that~~and ~~the~~will ~~Most~~be ~~Likely~~further ~~Outcome~~refined ~~(50%~~during ~~probability)~~the isyear. 47Water ~~net~~cooling ~~megawatt~~will ofincrease ~~generation~~the ~~capacity~~efficiency ~~within~~of athe ~~1.4~~plant ~~square~~during ~~mile~~the ~~area.~~summer ~~The~~period ~~Minimum~~when ~~level of~~ generation ~~capacity (90% probability) occurs in a 0.18 square mile area, and has~~is ~~18.8~~suppressed ~~net~~by ~~megawatts~~high ofambient ~~generation capacity~~temperatures.

~~These~~A ~~two~~second ~~wells~~upgrade ~~are~~project ~~approximately~~under ~~1,700~~evaluation ~~feet~~and ~~apart,~~engineering ~~along~~is the ~~new~~addition ~~structural trend identified in the Southwest Zone which is still open for expansion. Temperature gradient well data and seismic information indicate a potential strike length for the Southwest Zone~~ of uptwo toinjection ~~2,700~~pumps ~~feet.~~that ~~This compares~~would toboth areduce ~~strike length for~~ the ~~primary~~parasitic ~~producing~~load ~~wellfield~~in ~~at San Emidio~~the ~~Phase I of 800 feet~~plant, ~~suggesting~~and ~~the~~allow ~~potential~~an ~~for~~increase ~~a much larger resource~~ in ~~this Southwest~~the ~~Zone.~~pumping ~~Permits~~capacity toof ~~deepen three remaining temperature gradient wells were received from~~ the ~~Bureau~~production ~~of Land Management in December 2016. These three~~pumps ~~wells~~that ~~will~~feed behot ~~deepened~~fluid to the ~~targeted~~plant. ~~reservoir~~The ~~depth~~estimated tocapital ~~further~~costs ~~explore~~is ~~the Southwest Zone when weather allows~~$1.6 Ifmillion ~~successful,~~and itthe system could ~~extend~~be ~~the~~on-line ~~length~~by of the ~~productive~~4th ~~reservoir~~quarter ~~by 1,000 feet~~2018.

The three power plant units that were purchased in 2016 are available to provide this project with the major, long lead equipment requirements for 35-45 net megawatts of power (depending upon cooling system used). The increased San Emidio ~~II reservoir capacity with a 320°F+ temperature fits the design range of the equipment. These new~~I, ~~unused~~Nevada ~~components~~– ~~represent approximately~~Upgrade ~~70%~~Project ~~of the equipment needed for a complete facility similar to the Company’s Neal Hot Springs operation.~~

~~Given~~At ~~the~~our ~~larger~~operating ~~resource capacity at~~ San Emidio III project, we ~~have~~will move forward ~~cancelled~~with ~~our~~an ~~Small~~enhancement ~~Generator~~program ~~Interconnection~~to ~~Agreement~~increase ~~that~~generation ~~was~~from ~~completed~~the inpower plant by ~~2016,~~drilling ~~and~~a ~~are~~new ~~preparing~~production towell ~~apply~~in ~~for~~the aSouthwest ~~Large~~Zone ~~Generator~~and ~~Interconnection~~delivering ~~Agreement in~~that ~~support~~fluid ofto the ~~higher~~San ~~expected~~Emidio ~~output~~I plant. ~~Additionally,~~There are ~~transmission~~approximately ~~studies~~ 1.5 megawatts annual average that ~~contemplate~~remains ~~power~~available ~~sales~~under ~~into~~the terms ~~Southern~~of ~~California~~the ~~will~~PPA ~~also~~at befull ~~conducted~~price, ~~since~~ ~~there~~and isseveral ~~now~~more amegawatts ~~transmission~~that ~~path~~could ~~from~~be ~~Northern~~sold ~~Nevada~~at the ~~going~~excess ~~south~~energy onprice. ~~the~~One megawatt at full contract price is worth ~~new~~approximately ~~500KV~~$800,000 ~~800~~in additional annual revenue and each megawatt ~~transmission~~of ~~line~~excess energy ~~that~~generated ~~was~~above ~~completed~~10 inmegawatts, ~~January~~but ~~2014~~below 14.7 megawatts is worth approximately $425,000.

In-16- July 2016, the Company was awarded a $1.5 million Department of Energy cost share grant under the “Development of Technologies for Sensing, Analyzing, and Utilizing Novel Subsurface Signals in Support of the Subsurface Technology and Engineering (“SubTER”) Crosscut Initiative”. The program approved under the grant includes using new subsurface technologies at both San Emidio and Crescent Valley to identify fluid flow paths in the geothermal resource. The data collection phase of the program was completed at San Emidio in December. The data is being interpreted to determine whether viable targets have been identified. Upon approval from the DOE, a second phase of the grant program is designed to confirm the findings by drilling. The total program cost is $1.9 million with the Company providing $400,000 in cost share.

The drilling permit was received from the Bureau of Land Management (“BLM”) in January 2018 to drill production well 25A-1621. A permit from the State of Nevada is pending. The new production well will twin observation well 25-21, which intersected a high temperature, high permeability structure in the Southwest Zone. The well will be connected to the Phase I plant with a new pipeline, and is now planned to provide up to 2,000 gallons per minute of 320°F fluid. Starting production from the Southwest Zone in 2018 will provide a long-term flow test of the Southwest Zone that will be critical to understand its full development potential.

~~WGP~~Raft ~~Geysers~~River, ~~California~~Idaho ~~The~~– ~~WGP~~Upgrade Geysers project is located in the broader Geysers geothermal field located approximately 75 miles north of San Francisco, California. The broader Geysers geothermal field is the largest producing geothermal field in the world generating more than 850 megawatts of power for more than 30 years. Acquisition of the WGP Geysers Project from Ram Power was completed on April 22, 2014 for $6.4 million. We expect that approximately 75% of the development may be funded by non-recourse project debt, with the remainder funded through equity financing. We anticipate the project qualifying for the 30% Federal Investment Tax Credit, which when monetized can meet most of the equity financing requirements.

The ~~Conditional~~addition ~~Use~~of ~~Permit~~production ~~from~~well ~~Sonoma~~RRG-5 ~~County,~~increased ~~which~~the ~~approves~~average generation from the ~~construction~~Raft ~~plan~~River ~~for~~plant ~~the~~by ~~WGP~~1.6 ~~Geysers~~net ~~power~~megawatts ~~plant,~~in ~~was~~2017. ~~received~~Due onto ~~December~~the ~~16,~~positive ~~2016.~~response ~~Combined~~from ~~with~~ the ~~Large~~wellfield, ~~Generator~~which ~~Interconnection~~showed ~~Agreement~~a ~~that~~minimal ~~was~~decrease in fluid ~~received~~levels, ~~from~~a study to increase the ~~California~~capacity ~~Independent~~of ~~System~~production ~~Operator~~pump ~~and~~RRG-4 ~~Pacific~~in ~~Gas~~2018 &was ~~Electric,~~completed. ~~this~~The ~~completes~~upgrade ~~the~~project ~~long~~would ~~lead~~consist ~~permits~~of ~~and~~adding ~~agreements~~additional ~~that~~bowls ~~are~~to ~~needed~~the ~~for~~pump ~~the~~and ~~project.~~setting ~~Once~~the ~~final~~pump ~~engineering~~deeper ~~design~~in isthe ~~finished,~~well ~~and~~to aproduce ~~PPA~~approximately is400-500 ~~executed,~~gpm anmore ~~air~~fluid ~~quality~~to ~~permit~~the ~~and~~plant. ~~building~~The ~~permit~~pump ~~will~~in beRRG-4 ~~needed~~has ~~before~~been onin service for 10 years ~~site~~and ~~construction~~was ~~will~~already ~~begin~~scheduled for replacement in 2018.

WeThis ~~received~~upgrade ~~the~~would ~~signed~~result ~~Large~~in ~~Generator~~an ~~Interconnection Agreement~~estimated ~~for~~generation ~~the project on March 6, 2016 with the California Independent~~increase ~~System~~of ~~Operator~~approximately ~~and~~0.5 ~~Pacific~~net ~~Gas~~megawatts &annual ~~Electric (PG&E)~~average. ~~This~~In ~~agreement~~2019, ~~allows~~ the ~~project~~first tofull ~~connect~~year of toproduction, the ~~transmission~~energy ~~grid~~plus ~~and~~renewable ~~deliver~~energy upcredit tovalue 35will ~~megawatts of~~be ~~energy~~$75.71 ~~The~~per megawatt ~~Company~~hour. ~~has~~If ~~paid~~ the ~~total~~full ~~interconnection~~amount ~~cost~~ of ~~$1.9~~new ~~million for~~generation ~~the~~is ~~grid~~realized, ~~operator’s~~it ~~portion~~would ~~of the work~~ result in ~~the~~approximately ~~substation.~~$600,000 Anof additional 1annual revenue.~~7 mile~~ ~~long~~Approximately ~~transmission~~half ~~line will be required to connect from the plant to the~~of ~~substation.~~this ~~PG&E~~revenue ~~has~~is ~~undertaken~~expected ~~engineering studies~~ to ~~determine~~be ~~the~~realized ~~cost for~~in ~~the line~~2018.

~~Engineering~~WGP ~~optimization of the new~~Geysers, ~~hybrid~~California ~~power~~– ~~plant~~Development ~~design is~~Project continuing and budgetary quotes for the major equipment have been received. Our engineers and consultants are working in concert with EPC contractors to examine all aspects of the construction cycle with a focus on reducing construction costs. The hybrid design will dramatically increase the volume of water available for injection back into the reservoir, which will result in increased power generation over the life of the project. Traditional water cooled geothermal steam plants re-inject approximately 20 to 25% of the water that is extracted from the steam, while a hybrid design may re-inject 65% or more of the water. This higher injection rate will provide longer term, stable steam production, and will result in increased power generation over the life of the project.

~~Based~~The onWGP ~~flow~~Geysers ~~test~~project ~~data~~is ~~generated~~located ~~from~~in ~~well~~the ~~flow~~broader ~~testing~~Geysers ~~performed~~geothermal infield ~~mid-2015,~~located aapproximately ~~third~~75 ~~party~~miles ~~expert~~north ~~reported~~of inSan ~~September 2015~~Francisco, California. ~~that~~The broader Geysers geothermal field is the ~~four~~ ~~production~~largest ~~wells~~producing geothermal ~~already~~field ~~drilled~~in ~~are~~the ~~capable~~world ofgenerating ~~delivering~~more anthan ~~initial capacity~~850 megawatts of ~~28.1~~power MWfor more ~~(gross)~~than or30 25years.4 MWAcquisition ~~(net)~~of ~~based~~the onWGP ~~current~~Geysers ~~power~~Project ~~plant~~from ~~steam~~Ram ~~conversion~~Power ~~rates~~was completed ~~from~~on aApril ~~detailed~~22, ~~design~~2014 for a$6.4 28million.8 ~~MW (net)~~We ~~power~~expect ~~plant.~~that ~~These~~approximately ~~tests~~75% of ~~show~~ the ~~wells~~development ~~would~~may ~~initially~~be ~~produce~~funded aby ~~combined total~~non-recourse ofproject ~~458~~debt,~~000~~ ~~pounds~~with ~~per~~the remainder ~~hour~~funded through equity financing. ~~Using~~Due to the ~~average~~lapse ~~steam~~in ~~production~~the ~~rate from~~Federal ~~these~~Investment ~~wells~~Tax ~~and~~Credit anprogram ~~assumed~~for ~~interference~~geothermal ~~factor~~power generation and the delay for start of ~~30%~~construction, we do not believe that the ~~third~~project ~~party~~currently ~~expert~~qualifies ~~estimates~~for ~~that~~the an30% ~~additional~~ITC ~~two~~or toPTC. ~~three~~Several ~~production~~bills ~~wells~~have ~~would~~been beintroduced ~~needed~~in toCongress that ~~support~~could reauthorize the ~~long~~ITC/PTC ~~term~~for ~~operation~~geothermal ofpower ageneration, ~~28.8~~but MWit ~~(net)~~is ~~plant~~unknown when that action might take place.

Detailed engineering of the 28.8 net megawatt power plant is nearly complete. Our engineers and consultants are working in concert with our EPC contractors to examine all aspects of the construction cycle with a focus on reducing construction costs. The hybrid cooling design will dramatically increase the volume of water available for injection back into the reservoir, which will result in increased power generation over the life of the project. Traditional water cooled geothermal steam plants re-17inject approximately 20 to 25% of the water that is extracted from the steam, while our current hybrid design may re-inject approximately 80% more of the water. This higher injection rate will provide long term, stable steam production, and will result in increased power generation over the life of the project.

~~Recent~~-17- discussions have been held with a number of potential power purchasers in California for the generation from the WGP Geysers plant and are continuing. Interest has been expressed by a number of them for base load, renewable power to replace fossil fuel based power generation that is being phased out of some of their portfolios.

~~Crescent~~The ~~Valley~~Conditional ~~Phase~~Use I,Permit ~~Nevada~~from ~~The~~Sonoma ~~Crescent~~County, ~~Valley~~which approves ~~prospect~~the ~~consists~~construction ofplan ~~approximately~~for ~~21,300~~the ~~acres~~WGP ~~(33.3~~Geysers ~~square~~power ~~miles)~~plant, ofwas ~~private~~received on December 16, 2016 and ~~Federal~~is ~~geothermal~~active ~~leases.~~for It10 isyears. ~~located~~Combined inwith ~~Eureka~~the ~~County,~~Large ~~Nevada,~~Generator ~~approximately~~Interconnection 15Agreement ~~miles~~(“LGIA”) ~~south~~that ofwas ~~the~~received ~~Beowawe~~from ~~geothermal~~the ~~power~~California Independent ~~plant~~System Operator and ~~about~~Pacific 33Gas & Electric, this completes the ~~miles~~long ~~southeast~~lead ofpermits ~~Battle~~and ~~Mountain.~~agreements ~~The~~that are needed for the project. ~~was~~Once ~~acquired~~final engineering asdesign ~~part~~is offinished, ~~the~~and a PPA is executed, an air quality permit and ~~Earth~~building ~~Power~~permit ~~Resources~~will ~~merger~~be ~~which~~needed ~~was~~before ~~completed~~on insite ~~December~~construction ~~2014.~~will begin.

InWe ~~light~~terminated ofthe ~~federal~~LGIA ~~legislation~~the ~~that~~project ~~extended~~had with the ~~qualification~~California ~~for~~Independent ~~the~~System ~~30%~~Operator ~~Investment~~and ~~Tax~~Pacific ~~Credit~~Gas to& ~~projects~~Electric ~~that~~(PG&E). ~~began~~The termination ~~construction~~was ~~prior~~driven ~~to December~~by ~~31,~~various ~~2014,~~milestone ~~drilling~~dates that were not achievable because of the ~~first~~lack ~~production/injection~~of ~~well~~a ~~CVP-001 (67-3)~~PPA ~~was~~and ~~initiated~~the inlack ~~December~~ of ~~2014,~~an ~~following~~easement ~~completion~~for ofthe ~~gravity surveys,~~1.7 ~~and~~mile ~~analysis~~long transmission ofline ~~prior~~from ~~temperature~~the ~~gradient~~plant ~~drilling~~to ~~data~~the substation. ~~Well~~This ~~CVP-001~~LGIA allowed the ~~was~~project ~~completed~~to onconnect ~~March~~to ~~27,~~the ~~2015~~transmission togrid aand ~~depth~~deliver ofup ~~2,746~~to ~~feet~~35 megawatts of energy. The ~~well~~Company ~~exhibited modest~~paid ~~permeability~~the ~~with~~total ainterconnection ~~flowing~~cost ~~temperature~~ of ~~213°F,~~$1.9 ~~which~~million ~~makes~~to the ~~well~~ ~~suited~~grid operator for ~~duty~~their assubstation ~~an injection well~~work. ~~The~~After ~~next~~termination, ~~phase~~the remaining balance of ~~development~~the ~~work~~interconnection cost is ~~in the~~expected ~~planning~~to ~~stages~~be ~~and~~reimbursed isto ~~currently~~the onCompany during ~~hold~~the ~~due~~first toquarter ~~market~~of ~~conditions~~2018.

~~This~~We ~~project~~are isnow ~~expected~~considering toan ~~benefit~~alternative ~~from~~interconnection method which will trigger additional interconnection studies and extend the ~~Department~~time required offor interconnection into the transmission grid. A “ring bus” type ~~Energy~~substation ~~cost~~located ~~share~~on ~~grant~~the ~~awarded~~plant insite ~~July~~will ~~2016~~be required if the easement cannot be acquired. The ~~details~~additional ofcost ~~this~~associated ~~award~~with ~~are~~the ring bus type substation is ~~discussed~~currently included in the ~~San~~estimated ~~Emidio~~capital ~~Phase~~cost IIfor ~~project~~the ~~discussion above~~project.

~~Gerlach,~~Based ~~Nevada~~on ~~The~~flow ~~Gerlach~~test ~~Joint~~data ~~Venture,~~generated ~~located~~from well flow testing ~~adjacent~~performed toin ~~the~~mid-2015, ~~town~~a ofthird ~~Gerlach~~party expert reported in ~~Washoe~~September ~~County~~2015, ~~Nevada~~that isthe four ~~made~~production upwells already drilled are capable of ~~both private~~delivering ~~and~~an ~~BLM~~initial capacity ~~geothermal~~of ~~leases~~28.1 ~~The~~MW ~~Peregrine~~(gross) ~~well,~~or a25.4 ~~historic~~MW ~~exploration slim~~(net) ~~hole~~based ~~that~~on ~~encountered~~current apower ~~lost~~plant ~~circulation~~steam conversion ~~zone~~rates atfrom a ~~depth~~detailed ofdesign ~~975~~for ~~feet,~~a ~~was redrilled~~28.8 inMW ~~2010~~(net) ~~and~~power plant. These tests show the ~~hole~~wells ~~was~~would ~~opened~~initially ~~from~~produce a ~~6.5~~combined ~~inch~~total ~~diameter~~of ~~well~~458,000 ~~to a~~pounds 12per hour.5 ~~inch~~Using ~~diameter~~the ~~well.~~average ~~Lost~~steam ~~circulation~~production ~~was~~rate ~~confirmed~~from ~~within~~these ~~three~~wells ~~zones~~and an ~~through~~assumed ~~the~~interference ~~900~~factor toof 130%,~~024~~ ~~foot~~the ~~interval.~~third ~~The~~party ~~well~~expert ~~was~~estimates ~~stopped~~that atan additional ~~1,070~~two ~~feet~~to ~~total depth.~~three ~~Temperature~~production ~~surveys~~wells ~~and~~would be needed to support the long-term operation of a ~~short~~28.8 ~~clean~~MW ~~out~~(net) ~~flow~~plant. ~~test~~Using ~~were~~the ~~conducted~~large ondata base from the ~~well.~~surrounding ~~The~~Geysers ~~well~~geothermal ~~flowed~~field, atthe anhistoric ~~estimated~~WGP ~~300-400~~well ~~gallons~~production ~~per~~data, ~~minute~~ and the ~~flowing temperature~~2015 ~~was~~flow ~~208°F.~~test ~~Geochemistry~~information, ~~indicates~~a annumerical ~~average~~reservoir ~~potential~~model ~~source temperature~~has ofbeen ~~374°F~~developed to ~~for~~provide the ~~Gerlach~~final ~~site.~~well requirements and targeting for injection sites.

~~Drilling~~We ~~commenced~~continue onto ~~observation~~submit ~~well~~proposals ~~18-10a~~when onRequest ~~October~~for ~~30, 2014.~~Offers ~~18-10a~~are isreleased aby ~~twin~~organizations ~~well~~seeking torenewable aenergy ~~well~~and ~~originally~~have ~~drilled~~continued inbilateral ~~1994~~discussions ~~(the~~with ~~18-10 well).~~several ~~The~~potential ~~upper~~purchasers. In ~~section~~Fall of2017, ~~the~~we ~~well~~adopted ~~was~~a ~~drilled~~revised, tomore ~~826~~aggressive ~~feet~~pricing ~~deep~~structure ~~and~~when ansubmitting ~~8 inch liner was cemented in place~~bids. Despite ~~Temperature measurements in~~ the ~~well~~new ~~have~~pricing ~~provided the~~structure, ~~highest~~to ~~measured~~date, ~~temperature in~~ the ~~field~~WGP toGeysers ~~date~~project athas ~~268°F~~not ~~within~~been ~~160~~selected ~~feet of~~to ~~surface~~negotiate ~~and~~ a ~~temperature~~PPA. Purchasers ~~gradient~~have ofexpressed ~~6.4°F~~interest ~~per~~in ~~100’~~renewable, inbase ~~the~~load ~~bottom~~power ~~section~~to ~~of the~~replace ~~hole.~~fossil ~~There~~fuel ~~are~~based ~~two~~power ~~previously~~generation ~~identified~~that ~~lost~~is ~~circulation~~being ~~targets~~phased ~~from~~out ~~the original~~of ~~well~~some atof ~~1,600~~their portfolios and ~~2,800~~to ~~feet~~stabilize ~~deep~~and ~~that~~balance ~~will~~intermittent beresources ~~targeted~~already ~~when~~in ~~drilling is~~their ~~resumed~~portfolios.

-18-

~~Drilling~~San ~~resumed~~Emidio onPhase ~~well 18-10a on April 14~~II, ~~2012~~Nevada ~~and~~– ~~was stopped~~Development onProject April 18, 2012 at 1,943 feet deep. Circulation was lost in minor zones at 1,530 and 1,595 feet deep. Drilling resumed again on well 18-10a on August 14, 2014, and was completed in late November. The well was drilled to a total depth of 2,889 feet and encountered a maximum temperature of 275°F. Further work is dependent upon additional funding from the partners.

~~Vale,~~The ~~Oregon~~Phase ~~The~~II ~~property~~expansion ~~consists~~is ofdependent ~~368~~on ~~acres~~successful ofdevelopment ~~geothermal~~of ~~energy~~additional production and ~~surface~~injection ~~rights~~well ~~located~~capacity. inWe ~~Malheur~~expect ~~County, located~~that approximately ~~one-half~~75% ~~mile east~~ of the ~~town~~Phase ofII ~~Vale,~~development ~~Oregon.~~may ~~The~~be ~~property~~funded isby non-recourse ~~within~~project ~~the~~debt, ~~Vale~~with ~~Butte geothermal resource area and provides~~ the ~~opportunity~~remainder ~~to evaluate~~funded ~~development~~through ofequity ~~a known resource~~financing. AWe ~~prolific,~~believe ~~shallow reservoir located~~the ~~along~~project ~~the~~qualifies ~~north~~for ~~edge of~~ the ~~leasehold~~30% ~~area~~Federal ~~has~~Investment ~~been~~Tax ~~used~~Credit ~~for~~(or ~~many~~Production ~~years~~Tax Credit) inwhich, ~~an agricultural~~when ~~drying~~monetized, ~~facility~~can ~~and~~meet amost ~~mushroom~~of ~~growing~~the ~~operation~~equity financing requirements.

AnA ~~extensive~~power ~~database~~plant ofdevelopment ~~geophysical~~permit ~~and~~application ~~geological~~for ~~information~~the San Emidio ~~from~~Phase ~~previous~~II ~~geothermal~~project ~~exploration~~was insubmitted to the ~~Vale~~BLM ~~Butte~~on ~~area~~March ~~was~~29, ~~used~~2017. inThe ~~the~~application ~~evaluation~~provides offor the ~~prospect.~~installation ~~Geochemical~~of ~~analysis~~three ofpower ~~samples~~plant ~~taken~~units ~~from~~and ~~shallow hot~~up to 20 wells ~~results~~and related ininfrastructure aneeded ~~calculated~~to ~~geothermometer~~develop ~~that~~the ~~indicates~~project. aIt ~~potential~~is expected that the ~~reservoir~~evaluation ~~temperature~~by ofthe ~~311°F~~BLM will take 12 months or longer to ~~320°F~~complete. ~~Past~~All ~~exploration~~of ~~drilling~~the required ~~near~~cultural and biological surveys were completed for the ~~site~~plant and bywellfield ~~Trans~~area ~~Pacific~~during ~~Geothermal~~the ~~and~~second ~~Sandia~~quarter, ~~National~~with ~~Laboratory~~no ~~encountered~~unique or notable sites or ~~temperatures~~species inidentified. ~~excess~~Archeological surveys of ~~300°F~~the inpower line that will interconnect the ~~basement~~plant ~~rocks.~~to ~~The~~the ~~leases~~NV ~~for~~Energy ~~this project~~substation were ~~acquired~~conducted induring ~~January~~the 4th ~~and~~quarter ~~February 2014~~2017.

~~Raft~~During ~~River~~September ~~Phase~~2017, IIa 59-hour, ~~Idaho~~multi-well Inflow ~~2011,~~test was conducted using three of the ~~Raft~~recently ~~River~~drilled Southwest Zone wells. Total flow ~~Phase~~from IIthe ~~project~~wells was ~~awarded~~approximately an1,590 ~~$11~~gpm.4 ~~million~~Testing ~~cost-shared,~~included ~~thermal~~a ~~stimulation program~~step ~~grant~~rate ~~from~~program with ~~the~~four-hour ~~Department~~increments, ofwhereby ~~Energy~~one ~~with~~well, ~~the~~then ~~University~~two ofwells, ~~Utah~~and ~~Energy~~finally all ~~And~~three ~~Geoscience~~wells ~~Institute~~were asflowed for the ~~project~~51-hour ~~lead.~~duration ~~The~~of ~~goal~~the oftest. Flowing temperature from the ~~project~~three iswells ranged from 319°F to 325°F. Pressure was also ~~create~~monitored anon ~~Enhanced~~the ~~Geothermal~~flowing ~~System~~wells, ~~(“EGS”)~~which byexperienced ~~creating~~pressure ~~thermal~~drawdown ~~fractures~~from ~~and~~7.7 psi ~~developing~~to a43.0 ~~corresponding~~psi. ~~increase~~A inmonitoring ~~permeability~~well in the ~~low~~Southwest ~~permeability rock.~~Zone, ~~Well~~located ~~RRG-9~~1,700 ~~was~~feet ~~made~~from the ~~available~~nearest ~~for~~flowing ~~the~~well, ~~program~~had ~~and~~a ~~the~~pressure ~~first~~drawdown ~~stage~~ of 4.3 psi. Five additional ~~injection~~monitoring ~~into~~wells located in the ~~well~~Phase ~~began~~I inreservoir ~~June~~area ~~2013~~recorded pressure changes of 0.9 psi to 3.2 psi.

~~Initially~~These ~~the~~results ~~well~~continue ~~was~~to ~~only~~support ~~capable~~the ofpreviously ~~receiving 20 gallons per~~announced ~~minute~~Probability ~~(“gpm”)~~Power ofDensity ~~water~~model ~~due~~resource toestimate ~~the~~of ~~low~~25.9 ~~permeability~~megawatts ofat ~~the~~a ~~rock~~90% probability. ~~After~~The ~~several moderate~~50% ~~pressure~~probability ~~stimulations,~~level ~~the~~estimate ~~injection~~ of ~~cold~~47 ~~power~~megawatts ~~plant discharge~~remains ~~fluid~~unchanged ~~was~~because ~~started~~all ~~and~~of ~~has~~these ~~continued~~wells toare ~~date.~~inside ~~The~~the ~~lower~~originally ~~temperature~~defined ~~fluid causes~~Southwest ~~thermal~~Zone ~~fracturing~~resource ~~within~~area. ~~the~~Future ~~higher~~drilling ~~temperature~~to ~~host~~expand ~~rock~~the ofresource beyond the ~~reservoir. At~~currently ~~the~~defined ~~current~~area ~~plant~~is ~~generation~~planned ~~level,~~but cannot be implemented until the ~~flow~~Environmental Assessment ~~into~~for the ~~well~~Phase ~~has~~II ~~continued~~power ~~to increase~~plant ~~and~~development is ~~now~~approved ~~approximately~~by ~~1,200~~the ~~gpm~~BLM.

~~Well~~An ~~RRG-9~~application ~~continues~~for toa beLGIA ~~used~~was ~~temporarily~~filed aswith anNV ~~injection well~~Energy ason anJune ~~extension~~26, of2017. The LGIA would provide for the ~~DOE~~interconnection ~~EGS~~of ~~program~~45 megawatts of generation capacity. Permitting for the transmission line, which is ~~expected~~approximately at57 ~~this~~miles long, may extend the time required to ~~continue~~ ~~through~~interconnect ~~until~~the ~~mid-~~project and could impact the currently projected commercial operation date. The LGIA was accepted as complete by NV Energy and entered the first step in the FERC mandated evaluation process on October 1, 2017. The first phase study, a System Impact Study (“SIS”), was received on January 29, 2018. The ~~Company’s~~SIS ~~contributions~~that ~~for~~was presented indicated potentially higher transmission costs, but did not study the ~~thermal stimulation~~correct ~~program~~interconnection ~~are~~parameters ~~made~~and inis currently undergoing a re-~~kind~~study by ~~the~~NV ~~use~~Energy. A ofsecond phase study, the ~~RRG-9~~Facilities ~~well~~Study, ~~well~~will ~~field data~~be ~~provided~~required byto ~~the~~be ~~Company,~~completed ~~and~~before ~~through~~an ~~ongoing~~interconnection ~~monitoring~~agreement ~~support.~~can be reached.

The three power plant equipment packages that were purchased in 2016 are available to provide this project with the major, long lead equipment requirements for 25-~~19-~~35 net megawatts annual average (depending upon cooling system used). The increased San Emidio II reservoir capacity with a 320°F+ temperature fits the design range of the equipment. These new, unused components represent approximately 70% of the equipment needed for a complete facility similar to the Company’s Neal Hot Springs operation.

Lee Hot Springs, NevadaLee Hot Springs is in Churchill County, 18 miles south of Fallon. The area was originally explored by Occidental Geothermal Company, a subsidiary of the oil company Occidental Petroleum Corporation. The project is comprised of 2,560 acres (four square miles) of BLM leases. ENEL Green Energy, a subsidiary of ENEL Group, the Italian based, multi-~~national~~19- power company, has completed a 15 megawatt binary plant at Salt Wells, 6 miles to the east of Lee. The project was acquired as part of the Earth Power Resources merger which was completed in November 2014.

~~Dating~~In ~~back~~July ~~to 1930~~2016, the ~~area~~Company ~~has~~was ~~had~~awarded ~~numerous~~a ~~water~~$1.5 ~~wells,~~million DOE cost ~~thermal~~share ~~gradient~~grant ~~holes~~under the “Development of Technologies for Sensing, Analyzing, and Utilizing ~~geothermal~~Novel ~~slim~~Subsurface ~~hole~~Signals ~~tests.~~in ~~From~~Support ~~1977-1982 Occidental~~of ~~Geothermal,~~the ~~Inc.~~Subsurface ~~drilled~~Technology ~~four~~and Engineering ~~temperature~~(“SubTER”) ~~gradient~~Crosscut ~~holes~~Initiative”. toThe ~~depths~~program ofapproved under the ~~500~~grant ~~feet,~~includes ~~two~~using ~~stratigraphic~~new ~~test~~subsurface ~~wells’~~imaging totechnologies ~~2,000-3,000~~at ~~feet,~~both ~~and~~San ~~one~~Emidio and ~~large-diameter~~Crescent ~~production~~Valley ~~test~~ to ~~3,000~~identify ~~feet~~fluid ~~(well~~flow ~~72-33)~~paths in the geothermal resource. The primary ~~3,000~~data ~~foot~~collection ~~test well~~phase ~~flowed~~of ~~280°F~~the ~~hot~~program, ~~water~~which ~~from~~included apassive ~~zone~~seismic atand magnetotelluric 1(MT) stations,~~200~~ ~~ft.~~was ~~The~~completed ~~A33-4~~at ~~well,~~San ~~1,000~~Emidio ~~feet~~in December 2016. A ~~southwest~~second phase of ~~well~~data ~~72-33,~~collection was ~~drilled~~required to ~~2,400~~fill ~~feet~~in and ~~reportedly~~replace ~~had~~a limited ~~temperatures~~number inof ~~excess~~MT ofstations ~~300°F~~at San Emidio, and awas ~~steadily~~completed ~~increasing~~in ~~temperature~~the ~~gradient~~third quarter. Final interpretation of the geophysical data is currently underway.

~~The~~After ~~Great~~all ~~Basin~~data ~~Research~~is ~~Institute~~compiled ~~has~~and ~~had~~interpreted, ~~the~~if ~~leasehold~~viable ~~mapped~~drilling intargets ~~detail~~have been identified, ~~showing~~DOE ~~several~~may ~~large~~approve ~~silica~~a ~~deposits.~~second ~~The~~phase ~~reservoir~~of ~~temperature~~the ~~has~~grant ~~been~~program ~~estimated~~to ~~using~~confirm ~~geochemistry~~the asfindings ~~ranging~~by ~~from~~drilling. ~~320°F~~There tois ~~340°F~~no byassurance the USDOE will ~~Geological~~approve ~~Survey~~the ~~and~~drilling ~~other~~phase ~~sources~~of inthe grant, even if viable targets are identified. The total program cost is estimated to be $1.9 million and we anticipate the Company ~~1970s~~cost share would be $400,000.

~~Ruby~~El ~~Hot Springs~~Ceibillo, ~~Nevada~~Republic ~~The property is located 30 miles southwest~~ of ~~Elko.~~Guatemala ~~EPR~~– ~~filed~~Development ~~a BLM lease application for 2,140 acres in~~Project February 2001 and the lease application was rejected by the BLM in December 2005 due to cultural issues. The decision was appealed to the Interior Board of Land Appeals (“IBLA”) and the IBLA remanded the application back to the BLM for further action. No further action has been taken by BLM on issuance of the lease pending the completion of cultural and ethnographic studies that are required for further review. The project was acquired as part of the Earth Power Resources merger which was completed in November 2014.

~~The~~A ~~area~~geothermal ~~around~~energy ~~Ruby~~rights ~~was~~concession, ~~first~~located ~~leased~~14 ~~by Union Oil Company (now~~kilometers ~~Chevron)~~southwest inof ~~the~~Guatemala ~~late 1970s. A 3~~City,~~149~~ ~~foot test well~~ was ~~drilled~~awarded ~~and~~to ~~reportedly flowed~~U.S. atGeothermal ~~over~~Guatemala ~~300°F~~S. A., ~~second~~a wholly ~~well~~owned insubsidiary of the ~~area~~Company, ~~Ruby~~in ~~Valley~~April ~~65-10,~~2010. ~~was~~The ~~drilled~~concession agreement tocontains ~~1,075~~a ~~feet~~schedule ~~deep~~that ~~and~~requires ~~encountered~~the ~~lost~~development ~~circulation~~and ~~zones,~~construction ~~but~~of noa ~~temperature~~power ~~data is available~~plant. In July 2015, the ~~early~~Guatemalan ~~1980s,~~Ministry ~~Aminoil~~of ~~drilled~~Energy ~~twelve~~and ~~500~~Mines ~~foot~~approved ~~deep~~a ~~temperature~~modified ~~gradient~~construction ~~wells~~schedule that extended the development and ~~two~~construction period to June 1,~~000~~ ~~foot~~2018. ~~stratigraphic~~There ~~test~~are ~~wells.~~24,710 ~~Data from~~acres ~~these~~(100 ~~wells~~square ~~have~~kilometers) ~~been~~in ~~incorporated~~the concession, ~~into~~which ~~generalized~~is ~~heat-flow~~at ~~contour~~the ~~maps~~ center of the ~~area.~~Aqua and Pacaya twin volcano complex.

~~Employees~~On September 28, 2017, U.S. Geothermal Guatemala S.A. was notified that it has been awarded a $3.42 (€2.91) million grant from the German Development Facility for Latin America for further development drilling at the El Ceibillo project. The grant represents an approximate 40% cost share for drilling up to three production wells, with a total estimated program cost of $8.81 (€7.486) million. If the GDF funding is used on the project and the power plant is constructed, the grant would be converted into a loan. The German Development Bank may consider financing the entire project if it moves to production. The next phase of work for the project is being considered by the management team as 2018 budgets are being developed.

AtOn December 3129, ~~2016,~~2017 ~~the~~we ~~Company~~were ~~had~~notified 48that ~~full-time~~the ~~and~~US ~~one part~~Trade ~~time~~Development ~~employees~~Agency ~~(14~~had ~~administrative~~approved ~~and~~the ~~project~~grant ~~development,~~for ~~and~~a 35feasibility ~~field~~study ~~and~~at El Ceibillo ~~plant~~valued ~~operations)~~at $825,319. The ~~Company~~study ~~continuously~~is ~~considers~~being ~~acquisition~~led ~~opportunities~~by Power Engineers of Hailey, Idaho and ifa ~~the~~consortium ~~Company~~of isprofessional ~~successful~~geothermal incontractors. ~~making~~It ~~acquisitions,~~is ~~additional~~scheduled ~~management~~to be ~~and~~completed ~~administrative~~by ~~staff~~the ~~may~~end beof ~~added~~2018. All of the proceeds from the grant are paid to the contractors at defined milestones.

~~The~~A ~~Company~~production ~~did~~well, ~~not~~EC-5, ~~experience~~was ~~any~~drilled ~~labor~~in ~~disputes~~August or2016 ~~labor~~to a depth ~~stoppages~~of 1,450 feet (442 meter and intersected a high permeability zone at 1,299 feet (396 meters). EC-5 underwent a series of flow tests, with field wide monitoring, beginning on September 5, 2016 and ran until September 13, 2016. Data was collected from three monitoring wells during the test ~~current~~(EC-2A, ~~fiscal~~EC-3, ~~year~~and EC-4) to provide pressure data for the reservoir model. Fluid samples taken at the end of the flow test indicate a potential reservoir temperature of 450 to 523°F (232 to 273°C).

-20-

~~Principal~~With ~~Products~~the shallow, commercial resource now outlined, a deeper well has been sited to test the producing structure down dip from well EC-5 to a projected depth of 1,970 to 2,300 feet (600-800 meters). A deeper intersection in the reservoir could increase the reservoir capacity and production temperature and change the design of the power plant. Well EC-1, which was drilled in 2013 to a depth of 5,650 feet (1,722 meters) found a measured bottom-hole temperature of 526°F (274°C), but did not intersect a commercial zone of permeability. The comparative geology between EC-5 and EC-1 suggests a fault or other structure feeding the reservoir may be located in the area between the two wells.

~~The~~Expenditures ~~principal~~at ~~product~~El isCeibillo ~~based~~are ~~upon~~being ~~activities~~carefully ~~related to the~~controlled ~~production~~until ofwe ~~electrical~~see ~~power~~evidence ~~from~~that the ~~utilization~~energy ofmarket ~~the~~is ~~Company’s~~advancing ~~geothermal resources~~in Guatemala. ~~The~~On January ~~primary~~10, ~~product~~2017, ~~will~~the beGuatemalan government, through the ~~direct~~National ~~sale~~Electrical Energy ofCommission ~~power~~(COMISIÓN ~~generated~~NACIONAL byDE ~~our~~ENERG¥A ELÉCTRICA–“CNEE”), ~~interests~~announced inthat ~~our~~it ~~geothermal~~is ~~power~~preparing ~~plants.~~to ~~Currently,~~issue ~~our~~a ~~principal~~Request ~~revenues~~For Proposal (“RFP”) for ~~consist~~420 megawatts of ~~energy~~power, ~~sales~~of ~~and~~which ~~energy~~40 ~~credit~~megawatts ~~sales.~~is ~~All~~to ~~power~~be ~~plants~~reserved ~~currently~~specifically infor ~~operation,~~geothermal asenergy. ~~well~~The asRFP ~~all~~was ~~sites~~not ~~under~~issued ~~exploration~~in or2017 ~~development,~~and ~~are~~there ~~sites~~is still no ~~located~~indication inof ~~the~~when ~~Western~~that ~~United~~RFP ~~States~~may orbe inissued. When the ~~Republic~~RFP ofis ~~Guatemala~~issued, inwe ~~Central~~expect to ~~America~~bid the El Ceibillo project into the process.

~~Sources~~Raft ~~and~~River ~~Availability~~Phase ofII, ~~Raw~~Idaho ~~Materials~~

~~Geothermal~~In ~~energy~~2011, isthe ~~natural~~Raft ~~heat~~River ~~energy~~Phase ~~stored~~II ~~within~~project ~~the Earth’s~~was ~~crust~~awarded atan ~~economically~~$11.4 million ~~accessible~~cost-shared, ~~depth.~~thermal Instimulation ~~some~~program ~~areas~~grant offrom the ~~Earth, economic~~DOE ~~concentrations~~with the University of ~~heat~~Utah ~~energy~~Energy ~~result~~and ~~from~~Geoscience aInstitute ~~combination~~as ofthe ~~geological~~project lead. The goal ~~conditions~~of ~~that~~the ~~allow~~project ~~water~~is to ~~penetrate~~create ~~into~~an ~~hot~~Enhanced ~~rocks~~Geothermal atSystem ~~depth,~~(“EGS”) ~~become~~by ~~heated,~~creating ~~and~~thermal ~~then~~fractures ~~circulate~~and todeveloping a ~~near~~corresponding ~~surface~~increase ~~environment.~~in Inpermeability ~~these~~in ~~settings,~~the ~~commercially~~low ~~viable~~permeability ~~extraction~~rock. ofWell ~~the~~RRG-9 ~~geothermal~~was ~~energy~~made ~~and~~available ~~its~~for ~~conversion~~the toprogram and the ~~electricity~~first ~~become~~stage ~~possible~~of ~~and~~injection ainto ~~“geothermal~~the ~~resource”~~well isbegan ~~present.~~in June 2013.

~~There~~Initially ~~are~~the ~~four~~well ~~major~~was ~~components~~only ~~(or~~capable ~~factors)~~of receiving 20 gpm of water due to athe ~~geothermal~~low permeability of the rock. After several moderate pressure ~~resource:~~stimulations, the injection of cold power plant discharge fluid first began in June 2015 and has continued to date. The lower temperature fluid causes thermal fracturing within the higher temperature host rock of the reservoir. At the current plant generation level, the flow into the well has continued to increase and is now approximately 1,572 gallons per minute.

1.Well ~~Heat~~RRG-9 ~~source~~continues ~~and temperature – The economic viability of a geothermal resource is related~~ to ~~the~~be ~~amount~~used oftemporarily ~~heat~~for ~~generated.~~injection ~~The higher~~ from the ~~temperature,~~Raft ~~the~~River ~~more~~Energy ~~valuable~~I ~~the~~power ~~geothermal~~plant ~~resource. 2. Fluid – A geothermal resource is commercially viable only when the system contains water and/or steam~~ as aan ~~medium~~extension toof ~~transfer~~ the ~~heat~~DOE ~~energy~~EGS ~~to the surface~~program. ~~3. Permeability –~~ The Company’s ~~fluid~~contributions ~~present~~for ~~underground~~the ~~must~~thermal bestimulation ~~able~~program toare ~~move.~~made Inin-kind ~~general, significant porosity and permeability within~~ by the ~~rock~~use ~~formation are needed to create a viable reservoir. 4. Depth – The cost~~ of ~~development~~the ~~increases~~RRG-9 ~~with depth~~well, aswell dofield ~~resource~~data ~~temperatures.~~provided ~~The~~by ~~proximity of~~ the ~~reservoir~~Company, toand ~~the~~through ongoing ~~surface~~labor isfor ~~therefore~~monitoring ~~a key factor in the economic valuation of a geothermal resource~~support.

~~Electrical~~The ~~power~~development isand ~~directly~~construction ~~produced~~of ~~through~~a ~~the~~Phase ~~utilization of~~II ~~geothermal~~project ~~resources;~~at ~~however,~~Raft River ~~these~~is ~~resources~~dependent ~~are~~upon ~~not~~additional adrilling ~~direct~~and ~~component~~the availability of ~~the~~ ~~final~~a ~~product~~PPA.

~~Unless~~-21- ~~major geological changes occur that impact the geothermal reservoirs, the condition of the existing resources is expected to remain relatively consistent over time.~~

~~-21-~~Crescent Valley, Nevada

~~Significant~~The ~~Government~~Crescent ~~Permits~~Valley prospect consists of approximately 21,300 acres (33.3 square miles) of private and Federal geothermal leases. It is located in Eureka County, Nevada, approximately 15 miles south of the Beowawe geothermal power plant and about 33 miles southeast of Battle Mountain. The project was acquired as part of the Earth Power Resources merger which was completed in December 2014.

~~The~~In ~~Company~~light ~~maintains~~of ~~all~~federal ~~permits~~legislation ~~necessary~~that extended the qualification for ~~operating~~the ~~its~~30% Federal Investment Tax Credit to projects that began construction ~~three~~prior ~~plants~~to ~~located~~December in31, ~~Idaho~~2014, ~~Nevada~~drilling ~~and~~of ~~Oregon.~~the Infirst ~~addition,~~production/injection well CVP-001 (67-3) was initiated in December ~~2016~~of 2014, following completion of ~~the~~gravity ~~Company~~surveys, ~~received~~and ~~the~~analysis ~~primary~~of ~~operating~~prior ~~permit~~temperature ~~necessary~~gradient ~~for~~drilling ~~construction~~data. ~~and~~Well ~~operation~~CVP-001 was completed on March 27, 2015 to a depth of 2,746 feet. The well exhibited modest permeability with a flowing temperature of 213°F, which makes the ~~WGP~~well ~~Geysers~~suited ~~project.~~for duty as an injection well.

~~Neal~~The ~~Hot~~SubTER ~~Springs~~program, ~~Oregon~~approved under the DOE grant awarded in July 2016, includes using new subsurface technologies at both San Emidio and Crescent Valley to identify fluid flow paths in the geothermal resource. The passive ~~Neal~~seismic ~~Hot~~data ~~Springs~~collection ~~project~~phase of the program was completed at Crescent ~~has~~Valley ~~four~~in ~~primary~~December ~~permits~~of ~~governing~~2016. ~~power~~A ~~plant~~magnetotelluric ~~operations~~(MT) survey was completed during the third quarter 2017. The ~~permits~~data ~~include:~~is being interpreted to develop a 3D map to help identify future drilling targets. The details of this award are discussed in the San Emidio Phase II project discussion above.

1.Employees Geothermal Well Permits issued by the Department of Geology. 2. A Right-of-Way issued by the Bureau of Land Management. 3. A Conditional Use Permit issued by the Malheur County Commission. 4. Underground Injection Control Permit issued by the Oregon Department of Environmental Quality.

~~San~~At ~~Emidio~~December 31, ~~Nevada.~~2017, ~~The~~the ~~San~~Company ~~Emidio~~had ~~project~~48 ~~has~~full-time ~~five~~and one part ~~primary~~time ~~permits~~employees ~~governing~~(14 ~~power~~administrative and project development, and 34 field and plant operations.) in the United States, with another 9 employees in Guatemala. The ~~permits~~Company ~~include:~~continuously considers acquisition opportunities, and if the Company is successful in making acquisitions, additional management and administrative staff may be added.

1.The ~~Geothermal~~Company ~~well~~did ~~permits~~not ~~issued~~experience byany ~~the~~labor ~~Nevada~~disputes ~~Division~~or oflabor stoppages ~~Minerals.~~during ~~2. A Special Use Permit issued by~~ the ~~Washoe~~current ~~County~~fiscal ~~Board of Commissioners~~year. 3. An Air Quality Permit to Operate from Washoe County. 4. A Surface Discharge Permit from Nevada Division of Environmental Protection. 5. An Underground Injection Permit from Nevada Division of Environmental Protection.

~~Raft~~Principal ~~River,~~Products ~~Idaho. The Raft River project has four primary permits governing power plant operations. The permits include:~~

1.The ~~Geothermal~~principal ~~well~~product ~~permits~~is ~~issued~~based byupon activities related to the production ~~Idaho~~of ~~Department~~electrical power from the utilization of ~~Water~~the ~~Resources.~~Company’s 2geothermal resources. AThe ~~Conditional~~primary ~~Use~~product ~~Permit~~will ~~issued~~be the direct sale of power generated by ~~the~~our interests ~~Cassia~~in ~~County~~our ~~Planning~~geothermal power plants. Currently, our principal revenues consist of energy sales and ~~Zoning~~energy ~~Commission.~~credit 3sales. ~~Air~~All ~~Quality~~power ~~Permit~~plants tocurrently ~~Construct~~in operation, ~~issued~~as bywell ~~the~~as ~~Idaho~~all ~~Department~~sites ofunder ~~Environmental~~exploration ~~Quality.~~or 4.development, Aare ~~Wastewater~~sites located ~~Reuse~~in ~~Permit~~the ~~issued~~Western byUnited ~~the~~States ~~Idaho~~or ~~Department~~in the Republic of ~~Environmental~~Guatemala ~~Quality~~in Central America.

~~WGP~~-22- Geysers, California. Western GeoPower had previously been issued all necessary permits for construction and operation of up to a 38.5 megawatt geothermal power plant. The Sonoma County Conditional Use Permit administratively expired in 2015. A new Conditional Use was issued in December 2016 for an initial term of 10 years including administrative extensions of 5 years. The primary permits include:

	1.	Geothermal well permits for production and injection wells issued by the California Department of Oil, Gas, and Geothermal Resources.
	2.	A Conditional Use Permit that has been issued by the Sonoma County.

Sources and Availability of Raw Materials

~~-22-~~Geothermal energy is natural heat energy stored within the Earth’s crust at economically accessible depth. In some areas of the Earth, economic concentrations of heat energy result from a combination of geological conditions that allow water to penetrate into hot rocks at depth, become heated, and then circulate to a near surface environment. In these settings, commercially viable extraction of the geothermal energy and its conversion to electricity become possible and a “geothermal resource” is present.

3.There ~~Air~~are ~~Quality~~four ~~Permit~~major tocomponents ~~Construct~~(or ~~issued~~factors) byto ~~the~~a ~~Northern Sonoma Air Quality Board.~~geothermal resource:

~~Seasonality~~1. Heat source and temperature – The economic viability of ~~Business~~a geothermal resource is related to the amount of heat generated. The higher the temperature, the more valuable the geothermal resource. 2. Fluid – A geothermal resource is commercially viable only when the system contains water and/or steam as a medium to transfer the heat energy to the surface. 3. Permeability – The fluid present underground must be able to move. In general, significant porosity and permeability within the rock formation are needed to create a viable reservoir. 4. Depth – The cost of development increases with depth, as do resource temperatures. The proximity of the reservoir to the surface is therefore a key factor in the economic valuation of a geothermal resource.

~~The~~Electrical ~~Company~~power ~~has~~is ~~been~~directly ~~producing~~produced ~~energy revenues under the terms of three PPAs. Two of these contracts specify favorable rate periods and all three plants experience changes in levels of production~~ through the ~~year. The~~utilization ~~Raft River Energy I LLC (Raft River, Idaho) and USG Oregon LLC (Neal Hot Springs, Oregon) contracts pay higher rates in the months~~ of ~~July/August and November/December. Energy production can be influenced by the seasonal temperatures. The Company’s binary~~ geothermal ~~plants~~resources; ~~can~~however, ~~operate~~these ~~more efficiently~~resources inare ~~cooler~~not ~~temperatures.~~a ~~Cooler~~direct ~~temperatures~~component ~~facilitate the cooling process~~ of ~~the secondary fluid that is used to power the turbines. The Neal Hot~~ ~~Springs plant, since it utilizes air cooling rather than water cooling, is impacted more in~~ the ~~summer~~final ~~(lower generation) than the Raft River or San Emidio plants~~product. Neal Hot Springs produces higher generation in the winter. Drilling and other construction activities can be negatively impacted by inclement weather that can occur, primarily, during the winter months.

~~Industry~~Unless ~~Practices/Needs~~major ~~for~~geological ~~Working~~changes ~~Capital~~occur that impact the geothermal reservoirs, the condition of the existing resources is expected to remain relatively consistent over time.

~~The~~Significant ~~Company~~Government is heavily involved in exploration and development operations. Once the decision is made to construct a project, high levels of working capital are committed, either directly or indirectly to the construction efforts. After a plant becomes commercially operational and the necessary operating reserves have been funded, the needs for working capital are typically low. The Company is expecting to be significantly involved in exploration and development activities for the next 5 to 10 years. Permits

~~Dependence~~The onCompany amaintains ~~Few~~all ~~Customers~~permits necessary for operating its three plants located in Idaho, Nevada and Oregon. In addition, in December 2016 the Company received the Sonoma County Conditional Use Permit required for construction and operations of the WGP Geysers project.

~~Ultimately,~~Neal ~~the~~Hot ~~market for electrical power is vast; however~~Springs, ~~the~~ ~~numbers of entities that can physically, logistically and economically purchase the commodity in large quantities are limited~~Oregon. The ~~Company’s~~Neal ~~primary revenues~~Hot ~~originate~~Springs ~~from energy sales and the sale of energy credits. Currently,~~project ~~the~~has ~~Company~~four ~~generates~~primary ~~energy~~permits ~~revenues~~governing ~~and~~power energy credits from three sources. Idaho Power Company purchases energy generated by both Raft River Energy I LLC and USG Oregon LLC. NV Energy purchases energy from USG Nevada LLC. Energy credits earned by Raft River plant ~~are sold to Holy Cross Energy~~operations. ~~Under~~The ~~the current~~permits ~~PPAs, energy credits that are earned by USG Oregon LLC and USG Nevada~~include: LLC plants are bundled with energy sales. Based upon current operations and expected project completions, it is expected that the Company will have a small number of direct customers that may amount to less than 10 over the next 5 to 10 years.

1. Geothermal Well Permits issued by the Department of Geology. 2. A Right-23of-Way issued by the Bureau of Land Management. 3. A Conditional Use Permit issued by the Malheur County Commission. 4. Underground Injection Control Permit issued by the Oregon Department of Environmental Quality.

~~Competitive~~-23- ~~Conditions~~

~~Although~~San ~~the market for different forms of energy is large and dominated by very powerful players~~Emidio, we perceive our industrial competition to be independent power producers and in particular those producers who provide “green” renewable power. Our definition of green power is electricity derived from a source that does not pollute the air, water or earth. Sources of green power, in addition to geothermal, include wind, solar, biomass and run-of-the river hydroelectric. A number of states have instituted renewable portfolio standards (“RPS”) that require utilities and retail sellers of electricity to purchase a minimum percentage of their power from renewable sources. For example, RPS statutes in California require 50% by 2030, Oregon requires 50% by 2040 and Nevada ~~requires 25% by 2015~~. ~~According~~The toSan ~~the~~Emidio ~~Department~~project ofhas ~~Energy’s~~five ~~Energy~~primary ~~Efficiency~~permits ~~and~~governing ~~Renewable Energy department, approximately 38 states nationwide have established renewable portfolio standards or goals encouraging the procurement of green, renewable~~ power. Asplant ~~a result, we believe green power is an important sub-market in the broader electric market, in which many power purchasers are increasing or committing to increase their investments~~operations. ~~Accordingly,~~ ~~the~~The ~~conventional~~permits ~~energy~~include: ~~producers do not provide direct competition.~~

In1. ~~the~~Geothermal ~~Pacific~~well ~~Northwest~~permits ~~there~~issued ~~are currently only two commercial geothermal facilities, both operated~~ by the ~~Company.~~Nevada ~~There~~Division ~~are a number~~ of ~~wind~~Minerals. ~~farms,~~2. asA ~~well~~Special asUse ~~biomass~~Permit ~~and~~issued ~~run-of-the~~by ~~river hydroelectric facilities. However,~~ the ~~Company~~Washoe ~~believes~~County ~~that~~Board ~~the combination~~ of ~~greater reliability~~Commissioners. ~~and~~3. ~~the~~An ~~baseload~~Air ~~generation~~Quality ~~profile~~Permit ~~provided~~to byOperate ~~geothermal~~from ~~power, with~~Washoe ~~access~~County. to4. ~~infrastructure~~A ~~for~~Surface ~~deliverability,~~Discharge ~~and~~Permit afrom ~~low~~Nevada ~~"full~~Division ~~life"~~of ~~cost~~Environmental ~~of power~~Protection. ~~will~~5. ~~allow~~An ~~geothermal~~Underground toInjection ~~successfully~~Permit ~~compete~~from ~~for~~Nevada ~~long~~Division ~~term~~of ~~PPAs~~Environmental Protection.

~~Factors~~Raft ~~that~~River, ~~can~~Idaho. ~~influence~~The ~~the~~Raft ~~overall~~River ~~market~~project ~~for~~has ~~our product~~three ~~include~~primary ~~some~~permits ofgoverning ~~the~~power ~~following~~plant operations. The permits include:

~~number~~1. Geothermal well permits issued by the Idaho Department of ~~market~~Water ~~participants~~Resources. ~~buying~~2. A Conditional Use Permit issued by the Cassia County Planning and ~~selling~~Zoning ~~electricity;~~ Commission. 3. A Wastewater Reuse Permit issued by the Idaho Department of Environmental Quality.

~~availability~~WGP Geysers, California. Western GeoPower had previously been issued all necessary permits for construction and ~~cost~~operation of ~~transmission;~~up to a 38.5 megawatt geothermal power plant. The Sonoma County Conditional Use Permit administratively expired in 2015. A new Conditional Use was issued in December 2016 for an initial term of 10 years including administrative extensions of 5 years. The primary permits include:

~~availability~~1. Geothermal well permits for production and injection wells issued by the California Department of ~~low~~Oil, ~~cost~~Gas, ~~natural~~and ~~gas~~Geothermal asResources. an2. ~~alternate~~A ~~fuel~~Conditional ~~source~~ Use Permit that has been issued by the Sonoma County. 3. Air Quality Permit to Construct issued by the Northern Sonoma Air Quality Board.

~~amount~~Seasonality of ~~electricity~~Business ~~normally available in the market;~~

~~fluctuations~~The Company has been producing energy revenues under the terms of three PPAs. Two of these contracts specify favorable rate periods and all three plants experience changes in ~~electricity~~levels ~~supply~~of ~~due~~production tothrough ~~planned~~the year. The Raft River Energy I LLC (Raft River, Idaho) and ~~unplanned~~USG ~~outages~~Oregon LLC (Neal Hot Springs, Oregon) contracts pay higher rates in the months of July/August and ~~competitors~~November/December. Energy production can be influenced by the seasonal temperatures. The Company’s ~~generators;~~binary geothermal plants can operate more efficiently in cooler temperatures. Cooler temperatures facilitate the cooling process of the secondary fluid that is used to power the turbines. The Neal Hot Springs plant, since it utilizes air cooling rather than water cooling, is impacted more in the summer (lower generation) than the Raft River or San Emidio plants. Neal Hot Springs produces higher generation in the winter. Drilling and other construction activities can be negatively impacted by inclement weather that can occur, primarily, during the winter months.

~~fluctuations~~-24- ~~in electricity demand due to weather and other factors;~~

~~cost~~Industry ofPractices/Needs ~~fuel~~for ~~used~~Working ~~by generators, which could be impacted by efficiency of generation technology and fluctuations in fuel supply;~~ Capital

~~environmental~~The ~~regulations~~Company ~~that~~is ~~impact~~heavily usinvolved in exploration and ~~our~~development operations. ~~competitors;~~Once the decision is made to construct a project, high levels of working capital are committed, either directly or indirectly to the construction efforts. After a plant becomes commercially operational and the necessary operating reserves have been funded, the needs for working capital are typically low. The Company is expecting to be significantly involved in exploration and development activities for the next 5 to 10 years.

~~availability~~Dependence ofon ~~production~~a ~~tax~~Few ~~credits~~Customers ~~and other benefits allowed by tax law;~~

~~relative~~Ultimately, ~~ease~~the ormarket ~~difficulty~~for electrical power is vast; however, the numbers of ~~developing~~entities that can physically, logistically and ~~constructing~~economically purchase ~~new~~the ~~facilities;~~commodity in large quantities are limited. The Company’s primary revenues originate from energy sales and the sale of energy credits. Currently, the Company generates energy revenues and energy credits from three sources. Idaho Power Company purchases energy generated by both Raft River Energy I LLC and USG Oregon LLC. NV Energy purchases energy from USG Nevada LLC. As of January 2018, energy credits earned by Raft River plant are sold to the Public Utility District No. 1 of Clallam County, Washington. Under the current PPAs, energy credits that are earned by USG Oregon LLC and USG Nevada LLC plants are bundled with energy sales. Based upon current operations and expected project completions, it is expected that the Company will have a small number of direct customers that may amount to less than 10 over the next 5 to 10 years.

~~credit~~Competitive ~~worthiness~~Conditions ~~and risk associated with buyers.~~

~~Environmental~~Although ~~Compliance~~the market for different forms of energy is large and dominated by very powerful players, we perceive our industrial competition to be independent power producers and in particular those producers who provide “green” renewable power. Our definition of green power is electricity derived from a source that does not pollute the air, water or earth. Sources of green power, in addition to geothermal, include wind, solar, biomass and run-of-the river hydroelectric. A number of states have instituted renewable portfolio standards (“RPS”) that require utilities and retail sellers of electricity to purchase a minimum percentage of their power from renewable sources. For example, RPS statutes in California require 50% by 2030, Oregon requires 50% by 2040 and Nevada requires 25% by 2015. According to the Department of Energy’s Energy Efficiency and Renewable Energy department, approximately 38 states nationwide have established renewable portfolio standards or goals encouraging the procurement of green, renewable power. As a result, we believe green power is an important sub-market in the broader electric market, in which many power purchasers are increasing or committing to increase their investments. Accordingly, the conventional energy producers do not provide direct competition.

~~Geothermal~~In ~~drilling,~~the ~~construction~~Pacific ~~and~~Northwest ~~power~~there ~~plant operations~~ are ~~subject~~currently toonly ~~federal,~~two commercial ~~state~~geothermal ~~and~~facilities, ~~local~~both ~~environmental~~operated ~~requirements~~by ~~and construction~~the ~~oversight~~Company. ~~Applicable~~There ~~laws~~are ~~may~~a number ~~include~~of ~~but~~wind ~~are~~farms, ~~not~~as ~~limited~~well toas biomass and run-of-the ~~Clean~~ ~~Air~~river ~~Act~~hydroelectric facilities. However, the ~~Clean~~Company ~~Water~~believes ~~Act,~~that the ~~Emergency~~combination ~~Planning~~of ~~and Community~~greater ~~Right-to-Know~~reliability ~~Act,~~and the ~~Endangered~~baseload ~~Species~~generation ~~Act,~~profile ~~the~~provided ~~National~~by ~~Environmental~~geothermal ~~Policy Act~~power, with ~~state~~access ~~specific~~to ~~geothermal~~infrastructure ~~drilling~~for ~~rules~~deliverability, ~~state~~ and a low "full life" cost ~~federal~~of ~~injection~~power ~~well~~will ~~requirements~~allow ~~and~~geothermal ~~standards~~to ~~and~~successfully ~~local~~compete ~~building~~for ~~codes.~~long term PPAs.

-2425-

~~Prior~~Factors tothat ~~acquiring~~can aninfluence ~~existing geothermal development, USG retains an independent, licensed engineer or geologist to conduct a Site Assessment and evaluate~~ the ~~property~~overall ~~and~~market ~~performs~~for ~~detailed~~our ~~due diligence to~~product ~~minimize~~include ~~the~~some ~~potention~~ of anthe ~~unrecognized~~following: ~~financial liability from being passed to U.S. Geothermal Inc. or our subsidiaries.~~

~~Our~~• ~~geothermal~~number ~~operations~~of ~~involve~~market ~~significant~~participants ~~quantities~~buying and selling electricity; • availability and cost of ~~geothermal~~ ~~brine~~transmission; ~~that~~• isavailability ~~returned~~of tolow cost natural gas as an alternate fuel source • amount of electricity normally available in the ~~local~~market; ~~subsurface,~~• ~~geologic~~fluctuations ~~formation. We~~in ~~also~~electricity ~~use~~supply ~~isopentane~~due to planned and ~~R-134A~~unplanned ~~refrigerant~~outages ~~working~~of ~~fluids,~~competitors’ ~~and~~generators; ~~numerous industrial~~• ~~lubricants~~fluctuations ~~that~~in ~~are~~electricity ~~considered~~demand ~~contaminants~~due ifto ~~released~~weather orand ~~spilled. We~~other ~~are~~factors; ~~not~~• ~~aware~~cost of ~~any~~fuel ~~mismanagement~~used by generators, which could be impacted by efficiency of ~~these~~generation ~~materials~~technology and wefluctuations ~~are~~in ~~required~~fuel ~~to promptly~~supply; ~~report~~• ~~any~~environmental ~~release~~regulations that impact us and our competitors; • availability of ~~specified~~production ~~volumes~~tax credits and other benefits allowed by tax law; • relative ease or difficulty of ~~oil,~~developing ~~lubricants,~~and constructing new facilities; and ~~chemicals~~ ~~used~~• incredit ~~our~~worthiness ~~operations.~~and risk associated with buyers.

~~The~~Environmental ~~requisite~~Compliance approvals and permits for our operations have been independently reviewed and verified prior to obtaining project financing. Independent legal reviews have verified that USG and our subsidiaries are operated in accordance with applicable laws. Existing laws and regulations may be revised or reinterpreted, or new laws and regulations may become applicable to us. Under those circumstances we work with the appropriate agency or entity to ensure that our operations remain in compliance with the applicable rules. As of the date of this memorandum, all of the permits and approvals required to operate our plants have been obtained and are valid.

~~Neal~~Geothermal ~~Hot Springs~~drilling, ~~Oregon~~construction ~~The~~and ~~Neal~~power ~~Hot~~plant ~~Springs~~operations ~~project~~are issubject ~~situated~~to ~~approximately~~federal, 12state ~~miles~~and ~~west~~local ofenvironmental ~~Vale,~~requirements ~~Oregon~~and construction inoversight. anApplicable ~~area~~laws ~~with~~may include but are not limited to the ~~two~~Clean ~~nearby~~Air ~~residents.~~Act, ~~There~~the ~~are~~Clean noWater ~~unique~~Act, ~~plants~~the orEmergency ~~animal~~Planning ~~communities~~and inCommunity Right-to-Know Act, the Endangered Species Act, the National Environmental Policy ~~area~~Act, state specific geothermal drilling rules, state and nofederal ~~unique~~injection ~~cultural~~well requirements orand ~~environmental~~standards ~~constraints~~and local building codes.

~~Because~~Prior ~~the~~to ~~power~~acquiring ~~plant~~an isexisting ~~air-cooled~~geothermal ~~the~~development, ~~only environmental~~USG ~~reporting~~retains ~~required is a monthly production and injection report and~~ an ~~annual water~~independent, ~~quality~~licensed ~~summary.~~engineer ~~Both~~or ~~reports~~geologist ~~are sent~~ to ~~the~~conduct ~~Oregon Department of~~an Environmental ~~Quality~~Site Assessment and ~~Oregon~~evaluate ~~Department~~the ofproperty ~~Geology~~for ~~and Mineral Industries.~~recognized ~~Semi-annual~~environmental ~~water~~conditions ~~monitoring~~that ~~has~~could ~~been~~result ~~conducted~~in ~~since~~regulatory ~~2008~~ and ~~will continue~~financial ~~throughout~~liabilities ~~power~~being ~~plant~~passed ~~operations~~to U.S. ~~The~~Geothermal ~~Neal project files a quarterly energy generation report with the Federal Energy Regulatory Commission~~Inc. Anor ~~independent legal~~our ~~team has reviewed all regulatory requirements, permits and approvals for the project~~subsidiaries.

~~Adjoining~~Our ~~rangelands~~geothermal ~~are~~operations ~~privately~~involve significant quantities of geothermal brine that is returned to the local subsurface, geologic formation. We also use isopentane and ~~federally~~R-134A ~~managed~~refrigerant working fluids, and numerous ~~there~~industrial lubricants that are nodefined ~~rangeland~~by state regulatory agencies as “contaminants” if released or ~~cropland~~spilled. ~~management~~We ~~obligations~~are not aware of any mismanagement of these materials and we are required to promptly report any release of specified volumes of oil, lubricants, and chemicals used in our operations.

The ~~Neal~~requisite approvals and permits for our operations have been independently reviewed and verified prior to obtaining project isfinancing. Independent legal reviews have verified that USG and our subsidiary companies are operated in ~~compliance~~accordance with ~~all~~applicable ~~environmental~~laws. Existing laws and regulations ~~permitting~~may be revised or reinterpreted, ~~monitoring~~or new laws and ~~reporting~~regulations ~~requirements~~may ~~and~~become applicable ~~has~~to ~~received~~us. noUnder ~~formal~~those circumstances we work with the appropriate agency or entity to ensure that our operations remain in compliance with the applicable ~~informal~~rules. ~~notices~~As ~~from~~of ~~any~~the ~~local,~~date ~~state~~of this memorandum, orall ~~federal~~of ~~agency~~the permits and approvals required to operate our plants have been obtained and are valid.

~~San~~-26- ~~Emidio, Nevada The San Emidio project is located approximately 14 miles south of Gerlach Nevada. The nearest residence is over four miles from the plant site.~~

~~-25-~~Neal Hot Springs, Oregon

The ~~San~~Neal ~~Emidio~~Hot ~~staff~~Springs ~~files~~project ~~monthly,~~is ~~quarterly~~situated ~~and~~approximately ~~annual~~12 ~~water~~miles ~~reports~~west ~~with the Department~~ of ~~Environmental~~Vale, ~~Protection~~Oregon. ~~and~~There ~~Department~~are oftwo ~~Water Resources.~~nearby ~~Similar~~residents; toboth ~~other~~are ~~projects~~family ~~San~~of ~~Emidio’s~~JR ~~monthly geothermal production~~Land ~~and~~& ~~injection~~Livestock, ~~volumes~~our ~~are~~primary ~~submitted~~lessor. ~~the~~There ~~Division~~are ofno ~~Minerals~~unique ~~and~~plant ~~Division~~or ofanimal ~~Environmental~~communities ~~Protection.~~in ~~Water~~the ~~quality~~area ~~reporting~~and isno ~~also~~unique ~~submitted~~cultural ~~regularly~~or ~~to the~~environmental ~~Division of Environmental Protection~~constraints.

~~San~~Because ~~Emidio~~the power plant is inair-cooled ~~compliance~~the only environmental reporting required is a monthly production and injection report and an annual water quality summary. The reports are filed with ~~all~~the ~~environmental~~Oregon ~~permitting,~~Department of ~~monitoring~~Environmental Quality and ~~reporting~~Oregon ~~requirements~~Department of Geology and Mineral Industries. Bi-annual water monitoring has ~~received~~been noconducted ~~formal~~since or2008 ~~informal~~and will continue ~~notices~~throughout ~~from~~the ~~any~~life ~~local,~~of ~~state,~~the orproject. ~~federal~~Energy ~~agency~~generation reports are filed with the Federal Energy Regulatory Commission on a quarterly basis. An independent legal team has reviewed all regulatory requirements, permits and approvals for the project.

~~Raft~~Adjoining ~~River,~~rangelands ~~Idaho~~are ~~The~~privately ~~Raft~~and ~~River~~federally ~~project~~managed ~~is located~~and ~~approximately~~there ~~12 miles south of Malta, Idaho in a rural agricultural area with the nearest residence approximately two miles from the plant site. There~~ are no ~~unique~~ ~~plants~~rangeland or ~~animal~~cropland ~~communities~~management ~~in the area and no unique cultural or environmental constraints~~obligations.

~~Wastewater~~The ~~reuse~~Neal ~~requires~~project ~~a significant level of environmental reporting and data management. Water quality data~~ is ~~collected~~in acompliance ~~minimum of four times annually. Monthly production and injection reports are filed~~ with ~~the Idaho~~all ~~Department of Water Resources~~environmental permitting, amonitoring ~~land application~~ and ~~cooling~~reporting ~~water quality~~requirements ~~reports filed with the Idaho Department of Environmental Quality~~ and ~~Idaho~~ ~~Department~~has ofreceived ~~Water~~no ~~Resources~~formal ~~annually. The Project’s private lands are~~or ~~managed~~informal onnotices anfrom ~~ongoing~~any ~~basis for weed control~~local, ~~water management~~state, ~~irrigation,~~or ~~and fencing~~federal ~~infrastructure~~agency.

~~The~~San ~~Raft River project is in compliance with all environmental permitting~~Emidio, ~~monitoring~~Nevada ~~and reporting requirements and has received no formal or informal notices from any local, state, or federal agency.~~

~~WGP Geysers, California~~ The ~~Geysers~~San Emidio project is located approximately 3014 ~~minutes~~miles ~~north-east~~ south of ~~the~~Gerlach ~~city of Healdsburg, CA~~Nevada. The ~~property~~ ~~encompasses~~nearest aresidence ~~ridgetop~~is ~~and~~over afour ~~north~~miles ~~facing hillside that has been developed and used for geothermal operations~~ from ~~l979~~the ~~to l989. There are no unique~~ plant ~~or animal communities on the project~~ site ~~and no unique cultural or environmental constraints~~. ~~The North Coast Regional Water Quality Board (NCRWQB)~~ has required, prior to new construction, that WGP submit a plan to remove or reuse existing steam pipelines. The pipelines may contain mineral scale that has arsenic levels that exceed 150 parts per million.

~~WGP’s~~The ~~ongoing~~San ~~environmental~~Emidio ~~reports~~staff ~~include~~files a monthly, ~~well report~~quarterly ~~that~~and isannual ~~filed~~water reports with the ~~California~~Nevada Department of ~~Oil,~~Environmental ~~Gas~~Protection and ~~Geothermal~~Nevada Department of Water Resources. ~~and~~Similar anto ~~annual~~other ~~water~~projects ~~quality~~San ~~report~~Emidio’s ~~that~~monthly geothermal isproduction ~~filed~~and ~~with~~injection volumes are submitted the ~~California~~Nevada Division of ~~Regional~~Minerals ~~Water~~and ~~Board~~Nevada Division of Environmental Protection. Water quality reporting is also submitted regularly to the Nevada Division of Environmental Protection.

~~The~~San ~~Geysers~~Emidio ~~project~~ is in compliance with all environmental permitting, monitoring and reporting requirements and has received no formal or ~~informal~~ informal notices from any local, state, or federal agency.

~~-26-~~Raft River, Idaho

~~Gerlach,~~The ElRaft ~~Ceibillo,~~River ~~Crescent~~project ~~Valley,~~is ~~Lee~~located ~~Hot~~approximately ~~Springs,~~12 ~~Ruby~~miles south ~~Hot~~of ~~Springs~~Malta, ~~and~~Idaho ~~Vale~~in Noa ~~power~~rural ~~plant~~agricultural ~~operations~~area ~~are~~with ~~being~~the ~~conducted~~nearest onresidence ~~these~~approximately ~~properties~~two atmiles ~~this~~from ~~time.~~the ~~The~~plant ~~Company~~site. isThere inare ~~compliance with all environmental and regulatory requirements and has received~~ no ~~formal~~unique orplants ~~informal~~or ~~notices~~animal ~~from~~communities ~~any~~in ~~local,~~the ~~state,~~area orand ~~federal agency. There are~~ no ~~monthly, quarterly,~~unique cultural or ~~annual reporting requirements associated with these projects~~environmental constraints.

~~Financial~~Wastewater ~~Information~~reuse ~~about~~requires ~~Geographic~~bi-annual ~~Areas~~ground water monitoring at six locations, monthly monitoring of the cooling water and annual reporting. Water quality data is collected a minimum of twice annually. Monthly production and injection reports are filed with the Idaho Department of Water Resources, and land application and cooling water quality reports are filed with the Idaho Department of Environmental Quality and Idaho Department of Water Resources annually. The Project’s private lands are managed on an ongoing basis for weed control, water management, irrigation, and fencing infrastructure.

~~The~~-27- Company has interests in operational power plants in three locations in the Western United States. The Raft River Energy I LLC power plant is located in the southeastern part of the State of Idaho. Raft River Unit I became operational on January 3, 2008. USG Nevada LLC constructed a new power plant located in the northwestern part of the State of Nevada in the San Emidio Desert. This power plant owned by USG Nevada LLC became commercially operational May 25, 2012. The three units owned by USG Oregon LLC became commercially operational November 16, 2012. These units are located in the Eastern part of the State of Oregon near the Idaho border. A summary of total energy and energy credit sales by location is as follows:

		For the Year Ended December 31,
		2016		2015
USG Oregon LLC located in Eastern Oregon	$	19,561,718	$	18,823,799
USG Nevada LLC located in Northwestern Nevada		6,980,358		7,324,484
Raft River Energy I LLC located in Southeastern Idaho		4,939,599		5,051,815
Total energy and energy credits sales	$	31,481,675	$	31,200,098

The Raft River project is in compliance with all environmental permitting, monitoring and reporting requirements and has received no formal or informal notices from any local, state, or federal agency.

~~Financial~~WGP ~~Information~~Geysers, ~~about~~California ~~Business Segments~~

The ~~Company~~Geysers ~~has~~project ~~two~~is ~~reporting~~located ~~segments:~~approximately ~~operating~~30 ~~plants~~minutes north-east ~~and~~of the city of Healdsburg, California. The property encompasses a ~~corporate~~ridgetop and ~~development~~a north facing hillside that has been developed and used for geothermal operations from l979 to l989. ~~For~~There ~~more~~are ~~information~~no ~~about~~unique plant or animal communities on the ~~business~~project ~~segments~~site and no unique cultural or environmental constraints. The North Coast Regional Water Quality Board (NCRWQB) has required, ~~please~~prior ~~see~~to ~~Note~~new 15construction, that WGP submit a plan to ~~our~~remove ~~consolidated~~or ~~financial~~reuse ~~statements~~existing steam pipelines. The pipelines may contain mineral scale that has arsenic levels that exceed 150 parts per million.

~~Available~~WGP’s ~~Information~~ongoing environmental reports include a monthly well report that is filed with the California Department of Oil, Gas and Geothermal Resources and an annual water quality report that is filed with the California Regional Water Board.

WeThe ~~file~~Geysers ~~annual,~~project ~~quarterly~~is ~~and~~in ~~periodic~~compliance ~~reports, proxy statements and other information~~ with ~~the~~all ~~U.S.~~environmental permitting, ~~Securities~~monitoring and ~~Exchange Commission~~reporting ~~(“SEC”).~~requirements ~~You may obtain~~ and ~~copy~~has ~~any~~received ~~document~~no weformal ~~file with the SEC at~~or ~~the~~informal ~~SEC’s~~notices ~~Public~~from ~~Reference~~any ~~Room at 100 F Street~~local, ~~N.E.~~state, ~~Room~~or ~~1580;Washington~~federal Dagency.~~C. 20549.~~ You may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an internet website at http://www.sec.gov that contains reports, proxy and other information statements and other information regarding issuers that file electronically with the SEC. Our SEC filings are accessible via the internet at that website.

~~We make available~~Gerlach, ~~free~~El ~~of charge through our Internet website at http://www.usgeothermal.com~~Ceibillo, ~~our~~Crescent ~~annual report on Form 10-K~~Valley, ~~quarterly reports~~Lee onHot ~~Form 10-Q~~Springs, ~~current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to~~Ruby ~~Section~~Hot ~~13(a) or 15(d) of the Securities Exchange Act of 1934 of 1934~~Springs, as amended (the “Exchange Act”), as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC. Information on our website is not incorporated into this report and isVale ~~not a part of this report.~~

~~-27-~~No power plant operations are being conducted on these properties at this time. The Company is in compliance with all environmental and regulatory requirements and has received no formal or informal notices from any local, state, or federal agency. There are no monthly, quarterly, or annual reporting requirements associated with these projects.

~~Governmental~~-28- ~~Approvals and Regulations~~

~~The~~Financial ~~geothermal~~Information ~~energy~~about ~~industry~~Geographic inAreas the United States is regulated by federal, state and local agencies and commissions. Those agencies and commissions regulate geothermal drilling, power generation activities and environmental protection through permitting, licensing and bonding requirements. The following information is a general summary of the electric utility industry and applicable regulations in the United States and is not a full statement of the law or all issues pertaining to electric industry requirements.

~~Regulatory~~The ~~oversight~~Company ofhas ~~the~~interests ~~industry~~in ~~can~~operational bepower ~~broadly~~plants ~~divided~~in three ~~between~~locations ~~rules~~in ~~governing~~the ~~geothermal~~Western ~~exploration~~United ~~and~~States. ~~rules~~The ~~governing~~Raft ~~actual~~River ~~energy generation,~~Energy ~~power~~I ~~sales~~LLC ~~and~~power ~~delivery.~~plant is ~~Geothermal~~located ~~fluid~~in ~~production~~the issoutheastern ~~regulated under~~part ~~federal~~of ~~and~~the ~~state~~State ~~rules~~of ~~and~~Idaho. ~~regulations~~Raft ~~that~~River ~~require~~Unit ~~permits for drilling~~I ~~operations,~~became ~~geothermal~~operational ~~fluid~~on ~~production~~January ~~and injection~~3, ~~and well abandonment~~2008. ~~Prior~~ toUSG ~~drilling~~Nevada ~~agencies~~LLC ~~will~~constructed ~~review~~a ~~plans~~new ~~and~~power plant ~~ensure~~located ~~that~~in ~~natural~~the ~~resource values~~northwestern ~~such~~part asof ~~air,~~the ~~water,~~State ~~wildlife~~of ~~and~~Nevada ~~vegetation~~in ~~are~~the ~~protected.~~San ~~Geothermal~~Emidio ~~energy~~Desert. ~~generation~~This ispower ~~regulated~~plant ~~under~~owned ~~federal,~~by ~~state~~USG ~~and~~Nevada ~~local~~LLC ~~rules~~became ~~and~~commercially operational ~~regulations~~May 25, 2012. ~~Permits~~The ~~are~~three ~~required~~units ~~for~~owned ~~power~~by ~~plant~~USG ~~construction~~Oregon ~~and~~LLC ~~operation~~became ~~and~~commercially ~~ensure~~operational ~~that~~November a16, ~~project~~2012. ~~site~~These isunits ~~suitable~~are ~~and~~located ~~that~~in ~~natural~~the ~~resource~~Eastern ~~values~~part ~~and~~of ~~community~~the ~~concerns,~~State ifof ~~any,~~Oregon ~~are~~near ~~evaluated~~the ~~and~~Idaho ~~mitigated~~border. ~~during~~A ~~the~~summary ~~planning~~of total energy and energy ~~design~~credit ~~phase.~~sales by location is as follows:

Federal Electric Utility Industry Regulation. Electricity production and public utilities are regulated by both the federal government and state utility commissions. State utility commissions traditionally exercise their jurisdiction over an electric utility’s retail operations. There are two primary pieces of federal legislation that have governed public utilities since the 1930s, the Federal Power Act (“FPA”) and Public Utility Holding Company Act of 1935 (“PUHCA”). These statutes have been amended and supplemented by subsequent legislation, including Public Utility Regulatory Protection Act (“PURPA”), the Energy Policy Act of 1992, and Energy Policy Act of 2005 (“EPAct 2005”).

		For the Year Ended December 31,
		2017		2016		2015

USG Oregon LLC located in Eastern Oregon	$	19,941,366	$	19,561,718	$	18,823,799
USG Nevada LLC located in Northwestern Nevada		6,255,599		6,980,358		7,324,484
Raft River Energy I LLC located in Southeastern Idaho		5,859,822		4,939,599		5,051,815
Total energy and energy
credits sales	$	32,056,787	$	31,481,675	$	31,200,098

~~Federal~~Financial ~~Power~~Information ~~Act.~~about ~~Pursuant~~Business to the FPA the Federal Energy Regulatory Commission (“FERC”) has exclusive jurisdiction over the rates for most wholesale sales of electricity and transmission in interstate commerce. These rates may be based on a cost of service approach or may be determined on a market basis through competitive bidding or negotiation. FERC's regulations under PURPA exempt owners of small power production Qualifying Facilities that use geothermal resources as their primary source and other Qualifying Facilities that are 30 megawatts or under in size from many provisions of the FPA. Segments

~~Under~~The ~~the~~Company ~~FPA~~has ~~and~~two ~~FERC’s~~reporting ~~regulations,~~segments: ~~the~~operating ~~wholesale~~plants ~~sale of~~and ~~power~~corporate atand ~~market-based or cost-based rates requires that the seller have authorization issued by FERC to sell power at wholesale pursuant to a FERC-accepted rate schedule~~development. ~~FERC~~For ~~grants~~more ~~market-based~~information ~~rate~~about ~~authorization based on several criteria, including a showing that~~ the ~~seller~~business ~~and its affiliates lack market power in generation and transmission~~segments, ~~that the seller and its affiliates~~ ~~cannot~~please ~~erect~~see ~~other~~Note ~~barriers~~16 to ~~market~~our ~~entry~~consolidated ~~and~~financial ~~that there is no opportunity for abusive transactions involving regulated affiliates of the seller~~statements. All of the Company’s facilities are qualifying facilities and have been granted market-based rate authority to make wholesale sales of electrical energy by FERC. For the Neal Hot Springs power plant, USG Oregon files electronic quarterly reports of the contract and transaction data.

~~-28-~~Available Information

~~Energy~~We ~~Policy~~file ~~Act~~annual, ofquarterly ~~2005.~~and ~~EPAct~~periodic ~~2005 contains~~reports, ~~provisions to prohibit the manipulation of the electric energy and~~proxy ~~natural~~statements ~~gas markets~~ and ~~increase~~other ~~the~~information ~~ability of FERC to enforce and promote compliance~~ with the ~~statutes,~~U.S. ~~orders,~~Securities ~~rules,~~ and ~~regulations that FERC~~Exchange ~~administers~~Commission (“SEC”). ToYou ~~implement~~may ~~the~~obtain ~~market~~and ~~manipulation~~copy ~~provision~~any ofdocument ~~EPAct~~we ~~2005,~~file ~~FERC amended its regulations to prohibit a company, in connection~~ with the ~~purchase or~~SEC ~~sale of natural gas, electric energy, or transportation or transmission~~at ~~services~~the ~~subject to FERC~~SEC’s ~~jurisdiction,~~Public ~~from~~Reference ~~(1)~~Room ~~using~~at or100 ~~employing~~F ~~any device~~Street, ~~scheme,~~ ~~or artifice to defraud~~N.E., ~~(2)~~Room ~~declaring~~1580;Washington ~~any untrue statement of a material~~D.C. ~~fact~~20549. orYou ~~omitting~~may toobtain ~~state~~information aon ~~material fact necessary in order to make~~ the ~~statements~~ ~~made,~~operation ~~in the light~~ of the ~~circumstances~~SEC’s ~~under~~Public ~~which they were made,~~Reference ~~not~~Room ~~misleading,~~by orcalling ~~(3)~~the ~~engaging~~SEC inat ~~any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person~~1-800-SEC-0330. The ~~EPAct~~SEC ~~2005 made~~maintains aan ~~number~~internet ofwebsite at ~~other changes to laws affecting the regulation of electricity~~http://www. ~~These~~sec.gov ~~include,~~that ~~but~~contains ~~are not limited to~~reports, ~~giving~~proxy ~~FERC explicit authority to proscribe~~ and ~~enforce~~other ~~rules governing market transparency, giving FERC authority~~information tostatements ~~oversee~~ and ~~enforce~~other ~~electric~~information ~~reliability~~regarding ~~standards,~~issuers ~~requiring FERC to promulgate rules providing for incentive ratemaking to encourage investments~~ that ~~promote~~file ~~transmission~~electronically ~~reliability and reduce congestion, giving FERC certain~~with ~~siting~~the ~~authority~~SEC. ~~for~~Our ~~transmission~~SEC ~~lines~~filings inare ~~critical~~accessible ~~transmission~~via ~~corridors, requiring~~the ~~FERC~~internet toat promulgate rules granting incentives for transmission owners to join Regional Transmission Organizations, authorizing FERC to require unregulated utilities to provide open access transmission, and ensuring that ~~load~~ ~~serving entities can retain transmission rights necessary to serve native load requirements~~website. ~~EPAct 2005 promulgated PUHCA 2005, which repeals PUHCA 1935, effective as of February 8, 2006.~~

~~Public~~We ~~Utility~~make ~~Holding Company Act. Under PUHCA 2005~~available, ~~the~~free ~~books and records~~ of acharge ~~utility~~through ~~holding~~our ~~company,~~Internet ~~its affiliates,~~website ~~associate~~at ~~companies~~http://www.usgeothermal.com, ~~and~~our ~~subsidiaries~~annual ~~are~~report ~~subject~~on toForm ~~FERC~~10-K, ~~and state commission~~quarterly ~~review~~reports ~~with~~on ~~respect~~Form to10-Q, ~~transactions~~current ~~that~~reports ~~are~~on ~~subject~~Form to8-K, ~~the~~and ~~jurisdiction~~amendments ofto those ~~either~~reports ~~FERC~~filed or ~~the~~furnished ~~state~~pursuant ~~commission~~to orSection ~~costs incurred by~~ 13(a) ~~jurisdictional utility~~or in15(d) of the ~~same holding company system. However, if a company is a utility~~Securities ~~holding~~Exchange ~~company~~Act ~~solely~~of ~~with~~1934 ~~respect~~of ~~to Qualifying Facilities~~1934, ~~exempt~~as ~~wholesale generators,~~amended or(the ~~foreign~~“Exchange ~~utility companies~~Act”), itas ~~will~~soon ~~not~~as bereasonably ~~subject~~practicable toafter ~~review~~such ~~of books~~material ~~and~~is ~~records by FERC under PUHCA 2005. Qualifying Facilities that make only~~electronically ~~wholesale~~filed ~~sales~~with ofor ~~electricity~~furnished ~~are not subject~~ to ~~state~~the ~~commissions’~~SEC. ~~rate, financial,~~Information ~~and~~on ~~organizational~~our ~~regulations~~website ~~and,~~is ~~therefore, would~~ not ~~be subject~~ toincorporated ~~any~~into ~~review~~this ofreport ~~their books~~ and ~~records by state commissions pursuant to PUHCA 2005 as long as the Qualifying Facility~~ is not a part of athis ~~holding company system that includes a utility subject to regulation in that state~~report.

~~Our~~-29- power plants are Qualifying Facilities that make only wholesale sales of electricity and are not subject to rate, financial and organizational regulations applicable to electric utilities in those states. The power plants each sell their electrical output under power purchase agreements to electric utilities. The utilities are regulated by their respective state public utilities commissions. Neither USG nor our subsidiaries are considered utility holding companies under FPA, FERC, the EPAct2005, or PUHCA2005 and those regulations have had no direct adverse impact on our ability to develop geothermal resources or deliver power under our contracts.

~~-29-~~Governmental Approvals and Regulations

~~Geothermal~~The ~~Development~~geothermal ~~Concession~~energy industry in the United States is ~~Guatemala~~regulated by federal, state and local agencies and commissions. Those agencies and commissions regulate geothermal drilling, power generation activities and environmental protection through permitting, licensing and bonding requirements. The following ~~summary~~information ofis ~~certain~~a ~~aspects~~general summary of the electric utility industry and applicable regulations in ~~Guatemala~~the ~~should~~United ~~not~~States beand ~~considered~~is not a full statement of ~~the~~ ~~laws~~the oflaw ~~Guatemala~~ or all ~~of the~~ issues pertaining ~~thereto.~~to electric industry requirements.

InRegulatory ~~Guatemala,~~oversight of the ~~General~~industry ~~Electricity~~can ~~Law~~be ofbroadly ~~1996, Decree~~divided ~~93-96,~~between ~~created~~rules agoverning ~~wholesale~~geothermal ~~electricity~~exploration ~~market~~ and ~~established~~rules agoverning ~~new~~actual ~~regulatory~~energy ~~framework for the electricity sector. The law created a regulatory commission~~generation, ~~the~~ ~~CNEE, and a new wholesale~~ power ~~market~~sales ~~administrator, the AMM, for the regulation~~ and ~~administration of the sector~~delivery. ~~The~~Geothermal ~~AMM~~fluid production is ~~a private not-for-profit~~regulated ~~entity. The CNEE functions as an independent agency~~ under ~~the~~federal ~~Ministry of Energy~~ and ~~Mines~~state rules and isregulations inthat ~~charge~~require ofpermits ~~regulating,~~for ~~supervising, and controlling~~drilling ~~compliance with the electricity law~~operations, ~~overseeing~~geothermal ~~the~~fluid ~~market~~production and ~~setting rates for transmission services~~injection, and ~~distribution~~well ~~to medium and small customers~~abandonment. ~~All~~ ~~distribution~~Prior ~~companies must supply electricity~~ to ~~such~~drilling ~~customers~~agencies ~~pursuant~~will ~~to long-term~~review ~~contracts~~plans ~~with~~and ~~electricity~~ensure ~~generators.~~that ~~Large~~natural ~~customers can contract~~resource ~~directly~~values ~~with~~such ~~the~~as ~~distribution companies~~air, ~~electricity generators or power marketers~~water, orwildlife ~~buy~~and ~~energy~~vegetation inare ~~the spot market~~protected. ~~Guatemala has approved a Law of~~Geothermal ~~Incentives for the Development of Renewable Energy Power plants, Decree 52-2003, in order to promote the development of renewable~~ energy ~~power~~generation ~~plants.~~is ~~This~~regulated ~~law provides~~under ~~certain benefits to companies utilizing renewable energy~~federal, ~~including~~state ~~a 10-year~~and ~~exemption~~local ~~from~~rules ~~corporate income tax~~ and regulations. anPermits ~~import~~are ~~tax~~required ~~exemption~~ for ~~generation~~ ~~equipment,~~power ~~transmission~~plant ~~lines~~construction and ~~substation~~operation ~~equipment. In September~~and ~~2008,~~ensure ~~CNEE~~that ~~issued~~ a ~~resolution~~project ~~which~~site ~~approved~~is ~~the~~suitable ~~Technical Norms for the Connection, Operation, Control~~ and ~~Commercialization~~that ofnatural ~~the~~resource ~~Renewable Distributed~~values ~~Generation~~ and ~~Self-producers Users with exceeding amounts of~~ ~~energy.~~community ~~This~~concerns, ~~technical~~if ~~norm was created to regulate all aspects of generation~~any, ~~connection,~~ ~~operation,~~are ~~control~~evaluated and ~~commercialization~~mitigated ofduring ~~electric energy produced with renewable sources to promote and facilitate~~ the ~~installation~~planning ~~of new generation plants,~~ and ~~to promote the connection of existing generation plants~~ ~~which~~design ~~have exceeding amounts of electric energy for commercialization~~phase. ~~It is applicable to projects with a capacity of up to 5 megawatts.~~

~~Environmental~~Federal ~~Credits~~Electric Utility Industry Regulation. Electricity production and public utilities are regulated by both the federal government and state utility commissions. State utility commissions traditionally exercise their jurisdiction over an electric utility’s retail operations. There are two primary pieces of federal legislation that have governed public utilities since the 1930s, the Federal Power Act (“FPA”) and Public Utility Holding Company Act of 1935 (“PUHCA”). These statutes have been amended and supplemented by subsequent legislation, including Public Utility Regulatory Protection Act (“PURPA”), the Energy Policy Act of 1992, and Energy Policy Act of 2005 (“EPAct 2005”).

InFederal ~~the~~Power ~~past~~Act. ~~several~~Pursuant ~~years,~~to ~~there has been increased demand for energy generated from geothermal resources in~~ the ~~United~~FPA ~~States as production~~the ~~costs~~Federal ~~for~~Energy ~~electricity~~Regulatory ~~generated~~Commission ~~from~~(“FERC”) ~~geothermal~~has ~~resources~~exclusive ~~have~~jurisdiction ~~become~~over ~~competitive~~the ~~relative~~rates tofor ~~fossil~~most ~~fuel~~wholesale ~~generation.~~sales ~~This~~of iselectricity ~~partly due to newly enacted legislative~~ and ~~regulatory~~transmission ~~incentives,~~in ~~such as production tax credits~~interstate ~~and state renewable portfolio standards~~commerce. ~~State~~These ~~renewable~~rates ~~portfolio~~may ~~standards laws~~be ~~require~~based ~~that~~on ana ~~increasing~~cost ~~percentage~~ of ~~the~~service ~~electricity~~approach ~~supplied~~or bymay be ~~electric~~determined ~~utility~~on ~~companies~~a ~~operating~~market inbasis ~~states~~through ~~with~~competitive ~~such~~bidding ~~standards~~or ~~will~~negotiation. beFERC's ~~derived~~regulations ~~from~~under ~~renewable~~PURPA ~~energy~~exempt ~~resources~~owners ~~until~~of ~~certain~~small ~~pre-established~~power ~~goals~~production ~~are~~Qualifying ~~met.~~Facilities Wethat ~~expect~~use ~~increasing~~geothermal ~~demand~~resources ~~for~~as ~~energy~~their ~~generated~~primary ~~from~~source ~~geothermal~~ and other ~~renewable~~Qualifying ~~resources~~Facilities inthat ~~the~~are ~~United~~30 ~~States~~megawatts asor ~~additional~~under ~~states~~in ~~adopt~~size orfrom ~~extend~~many ~~renewable~~provisions ~~portfolio~~of ~~standards~~the FPA.

AsUnder athe ~~“green”~~FPA ~~power~~and ~~producer~~FERC’s regulations, ~~environmental-related~~the ~~credits, such~~wholesale assale ~~renewable~~of power ~~energy~~at ~~credits~~market-based or ~~carbon~~cost-based ~~credits,~~rates ~~are~~requires ~~also~~that ~~available~~the ~~for~~seller ~~sale~~have authorization issued by FERC to sell power ~~companies~~at (wholesale pursuant to ~~allow~~a FERC-accepted ~~them~~rate toschedule. ~~meet~~FERC ~~their~~grants ~~“green”~~market-based rate authorization based on several criteria, including a showing that the seller and its affiliates lack market power ~~requirements)~~in orgeneration and transmission, that the seller and its affiliates cannot erect other barriers to ~~businesses~~market ~~which~~entry ~~produce~~and ~~carbon~~that ~~based~~there ~~pollution.~~is Inno ~~all~~opportunity for abusive transactions involving regulated affiliates of the seller. All of the Company’s ~~projects,~~ ~~these~~facilities ~~credits~~are qualifying facilities and have been ~~sold~~granted ~~separately,~~market-based orrate ~~bundled~~authority ~~with~~to ~~the~~make wholesale sales of electrical ~~electricity~~energy toby ~~provide~~FERC. anFor ~~additional~~the ~~source~~Neal Hot Springs power plant, USG Oregon files electronic quarterly reports of ~~revenue~~the contract and transaction data.

-30-

WeEnergy ~~expect~~Policy Act of 2005. EPAct 2005 contains provisions to prohibit the ~~following~~manipulation ~~key~~of the electric energy and natural gas markets and increase the ability of FERC to enforce and promote compliance with the statutes, orders, rules, and regulations that FERC administers. To implement the market manipulation provision of EPAct 2005, FERC amended its regulations to prohibit a company, in connection with the purchase or sale of natural gas, electric energy, or transportation or transmission services subject to FERC’s jurisdiction, from (1) using or employing any device, scheme, or artifice to defraud, (2) declaring any untrue statement of a material fact or omitting to state a material fact necessary in order to make the statements made, in the light of the circumstances under which they were made, not misleading, or (3) engaging in any act, practice, or course of business that operates or would operate as a fraud or deceit upon any person. The EPAct 2005 made a number of other changes to laws affecting the regulation of electricity. These include, but are not limited to, giving FERC explicit authority to proscribe and enforce rules governing market transparency, giving FERC authority to oversee and enforce electric reliability standards, requiring FERC to promulgate rules providing for incentive ratemaking to encourage investments that promote transmission reliability and reduce congestion, giving FERC certain siting authority for transmission lines in critical transmission corridors, requiring FERC to promulgate rules granting incentives for transmission owners to ~~influence~~join ~~our~~Regional ~~results~~Transmission Organizations, authorizing FERC to require unregulated utilities to provide open access transmission, and ensuring that load serving entities can retain transmission rights necessary to serve native load requirements. EPAct 2005 promulgated PUHCA 2005, which repeals PUHCA 1935, effective as of ~~operations:~~February 8, 2006.

~~Production~~Public ~~Tax~~Utility ~~Credits~~Holding ~~and~~Company ~~Investment~~Act. ~~Tax~~Under ~~Credits.~~PUHCA A2005, ~~PTC~~the ~~provides~~books ~~project~~and ~~owners~~records ~~with~~of a ~~federal~~utility ~~tax~~holding ~~credit~~company, its affiliates, ~~for~~associate ~~the~~companies, ~~first~~and ~~ten~~subsidiaries ~~years~~are ofsubject ~~plant~~to ~~operation.~~FERC ~~The~~and ~~PTC~~state ~~enhances~~commission review with respect to transactions that are subject to the ~~annual~~jurisdiction ~~revenues~~ of either ~~the~~FERC ~~projects~~or bythe asstate ~~much~~commission asor 25costs ~~percent~~incurred ~~per~~by ~~year~~a ~~for~~jurisdictional utility in the ~~first~~same 10holding ~~years~~company system. However, if a company is a utility holding company solely with respect to Qualifying Facilities, ~~that~~exempt ~~begin~~wholesale generators, ~~construction~~or ~~after~~foreign ~~December~~utility 31companies, ~~2016~~it will not be ~~eligible~~ subject to ~~use~~review ~~this~~of books ~~production~~and ~~tax~~records ~~credit.~~by ~~The~~FERC ~~federal~~under ~~production~~PUHCA ~~tax~~2005. ~~credit~~Qualifying ~~available~~Facilities that make only ~~for~~wholesale ~~geothermal~~sales ~~energy~~of inelectricity ~~2014~~are ~~was~~not ~~2.3~~subject ~~cents~~to ~~per~~state ~~kilowatt-hour.~~commissions’ ~~Alternatively~~rate, ~~certain~~financial, ~~projects~~and ~~under~~organizational ~~construction~~regulations ~~before~~and, ~~the end of 2016~~therefore, ~~are~~would ~~eligible~~not ~~to elect~~be subject to ~~take~~any areview ~~30%~~of ~~ITC~~their inbooks ~~lieu~~and ofrecords ~~the~~by ~~PTC.~~state ~~The~~commissions ~~ITC~~pursuant ~~may~~to bePUHCA 2005 ~~taken~~as ~~after~~long as the ~~plant has~~Qualifying ~~gone~~Facility ~~into~~is ~~operation~~not ~~and~~part ~~may~~of bea ~~monetized.~~holding ~~Both~~company ~~PTC~~system that ~~and~~includes ~~ITC~~a ~~credits~~utility ~~require~~subject ~~a tax~~to ~~equity~~regulation ~~partner~~in tothat ~~monetize~~state.

~~The~~Our ~~WGP~~power ~~Geysers~~plants ~~project,~~are ~~San~~Qualifying ~~Emidio~~Facilities IIthat ~~project~~make only wholesale sales of electricity and are not subject to rate, financial and organizational ~~the~~regulations that are otherwise applicable to electric utilities ~~Crescent~~in ~~Valley~~those ~~project~~states. ~~all~~The ~~began~~power ~~construction~~plants ~~prior~~each sell their electrical output under power purchase agreements to ~~December~~an ~~31,~~electric ~~2014,~~utility ~~and~~company. The utilities are regulated ~~the~~by ~~Company~~their ~~believes~~respective ~~all~~state ~~three~~public ~~projects~~utilities ~~currently~~commissions. ~~qualify~~Neither ~~for~~USG nor our subsidiaries are considered utility holding companies under FPA, FERC, the EPAct2005, ~~30%~~or ~~ITC~~PUHCA2005 inand those regulations have had no direct adverse impact ~~lieu~~on ofour ~~the~~ability ~~PTC~~to develop geothermal resources or deliver power under our contracts.

~~Renewable Energy Credits. Renewable Energy Certificates, or RECs, are tradable environmental commodities that represent proof that one megawatt~~-~~hour of electricity was generated from an eligible renewable energy resource. A renewable energy provider is credited with one REC for every 1,000 kilowatt~~31-~~hours~~ or one megawatt-hour of electricity it produces. The electrical energy is fed into the electrical grid and the accompanying REC can either be delivered to the purchaser of the power (“bundled”) or can be sold on the open market providing the renewable energy producer with an additional source of income.

OnGeothermal ~~July~~Development ~~29,~~Concession ~~2006, the Company signed a $4.6 million renewable~~in ~~energy credits purchase and sales agreement with Holy Cross Energy, a Colorado cooperative electric association~~Guatemala. The ~~agreement~~following issummary ~~capped~~of atcertain ~~87,600~~aspects ~~RECs~~of ~~(10 megawatt s average over~~ the ~~year). Holy Cross Energy began purchasing the~~ ~~renewable~~electric ~~energy~~industry ~~credits~~in ~~associated~~Guatemala ~~with~~should ~~the~~not ~~RREI~~be ~~power~~considered ~~production~~a onfull ~~October 2007,~~statement ~~and~~of ~~is expected to continue purchasing through 2017. Under~~ the ~~revised~~ ~~RREI~~laws ~~agreement,~~of ~~Idaho~~Guatemala ~~Power~~or ~~keeps~~ all ~~RECs above 87,600 RECs per year. In addition, we retain 49%~~ of the ~~renewable~~issues ~~energy~~pertaining ~~credits associated with power production from RREI after 2017 and Idaho Power retains the other 51%~~thereto. ~~We expect to receive a majority of the annual revenue from the ten-year renewable energy credits sales arrangement with Holy Cross Energy.~~

OnIn ~~December~~Guatemala, 10the General Electricity Law of 1996, ~~2010~~Decree 93-96, created a ~~second~~wholesale ~~REC~~electricity ~~contract~~market ~~was~~and ~~signed~~established ~~with~~a new regulatory ~~Public~~framework ~~Utility~~for ~~District~~the Noelectricity sector. 1The oflaw ~~Clallam~~created ~~County~~a regulatory commission, the ~~Washington~~CNEE, and a new wholesale power market administrator, the AMM, for the regulation and administration of the sector. The ~~term~~AMM ofis a private not-for-profit entity. The CNEE functions as an independent agency under the Ministry of Energy ~~agreement~~and Mines and is ~~from~~in ~~2018~~charge of regulating, supervising, and controlling compliance with the electricity law, overseeing the market and setting rates for transmission services, and distribution to ~~2034~~medium and ~~includes~~small ~~sales~~customers. All distribution companies must supply electricity to such customers pursuant to long-term contracts with electricity generators. Large customers can contract directly with the distribution companies, electricity generators or power marketers, or buy energy in the spot market. Guatemala has approved a Law of Incentives anfor ~~estimated~~the 50Development of Renewable Energy Power plants,~~000~~ Decree 52-2003, ~~megawatt~~in ~~hours~~order to promote the development of ~~RECs~~renewable ~~annually~~energy power plants. This law provides certain benefits to companies utilizing renewable energy, ~~representing~~including a 10-year exemption from corporate income tax and an import tax exemption for generation equipment, transmission lines and substation equipment. In September 2008, CNEE issued a resolution which approved the ~~49%~~Technical ~~ownership~~Norms infor ~~RECs~~the Connection, ~~retained~~Operation, Control and Commercialization of the Renewable byDistributed ~~RREI~~Generation ~~under~~and Self-producers Users with exceeding amounts of energy. This technical norm was created to regulate all aspects of generation, connection, operation, control and commercialization of electric energy produced with renewable sources to promote and facilitate the ~~Idaho~~installation ~~Power~~of ~~PPA~~new generation plants, and to promote the connection of existing generation plants which have exceeding amounts of electric energy for commercialization. It is applicable to projects with a capacity of up to 5 megawatts.

~~The~~Environmental ~~PPAs~~Credits for the existing San Emidio and Neal Hot Springs power plants require the bundling of power sales and RECs. Therefore, under these contracts all RECs are delivered with the net power sold to the utility.

In the past several years, there has been increased demand for energy generated from geothermal resources in the United States as production costs for electricity generated from geothermal resources have become competitive relative to fossil fuel generation. This is partly due to newly enacted legislative and regulatory incentives, such as production tax credits and state renewable portfolio standards. State renewable portfolio standards laws require that an increasing percentage of the electricity supplied by electric utility companies operating in states with such standards will be derived from renewable energy resources until certain pre-~~31-~~established goals are met. We expect increasing demand for energy generated from geothermal and other renewable resources in the United States as additional states adopt or extend renewable portfolio standards.

~~Item~~As 1Aa “green” power producer, environmental-related credits, such as renewable energy credits or carbon credits, are also available for sale to power companies (to allow them to meet their “green” power requirements) or to businesses which produce carbon based pollution. ~~Risk~~In ~~Factors~~all of the Company’s projects, these credits have been sold separately, or bundled with the electricity to provide an additional source of revenue.

~~Investing in our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this 10~~-K32- filing and related financial statements, before deciding whether to invest in shares of our common stock. The occurrence of any of the following risks, or other risks that are currently unknown or unforeseen by us, or that we currently believe are not material, could harm our business, financial condition, results of operation or growth prospects. In that case, you may lose all or a portion of your investment.

We ~~have~~expect ~~organized~~ the following ~~risk~~key ~~factors~~incentives ~~into categories~~ to ~~present~~ ~~related~~influence ~~risks~~our ~~together. As a consequence~~ results of ~~this, it is highly recommended that you read this entire risk factor section completely. The risks we have identified have been grouped into the following categories~~operations:

~~Risks~~Production ~~Related~~Tax Credits and Investment Tax Credits. A PTC provides project owners with a federal tax credit for the first ten years of plant operation. The PTC enhances the annual revenues of the projects by as much as 25 percent per year for the first 10 years. Facilities that begin construction after December 31, 2016 will not be eligible to ~~Our~~use ~~Business;~~this production tax credit. The federal production tax credit available for geothermal energy in 2014 was 2.3 cents per kilowatt-hour. Alternatively, certain projects under construction before the end of 2016, are eligible to elect to take a 30% ITC in lieu of the PTC. The ITC may be taken after the plant has gone into operation and may be monetized. Both PTC and ITC credits require a tax equity partner to monetize.

~~Risks~~The ~~Related~~WGP Geysers project, San Emidio II project, and the Crescent Valley project all began construction prior to ~~Our~~December ~~Growth;~~31, 2014, and the Company believes all three projects currently qualify for the 30% ITC in lieu of the PTC.

~~Risks~~Renewable ~~Related~~Energy Credits. Renewable Energy Certificates, or RECs, are tradable environmental commodities that represent proof that one megawatt-hour of electricity was generated from an eligible renewable energy resource. A renewable energy provider is credited with one REC for every 1,000 kilowatt-hours or one megawatt-hour of electricity it produces. The electrical energy is fed into the electrical grid and the accompanying REC can either be delivered to ~~Our~~the ~~Power~~purchaser ~~Purchase~~of ~~Agreements;~~the power (“bundled”) or can be sold on the open market providing the renewable energy producer with an additional source of income.

~~Risks~~On ~~Related~~July to29, ~~Our~~2006, ~~Liquidity~~the Company signed a $4.6 million renewable energy credits purchase and ~~Capital~~sales ~~Resources;~~agreement with Holy Cross Energy, a Colorado cooperative electric association. The agreement is capped at 87,600 RECs (10 megawatt average over the year) through the year 2017. Holy Cross Energy began purchasing the renewable energy credits associated with the RREI power production on October 2007, and continued purchasing through 2017. Under the revised RREI agreement, Idaho Power keeps all RECs above 87,600 RECs per year. In addition, we retain 49% of the renewable energy credits associated with power production from RREI after 2017 and Idaho Power retains the other 51%.

~~Risks~~On ~~Related~~December 15, 2010, a second REC contract was signed with Public Utility District No. 1 of Clallam County, Washington. The term of the agreement is from 2018 to ~~Government~~2034 ~~Regulation;~~and includes sales of an estimated 50,000 megawatt hours of RECs annually, representing the 49% ownership in RECs retained by RREI under the Idaho Power PPA.

~~Risks~~The ~~Related~~PPAs tofor ~~Ownership~~the existing San Emidio and Neal Hot Springs power plants require the bundling of ~~Our~~power ~~Common~~sales ~~Stock~~and RECs. Therefore, under these contracts all RECs are delivered with the net power sold to the utility.

~~Risks~~-33- ~~Related to Our Business~~

~~Our~~Item ~~geothermal power plants have numerous pieces of equipment that are subject to breakdown or failure, many beyond our control~~1A. ~~Failure~~ ofRisk critical equipment could have a material impact on electrical generation and associated revenues. Our financial performance depends on the successful operation of our geothermal power plants, which are subject to numerous operational risks that are outside of our control. The continued operation of our geothermal power plants involves many risks, including breakdown or failure of power generation equipment, transmission lines, pipelines, pumps or other equipment or processes, and performance below expected levels of output or efficiency. If any of these risks were to materialize, they could have a material and adverse effect on our financial condition and results of operations. Factors

AInvesting ~~breakdown or failure~~ in our ~~geothermal~~common ~~power~~stock ~~plants,~~involves ~~our power~~a ~~generation~~high ~~equipment,~~degree ~~the transmission lines, pipelines, pumps or other~~of ~~equipment~~risk. orYou ~~processes~~should ~~would~~carefully ~~also~~consider ~~mean~~the ~~lost~~following ~~revenue~~risk ~~because~~factors, ~~such~~as awell ~~failure~~as orthe ~~breakdown~~other ~~could~~information ~~prevent~~in usthis ~~from~~10-K ~~selling~~filing ~~electricity~~and torelated ~~our~~financial ~~customers.~~statements, ~~For~~before ~~instance,~~deciding ~~because~~whether weto ~~rely~~invest onin ~~transmission~~shares ~~lines~~of ~~owned~~our bycommon ~~third~~stock. ~~parties~~The ~~to deliver~~occurrence ~~all~~of any of the ~~power~~following ~~that~~risks, weor ~~generate~~other torisks ~~the~~that ~~purchasers~~are ofcurrently ~~our~~unknown ~~electricity,~~or unforeseen ~~any~~by ~~interruption~~us, inor athat ~~transmission~~we ~~line’s~~currently ~~service~~believe ~~could~~are ~~result~~not inmaterial, ~~lost~~could ~~revenue. Any~~harm ~~such interruption in~~ our ~~ability~~business, financial tocondition, ~~provide~~results ~~electricity~~of tooperation ~~our~~or ~~customers~~growth ~~on a~~prospects. ~~timely~~In ~~basis~~that ~~could~~case, ~~therefore~~you may ~~materially~~lose ~~and~~all ~~adversely~~or ~~affect~~a ~~our~~portion ~~financial condition and results~~ of ~~operations.~~your investment.

~~-32-~~We have organized the following risk factors into categories to present related risks together. As a consequence of this, it is highly recommended that you read this entire risk factor section completely. The risks we have identified have been grouped into the following categories:

~~Our~~• ~~geothermal~~Risks ~~reserves~~Related ~~could~~to ~~decline~~Our inBusiness; ~~the~~• ~~future. Declines~~Risks ~~greater~~Related than those that we expect would reduce our electricity production levels, which could have a material adverse effect on our operating revenues. We currently derive all of our revenue from geothermal energy and anticipate that we will continue to ~~generate~~Our ~~substantially~~Growth; ~~all~~• ofRisks ~~our revenue~~Related from our current geothermal power plants for the next several years. Electricity production from geothermal properties can decline as the water resources in the earth are used, with the rate of water or temperature decline depending on reservoir characteristics and our ability to ~~re-inject~~Our ~~water effectively~~Power ~~back~~Purchase ~~into~~Agreements; ~~the~~• ~~earth.~~Risks ~~Therefore,~~Related ~~we try~~ to ~~minimize~~Our ~~the~~Liquidity ~~decline in water~~ and ~~temperature~~Capital ofResources; ~~the~~• ~~water~~Risks inRelated ~~the~~to ~~ground~~Government ~~and~~Regulation; ~~maximize~~• ~~the~~Risks ~~resources~~Related ~~that we use~~ to ~~generate~~Ownership ~~electricity. For each~~ of ~~our~~Our ~~geothermal~~Common ~~power~~Stock; ~~plants, we estimate the productivity of the geothermal resource~~ and ~~the~~• ~~expected~~Risks ~~decline~~Related ~~in productivity. We base our operating plans and financial models on these estimates of resources. However, because the development and operation of geothermal energy resources are subject~~ to ~~substantial risks and uncertainties,~~ the ~~productivity of a geothermal resource may decline more than anticipated, resulting in insufficient reserves being available for sustained generation of the electrical power capacity desired~~Merger. ~~Factors that could adversely affect our geothermal reserves and result in decline rates greater than we forecast include, among others:~~

~~significant~~Risks ~~changes~~Related into ~~the~~Our ~~characteristic~~Business ~~of the geothermal resource;~~

~~drilling~~Our ingeothermal ~~areas~~power inplants have numerous pieces of equipment that are subject to breakdown or failure, many beyond our control. Failure of critical equipment could have a material impact on electrical generation and ~~around~~associated revenues. Our financial performance depends on the successful operation of our ~~facilities~~geothermal bypower ~~third~~plants, ~~parties;~~which are subject to numerous operational risks that are outside of our control. The continued operation of our geothermal power plants involves many risks, including breakdown or failure of power generation equipment, transmission lines, pipelines, pumps or other equipment or processes, and performance below expected levels of output or efficiency. If any of these risks were to materialize, they could have a material and adverse effect on our financial condition and results of operations.

A breakdown or failure in our geothermal power plants, our power generation equipment, the ~~total~~transmission ~~amount~~lines, pipelines, pumps or other equipment or processes would also mean lost revenue because such a failure or breakdown could prevent us from selling electricity to our customers. For instance, because we rely on transmission lines owned by third parties to deliver all of ~~recoverable~~the ~~reserves~~power that we generate to the purchasers of our electricity, any interruption in a transmission line’s service could result in lost revenue. Any such interruption in our ability to provide electricity to our customers on a timely basis could therefore materially and adversely affect our financial condition and results of operations.

An-34- unexpected decline in productivity of our geothermal resources would therefore reduce the amount of electricity that we can produce and, therefore, the revenue that we will be able to generate from our geothermal resources.

WeOur ~~cannot~~geothermal ~~assure~~reserves ~~you~~could ~~that~~decline ~~our~~in ~~estimates~~the of future. ~~generation~~Declines ~~resources,~~greater ~~production~~than ~~capacity~~those ~~and~~that ~~cash~~we ~~flows~~expect ~~are~~would ~~accurate. Estimates~~reduce ofour ~~future generation resources and the~~electricity ~~corresponding~~production ~~future~~levels, ~~net~~which ~~cash~~could ~~flows~~have ~~attributable~~a tomaterial ~~those~~adverse ~~resources~~effect ~~are~~on ~~prepared~~our operating byrevenues. ~~independent~~We ~~engineers,~~currently ~~geologists~~derive ~~and~~all ~~geoscientists.~~of ~~There~~our ~~are~~revenue ~~numerous uncertainties~~from ~~inherent~~geothermal inenergy ~~estimating~~and ~~these~~anticipate ~~resources~~that ~~and~~we ~~the~~will ~~potential~~continue ~~future~~to generate ~~cash~~substantially ~~flows~~all ~~attributable~~of toour ~~such~~revenue ~~resources.~~from ~~Reserve~~our ~~engineering~~current isgeothermal apower ~~subjective~~plants for ~~process~~the ofnext ~~estimating~~several ~~underground~~years. ~~accumulations~~Electricity ~~that~~production ~~cannot~~from begeothermal ~~measured~~properties ~~in an~~can ~~exact~~decline ~~manner.~~as ~~The~~the ~~accuracy~~water ofresources anin ~~estimate~~the ofearth ~~quantities~~are ~~of resources~~used, orwith ofthe ~~cash flows~~rate ~~attributable~~of towater ~~such~~or temperature ~~resources,~~decline isdepending aon ~~function~~reservoir ofcharacteristics ~~the~~and ~~available~~our ~~data,~~ability to ~~assumptions~~re-inject ~~regarding~~water ~~future~~effectively ~~electricity~~back ~~prices~~into ~~and~~the ~~expenditures~~earth. ~~for~~Therefore, ~~future development~~we ~~and~~try ~~exploitation~~to ~~activities,~~minimize the ~~and~~decline ofin ~~engineering~~water and ~~geological interpretation~~temperature ~~and~~of ~~judgment.~~the Inwater ~~order~~in tothe ~~undertake~~ground ~~these estimates~~ and ~~studies,~~maximize the ~~independent~~resources ~~third~~that ~~parties~~we ~~must~~use ~~often~~to ~~rely~~generate toelectricity. ~~some~~For ~~extent~~each onof our ~~own~~geothermal ~~estimates~~power ~~and data~~plants, ~~which~~ we ~~believe~~estimate ~~are~~the ~~reasonable~~productivity ~~and~~of ~~accurate~~the ~~but~~geothermal ~~which~~resource ~~may~~and ~~ultimately~~the expected bedecline ~~proved~~in toproductivity. beWe ~~incorrect.~~base ~~Actual~~our ~~future~~operating ~~production,~~plans ~~revenue,~~and ~~taxes,~~financial ~~development~~models on ~~expenditures,~~these ~~operating~~estimates ~~and~~of ~~royalty~~resources. ~~expenses~~However, ~~quantities~~because ofthe ~~recoverable resources~~development and ~~the~~operation ~~value~~ of geothermal ~~cash~~energy ~~flows~~resources ~~from~~are ~~such~~subject ~~resources~~to ~~may~~substantial ~~vary~~risks ~~significantly from~~and uncertainties, the ~~assumptions~~productivity ~~and~~of ~~underlying~~a ~~information~~geothermal ~~set~~resource ~~forth~~may ~~herein.~~decline Inmore ~~addition~~than anticipated, ~~different~~resulting ~~reserve~~in ~~engineers~~insufficient ~~may~~reserves ~~make~~being ~~different~~available ~~estimates~~for ofsustained ~~resources~~generation ~~and cash~~of ~~flows based on~~ the ~~same~~electrical ~~available~~power ~~data~~capacity desired. WeFactors ~~cannot~~that ~~assure~~could ~~you~~adversely ~~that~~affect ~~we will~~our ~~accurately~~geothermal ~~estimate~~reserves ~~the~~and ~~quantity~~result orin ~~productivity~~decline ofrates ~~our~~greater ~~geothermal~~than ~~resources.~~we forecast include, among others:

~~Our~~• ~~results~~significant ~~are~~changes ~~subject~~in tothe ~~quarterly~~characteristic ~~and seasonal fluctuations. Our results~~ of ~~operations~~the ~~are~~geothermal ~~subject~~resource; to• ~~seasonal variations.~~drilling ~~This~~in isareas ~~primarily~~in ~~because~~and ~~some~~around of our ~~power~~facilities ~~plants~~by ~~receive~~third ~~higher energy~~parties; ~~payments during certain summer~~ and ~~winter~~• ~~months. Some of our air cooled power plants may also experience reduced generation during hot summer months due to~~ the ~~lower~~total ~~differential~~amount ~~between the temperature~~ of ~~the~~recoverable ~~geothermal fluid and the ambient surroundings~~reserves. ~~Such seasonal variations could materially and adversely affect our business, financial condition, and cash flow.~~

~~-33-~~An unexpected decline in productivity of our geothermal resources would therefore reduce the amount of electricity that we can produce and, therefore, the revenue that we will be able to generate from our geothermal resources.

IfWe cannot assure you that our ~~operating~~estimates ~~results~~of ~~fall~~future generation ~~below~~resources, production capacity and cash flows are accurate. Estimates of future generation resources and the corresponding ~~public’s~~future net cash flows attributable to those resources are prepared by independent engineers, geologists and geoscientists. There are numerous uncertainties inherent in estimating these resources and the potential future cash flows attributable to such resources. Reserve engineering is a subjective process of estimating underground accumulations that cannot be measured in an exact manner. The accuracy of an estimate of quantities of resources, or ~~analysts’~~of cash ~~expectations~~flows attributable to such resources, is a function of the ~~market~~available ~~price~~data, assumptions regarding future electricity prices and expenditures for future development and exploitation activities, and of engineering and geological interpretation and judgment. In order to undertake these estimates and studies, independent third parties must often rely to some extent on our ~~common~~own ~~stock~~estimates and ~~can~~data, ~~fall~~which inwe believe are reasonable and accurate but which may ultimately be proved to be incorrect. Actual future production, revenue, taxes, development expenditures, operating and royalty expenses, quantities of recoverable resources and the value of cash flows from such ~~periods~~resources may vary significantly from the assumptions and underlying information set forth herein. In addition, different reserve engineers may make different estimates of resources and cash flows based on the same available data. We cannot assure you that we will accurately estimate the quantity or productivity of our geothermal resources.

~~Operating~~Our ~~hazards,~~results ~~natural~~are ~~disasters~~subject orto ~~other~~quarterly and seasonal ~~interruptions~~fluctuations. Our results of ~~our~~operations ~~geothermal~~are subject to seasonal variations. This is primarily because some of our power ~~plant~~plants ~~operations~~receive ~~could~~higher energy ~~result~~payments induring ~~potential~~certain summer and winter months. Some of our air cooled ~~liabilities,~~power ~~which~~plants may ~~not~~also beexperience ~~fully~~reduced ~~covered~~generation byduring ~~our~~hot ~~insurance.~~summer ~~The~~months due to the lower differential between the temperature of the geothermal fluid and the ambient surroundings. Such seasonal variations could materially and adversely affect our business, financial ~~involves~~condition, ~~certain~~and cash flow. If our operating ~~hazards~~results fall below the public’s or analysts’ expectations, the market price of our common stock can fall in such ~~as:~~periods.

~~well~~-35- ~~blowouts;~~

~~casing~~Operating ~~deformation;~~hazards, natural disasters or other interruptions of our geothermal power plant operations could result in potential liabilities, which may not be fully covered by our insurance. The geothermal business involves certain operating hazards such as:

• well blowouts; • casing deformation; • casing corrosion; • uncontrollable flows of steam and hot water; • spills, releases, and other accidental environmental impacts; and • induced seismic activity.

~~uncontrollable~~The ~~flows~~occurrence of ~~steam~~any ~~and~~one ~~hot~~of ~~water;~~the above may result in injury, loss of life, suspension of operations, environmental damage and remediation and/or governmental investigations and penalties.

~~spills~~In addition, ~~releases~~all of our operations are susceptible to damage from natural disasters, such as earthquakes and ~~other~~fires, ~~accidental~~which ~~environmental~~involve ~~impacts;~~increased risks of personal injury, property damage and service interruptions. Any of these events could cause serious injuries, fatalities or property damage, which could expose us to liabilities. The payment of any of these liabilities could reduce, or even eliminate, the funds available for exploration, development and acquisition, or could result in a loss of our properties. Our insurance policies are subject to deductibles, limits and exclusions that are customary or reasonable given the cost of procuring insurance, current operating conditions and insurance market conditions. There can be no assurance that such insurance coverage will continue to be available to us on an economically feasible basis, nor that all events that could give rise to a loss or liability are insurable, nor that the amounts of insurance will at all times be sufficient to cover each and every loss or claim that may occur involving the operations of our assets. If we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits, or if we incur liability at a time when we do not have liability insurance, our business, results of operations and financial condition could be materially and adversely affected.

~~induced~~Threats ~~seismic~~of ~~activity~~terrorism and cyber-attacks could impact our operations and could adversely affect our business and operating revenues. We are subject to the potentially adverse operating and financial effects of terrorist acts and threats, as well as cyberattacks. Our generation and transmission facilities, information technology systems and other infrastructure facilities could be directly or indirectly affected by such activities. Terrorist acts or other similar events could harm our business by limiting our ability to generate or transmit power and by delaying the development of new generating facilities. These events could result in a material decrease in revenues and significant additional costs to repair and insure our assets. We operate in an industry that requires the continued operation of sophisticated information technology systems vulnerable to security breaches, and failures. Those breaches and events may result from acts of our employees, contractors, or third parties. If our technology systems were to be breached and we were unable to recover in a timely way, we would be unable to fulfill critical business functions, which could adversely affect our business.

~~The~~-36- ~~occurrence of any one of the above may result in injury, loss of life, suspension of operations, environmental damage and remediation and/or governmental investigations and penalties.~~

InOur ~~addition,~~geothermal ~~all~~resource ofleases ~~our~~may ~~operations~~terminate ~~are~~if ~~susceptible to damage~~not ~~from~~placed ~~natural~~into ~~disasters~~production, ~~such as earthquakes and fires,~~ which ~~involve increased risks of personal injury, property damage and service interruptions. Any of these events~~ could ~~cause~~require ~~serious injuries, fatalities or property damage, which could expose~~ us to ~~liabilities.~~enter ~~The~~into ~~payment~~new ofleases ~~any of these liabilities could reduce,~~ or ~~even eliminate, the funds available for exploration, development and~~ ~~acquisition,~~secure orrights ~~could~~to ~~result~~alternate ingeothermal ~~a loss of our properties. Our insurance policies are subject to deductibles~~resources, ~~limits~~none ~~and exclusions that are customary or reasonable given the cost~~ of ~~procuring~~which ~~insurance,~~may ~~current operating conditions and insurance market conditions. There can~~ be ~~no assurance that such insurance~~available ~~coverage~~on ~~will~~terms ~~continue~~as tofavorable ~~be available~~ to us onas anany ~~economically~~such ~~feasible~~terminated ~~basis~~lease, ~~nor~~ ~~that~~if ~~all events that could give rise to a loss or liability are insurable, nor that the amounts of insurance will~~ at all ~~times be sufficient to cover each and every loss or claim that may occur involving the operations of our assets~~. If we incur substantial liability and the damages are not covered by insurance or are in excess of policy limits, or if we incur liability at a time when we do not have liability insurance, our business, results of operations and financial condition could be materially and adversely affected.

~~Threats~~Most of ~~terrorism and cyber-attacks could impact~~ our ~~operations~~ ~~and~~geothermal ~~could~~resource ~~adversely~~leases ~~affect~~are ~~our~~originally ~~business~~for ~~and~~a fixed ~~operating~~term ~~revenues. We~~but ~~are~~provide ~~subject~~for tocontinuation ~~the~~for ~~potentially~~so ~~adverse~~long ~~operating~~as ~~and~~we ~~financial~~extract geothermal ~~effects~~resources ofin ~~terrorist~~“commercial ~~acts~~quantities” ~~and~~or ~~threats,~~pursuant asto ~~well~~other asterms ~~cyberattacks.~~of ~~Our generation~~extension. ~~and~~Most ~~transmission~~of ~~facilities,~~the ~~information~~leases ~~technology~~have ~~systems~~been ~~and~~producing ~~other infrastructure~~in ~~facilities~~“commercial ~~could~~quantities” befor ~~directly or indirectly affected by such~~many ~~activities~~years. ~~Terrorist~~The ~~acts~~land orcovered ~~other~~by ~~similar~~a ~~events~~few ~~could~~of ~~harm~~ our ~~business~~periphery ~~by limiting~~leases ~~our~~have ~~ability~~yet to ~~generate or transmit power and by delaying the~~produce ~~development~~“commercial quantities” of ~~new~~geothermal ~~generating facilities~~resources. ~~These~~Leases ~~events~~covering ~~could~~land ~~result in a~~that ~~material~~remains ~~decrease~~undeveloped ~~in revenues~~ and ~~significant~~does ~~additional~~not ~~costs~~produce togeothermal ~~repair~~resources ~~and~~in commercial ~~insure~~quantities ~~our~~may ~~assets~~terminate. WeIn ~~operate~~the inevent anthat ~~industry~~we determine that ~~requires~~a ~~the~~terminated ~~continued~~lease ~~operation~~is ofsubsequently ~~sophisticated~~required ~~information~~for ~~technology~~a ~~systems~~project, ~~vulnerable~~we towould ~~security breaches,~~need ~~and~~to ~~failures.~~enter ~~Those~~into ~~breaches~~one ~~and~~or ~~events~~more new ~~may~~leases ~~result~~in ~~from~~order ~~acts~~to ofdevelop ~~our employees,~~and ~~contractors,~~exploit orthese ~~third~~geothermal ~~parties~~resources. IfIt ~~our~~may not ~~technology~~be ~~systems~~possible ~~were~~ to ~~be breached~~enter ~~and~~into wenew ~~were~~leases ~~unable~~or tothese ~~recover~~new inleases acould ~~timely~~be ~~way,~~on weless favorable ~~would~~financial beterms ~~unable~~than ~~to fulfill~~the ~~critical~~prior ~~business functions~~leases, which could materially and adversely affect our ~~business.~~ability to achieve commercial success on the applicable project.

Pursuant to the terms of our leases with the BLM, we are required to conduct our operations on BLM-34leased land in a workmanlike manner and in accordance with all applicable laws and BLM directives and to take all mitigating actions required by the BLM to protect the surface of and the environment surrounding the relevant land. In the event of a default under any BLM lease, or the failure to comply with such requirements, or any non-compliance with any applicable regulations governing our use of the land, the BLM may, thirty days after notice of default is provided to our relevant project subsidiary, suspend our operations until the requested action is taken or terminate the lease, either of which could materially and adversely affect our business, financial condition, operating results and cash flow.

~~Our~~Claims ~~geothermal~~have ~~resource~~been ~~leases~~made that thermal fracturing and well drilling at some geothermal plants may ~~terminate~~cause ifseismic ~~not~~activity and related ~~placed~~property ~~into~~damage. ~~production,~~There ~~which~~are ~~could~~approximately ~~require~~two-dozen ussteam togeothermal plants ~~enter~~operating ~~into~~within ~~new~~a ~~leases~~fifty-square-mile orregion known as “The Geysers” ~~secure~~located ~~rights~~near tothe ~~alternate~~community ~~geothermal~~of ~~resources~~Anderson Springs, ~~none~~in Northern California, and there is general agreement that the operation of ~~which~~these ~~may~~plants becauses ~~available~~a generally onlow ~~terms~~level asof ~~favorable~~seismic activity. Some residents in the Anderson Springs area have asserted property damage claims against those plant operators. There are significant issues whether the plant operators are liable, and to usdate asno ~~any~~court has found in favor of such ~~terminated~~claimants. ~~lease~~While we do not believe the areas where our current projects are located will present the same geological or seismic risks, ifthere atcan ~~all~~be no assurance that we would not be subject to similar claims and litigation, which may adversely impact our operations and financial condition.

~~Most~~As ofan ~~our~~SEC ~~geothermal~~reporting ~~resource~~company, ~~leases~~failure ~~are~~to ~~originally~~achieve ~~for a~~and ~~fixed~~maintain ~~term~~effective ~~but~~internal ~~provide~~control ~~for~~over ~~continuation~~financial ~~for~~reporting socould ~~long~~harm ~~as we extract geothermal~~our ~~resources~~business inand ~~“commercial~~operating ~~quantities”~~results and/or ~~pursuant~~result toin ~~other~~a ~~terms~~loss of ~~extension. Most~~investor ofconfidence ~~the~~in our ~~leases~~financial ~~have~~reports, ~~been~~which ~~producing~~could in ~~“commercial~~turn ~~quantities”~~have ~~for many years. The land covered by~~ a ~~few~~material ofand ~~our~~adverse ~~periphery~~effect ~~leases have yet to produce~~on ~~“commercial~~our ~~quantities”~~business ofand ~~geothermal~~stock ~~resources~~price. ~~Leases~~We ~~covering~~are ~~land~~required ~~that remains~~to ~~undeveloped~~document and ~~does~~test ~~not produce geothermal resources in commercial~~our ~~quantities~~internal ~~may~~control ~~terminate.~~over Infinancial ~~the~~reporting ~~event~~so that weour ~~determine~~management ~~that~~can acertify ~~terminated lease~~as isto ~~subsequently~~the ~~required~~effectiveness ~~for~~of aour ~~project,~~internal wecontrol ~~would~~over ~~need~~financial toreporting. ~~enter~~We ~~into one or more~~cannot ~~new~~be ~~leases~~certain inas ~~order~~ to ~~develop~~the ~~and~~timing ~~exploit~~of ~~these~~completion ~~geothermal~~of ~~resources.~~our Itevaluation, ~~may~~testing and ~~not~~remediation beactions, ~~possible~~if any, related to ~~enter~~internal ~~into~~controls ~~new~~and ~~leases~~other SEC rules or ~~these~~the ~~new~~impact ~~leases~~of ~~could~~the besame on ~~less~~our operations. The ~~favorable~~assessment ~~financial~~of ~~terms~~our ~~than~~internal ~~the~~control ~~prior~~over ~~leases,~~financial ~~which~~reporting ~~could~~will ~~materially~~require ~~and~~us to ~~adversely~~expend ~~affect~~significant ~~our~~management ~~ability~~and toemployee ~~achieve~~time ~~commercial~~and ~~success~~resources onand ~~the applicable~~incur ~~project.~~significant additional expense.

~~Pursuant to the terms of our leases with the BLM, we are required to conduct our operations on BLM~~-leased land in a workmanlike manner and in accordance with all applicable laws and BLM directives and to take all mitigating actions required by the BLM to protect the surface of and the environment surrounding the relevant land. In the event of a default under any BLM lease, or the failure to comply with such requirements, or any non37-~~compliance~~ with any applicable regulations governing our use of the land, the BLM may, thirty days after notice of default is provided to our relevant project subsidiary, suspend our operations until the requested action is taken or terminate the lease, either of which could materially and adversely affect our business, financial condition, operating results and cash flow.

~~Claims~~During ~~have~~the ~~been~~course ~~made~~of ~~that~~our ~~thermal~~assessment ~~fracturing~~of ~~and~~the ~~well~~effectiveness of our ~~drilling~~internal atcontrol ~~some~~over ~~geothermal~~financial ~~plants~~reporting, we may ~~cause~~identify ~~seismic~~material ~~activity~~weaknesses in ~~and~~our ~~related property~~internal ~~damage.~~control ~~There~~over ~~are~~financial ~~approximately~~reporting, ~~two-dozen~~as ~~steam~~well ~~geothermal~~as any other ~~plants~~significant ~~operating~~deficiencies ~~within~~that amay ~~fifty-square-mile~~exist ~~region~~or ~~known~~hereafter asarise ~~“The~~or ~~Geysers”~~be identified, ~~located~~which ~~near~~could ~~the~~harm ~~community~~our ofbusiness ~~Anderson~~and ~~Springs~~operating results, inand ~~Northern~~could ~~California,~~result ~~and~~in adverse ~~there~~publicity, isregulatory ~~general~~scrutiny ~~agreement~~and ~~that~~a ~~the~~loss ~~operation~~ of ~~these~~investor ~~plants~~confidence ~~causes~~in athe ~~generally~~accuracy ~~low~~and ~~level~~completeness of ~~seismic~~our ~~activity~~financial reports. ~~Some~~In ~~residents~~turn, inthis ~~the~~could ~~Anderson~~have ~~Springs~~a ~~area have~~materially ~~asserted~~adverse ~~property~~effect ~~damage~~on ~~claims~~our ~~against~~stock ~~those~~price, ~~plant~~and, ~~operators.~~if ~~There~~such weaknesses are ~~significant~~ ~~issues~~not ~~whether~~properly remediated, ~~the~~could ~~plant~~adversely ~~operators~~affect ~~are~~our ~~liable,~~ability ~~and~~ to ~~date~~report noour ~~court~~financial results ~~has~~on ~~found~~a intimely ~~favor~~and ofaccurate ~~such claimants~~basis. ~~While~~Although we dobelieve ~~not~~we ~~believe~~would ~~the~~be ~~areas~~able ~~where~~to take ~~our~~steps ~~current~~to ~~projects~~remediate ~~are~~any ~~located~~material ~~will~~weaknesses ~~present~~we ~~the~~may ~~same~~discover, ~~geological~~we orcannot ~~seismic~~assure you ~~risks,~~that ~~there~~this ~~can~~remediation would be nosuccessful ~~assurance~~or that weadditional deficiencies or weaknesses in our controls and procedures would not be ~~subject~~identified. Moreover, we expect to ~~similar~~continue ~~claims~~to operate at a relatively low staffing level. Our control ~~and~~procedures ~~litigation~~have been designed with this staffing level in mind; however, ~~which~~they are ~~may~~highly dependent on each individual’s performance of controls in the required manner. The loss of accounting personnel, particularly our chief financial officer, would adversely impact the effectiveness of our ~~operations~~control environment and ~~financial~~our internal controls, including our internal control over ~~condition~~financial reporting.

AsOur anparticipation ~~SEC reporting company, failure to achieve and maintain effective internal control over financial reporting could harm our business and operating results and/or result~~ in ajoint ~~loss~~ventures ofis ~~investor~~subject ~~confidence~~to inrisks ~~our~~relating ~~financial~~to ~~reports,~~working ~~which~~with ~~could in turn have~~ a ~~material~~co-venture ~~and adverse effect on our business and stock price~~partner. We are ~~required~~subject to ~~document~~risks in ~~and~~working ~~test~~with ~~our internal~~a ~~control~~co-venture ~~over~~partner ~~financial~~that ~~reporting~~could soadversely ~~that~~impact our ~~management~~current projects ~~can~~as ~~certify~~well as to ~~the~~anticipated ~~effectiveness~~development of ~~our~~expansion ~~internal control over financial reporting~~projects. WeInvolving ~~cannot~~a bejoint ~~certain~~venture aspartner tomay ~~the~~result ~~timing~~in ofissues ~~completion~~related ofto ~~our~~funding ~~evaluation~~challenges, ~~testing and~~ ~~remediation~~control ~~actions~~issues, ~~if any, related to internal controls~~ and other ~~SEC~~general ~~rules~~disputes. ~~or the~~It’s ~~impact~~possible ofthat the ~~same~~proposed project onexpansions ~~our~~may ~~operations.~~utilize ~~The~~the ~~assessment~~geothermal ofresource ~~our~~within ~~internal~~the ~~control~~current joint ~~over~~venture ~~financial~~boundaries. ~~reporting~~Our ~~will~~required ~~require~~contribution us to ~~expend~~the ~~significant~~joint ~~management~~venture ~~and~~could also ~~employee~~exceed ~~time~~returns ~~and~~from ~~resources~~the ~~and~~joint ~~incur significant additional expense~~venture.

~~-35-~~We are a holding company and our revenues depend substantially on the performance of our subsidiaries and the projects they operate. We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries. We conduct no other business and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow. Our subsidiaries and projects may be restricted in their ability to pay dividends, make distributions or otherwise transfer funds to us prior to the satisfaction of other obligations, including the payment of operating expenses or debt service.

~~During~~Counterparty ~~the~~credit ~~course~~default ofcould ~~our~~have ~~assessment~~an ofadverse ~~the effectiveness of our~~effect ~~internal~~on ~~control~~the ~~over~~Company. ~~financial~~Our ~~reporting,~~revenues weare ~~may~~generated ~~identify~~under ~~material~~contracts ~~weaknesses~~with various incounterparties. ~~our~~Results ~~internal~~of ~~control~~operations ~~over~~would ~~financial~~be ~~reporting,~~adversely asaffected ~~well~~ as ~~any~~a ~~other~~result of ~~significant~~non-performance ~~deficiencies~~by ~~that~~any ~~may~~of ~~exist~~these orcounterparties ~~hereafter~~of ~~arise~~their orcontractual ~~be identified,~~obligations ~~which~~under ~~could~~the ~~harm~~various ~~our~~contracts. ~~business~~A ~~and~~counterparty’s ~~operating~~default ~~results,~~or ~~and~~non-performance could ~~result in adverse~~ ~~publicity,~~be ~~regulatory~~caused ~~scrutiny~~by ~~and~~factors abeyond ~~loss of investor confidence in the accuracy and completeness of~~ our ~~financial reports~~control. InA ~~turn,~~default ~~this~~ could ~~have~~occur as a ~~materially~~result of ~~adverse~~circumstances ~~effect~~relating ondirectly ~~our~~to ~~stock~~the ~~price~~counterparty, ~~and,~~or ifdue ~~such~~to ~~weaknesses are not properly~~circumstances ~~remediated,~~caused ~~could~~by ~~adversely~~other ~~affect~~market ~~our~~participants ~~ability~~having toa ~~report~~direct ~~our~~or ~~financial~~indirect ~~results~~relationship onwith asuch ~~timely and accurate basis~~counterparty. ~~Although~~We weseek ~~believe we would be able~~ to ~~take steps~~mitigate tothe ~~remediate~~risk ~~any~~of ~~material~~default ~~weaknesses~~by ~~we may discover, we cannot assure you~~evaluating ~~that~~the ~~this~~financial ~~remediation~~strength ~~would~~of bepotential ~~successful~~counterparties orand ~~that~~utilizing ~~additional~~industry standard ~~deficiencies~~credit ~~or weaknesses~~provisions in our ~~controls~~contracts, ~~and procedures would not be identified. Moreover~~however, ~~we expect~~despite toour ~~continue to operate at a relatively low staffing level. Our control~~mitigation ~~procedures~~efforts, ~~have~~defaults ~~been~~by ~~designed~~counterparties ~~with~~may ~~this~~occur ~~staffing~~from ~~level~~time into ~~mind; however~~time, ~~they are~~and ~~highly~~this ~~dependent~~could onnegatively ~~each individual’s performance of controls in the~~impact ~~required~~our ~~manner.~~results ~~The loss~~ of ~~accounting personnel~~operations, ~~particularly our chief~~ financial ~~officer,~~position ~~would adversely impact the effectiveness of our control environment~~ and ~~our~~cash ~~internal controls, including our internal control over financial reporting~~flows.

~~Our participation in joint ventures is subject to risks relating to working with a co~~-~~venturer. We are subject to risks in working with a co~~38-~~venturer~~ that could adversely impact our current projects as well as anticipated development of expansion projects. Involving a joint venturer may result in issues related to funding challenges, control issues, and other general disputes. It’s possible that the proposed project expansions may utilize the geothermal resource within the current joint venture boundaries. Our required contribution to the joint venture could also exceed returns from the joint venture.

WeEnvironmental ~~are~~liabilities ~~a holding company~~ and ~~our~~compliance ~~revenues~~costs ~~depend~~could ~~substantially~~adversely onaffect ~~the performance of~~ our ~~subsidiaries~~financial ~~and the projects they operate~~condition. We are a holding company whose primary assets are our ownership of the equity interests in our subsidiaries. We conduct no other business and, as a result, we depend entirely upon our subsidiaries’ earnings and cash flow. Our subsidiaries and projects may be restricted in their ability to pay dividends, make distributions or otherwise transfer funds to us prior to the satisfaction of other obligations, including the payment of operating expenses or debt service.

~~Counterparty~~The ~~credit~~geothermal ~~default~~business ~~could~~is ~~have~~subject anto ~~adverse~~environmental ~~effect~~hazards, onsuch ~~the~~as ~~Company.~~leaks, ~~Our~~ruptures ~~revenues~~and ~~are~~discharges ~~generated~~of ~~under~~geothermal ~~contracts~~fluids ~~with~~and ~~various~~hazardous ~~counterparties.~~substances, ~~Results~~emissions of ~~operations~~toxic ~~would~~gases beand ~~adversely~~disposal ~~affected as a result~~ of ~~non-performance~~ byhazardous ~~any of these counterparties of their contractual obligations under the various contracts~~substances. ~~A counterparty’s default or non-performance could~~These beenvironmental ~~caused~~hazards ~~by factors beyond our control. A default~~ could ~~occur~~expose asus ~~a result of circumstances relating directly~~ to ~~the~~material ~~counterparty,~~liabilities orfor ~~due to circumstances~~property ~~caused~~damages, bypersonal ~~other~~injuries ~~market participants having a direct~~ or ~~indirect~~other ~~relationship with~~environmental ~~such~~harm, ~~counterparty.~~including Wecosts ~~seek to mitigate the risk~~ of ~~default by evaluating~~ ~~the~~investigating ~~financial strength of potential counterparties~~ and ~~utilizing~~remediating ~~industry standard~~contaminated ~~credit~~properties. ~~provisions~~In ~~in our contracts~~addition, ~~however,~~we ~~despite~~also ~~our mitigation~~may ~~efforts,~~be ~~defaults~~liable byfor ~~counterparties~~environmental ~~may~~damages ~~occur~~caused ~~from~~by ~~time~~the toprevious ~~time,~~owners ~~and~~or ~~this could~~operators ~~negatively~~of ~~impact~~properties ~~our~~we ~~results~~have ofpurchased ~~operations,~~or ~~financial~~are ~~position~~currently ~~and cash flows~~operating.

~~Environmental~~A ~~liabilities~~variety of stringent federal, state and ~~compliance~~local ~~costs~~laws ~~could~~and ~~adversely~~regulations ~~affect~~govern the environmental aspects of our ~~financial~~business ~~condition.~~and impose strict requirements for, among other things:

~~The~~• ~~geothermal~~water ~~business~~extraction isfrom ~~subject~~surface tostreams ~~environmental hazards, such as leaks, ruptures~~ and ~~discharges~~lakes; of• ~~geothermal~~well ~~fluids~~drilling ~~and~~or ~~hazardous substances~~workover, ~~emissions~~ ofoperation ~~toxic gases~~ and ~~disposal~~abandonment; of• ~~hazardous~~waste ~~substances.~~management; ~~These environmental~~• ~~hazards~~injection ~~could~~well ~~expose~~classifications; us• toland ~~material~~reclamation; ~~liabilities~~• ~~for~~financial ~~property damages~~assurance, ~~personal~~such ~~injuries~~as orposting ~~other~~bonds; ~~environmental harm, including costs of investigating~~ and ~~remediating~~• ~~contaminated~~controlling ~~properties. In addition~~air, wewater ~~also~~and ~~may be~~waste ~~liable for environmental damages caused by the previous owners or operators of properties we have purchased or are currently operating~~emissions.

~~-36-~~Any noncompliance with these laws and regulations could subject us to material administrative, civil or criminal penalties or other liabilities and could lead to a curtailment or shut down of one or more of our plants. Additionally, our compliance with these laws may result in increased costs to our operations or our exploration, acquisition and development of new plants or may result in decreased production from our existing plants. We are unable to predict the ultimate cost of complying with these regulations. Pollution and similar environmental risks generally are not fully insurable.

AWe ~~variety~~use ofindustrial ~~stringent~~lubricants ~~federal~~and other substances at our projects that are or could become classified as hazardous substances. If any hazardous substances are found to have been released into the environment at or by the projects, ~~state~~we could become liable for the investigation and ~~local~~removal of those substances, regardless of their source or time of release. If we fail to comply with these laws, ordinances or regulations, we could be subject to civil or criminal liability, the imposition of liens or fines, and large expenditures ~~regulations~~to ~~govern~~bring the ~~environmental~~projects ~~aspects~~into compliance. Furthermore, we can be held liable for the cleanup of ~~our~~releases ~~business~~of ~~and~~hazardous ~~impose~~substances ~~strict~~at other locations where we ~~requirements~~arranged for disposal of those substances, ~~among~~even if we did not cause the release at that location. The cost of any remediation activities in connection with a spill or other ~~things:~~release of such substances could be significant.

~~water~~Our ~~extraction~~geothermal ~~from~~facilities ~~surface~~have ~~streams~~been in operation for a substantial length of time, and ~~lakes;~~current or future local, state and federal environmental and other laws and regulations may require substantial expenditures to remediate the properties or to otherwise comply with these laws and regulations.

~~well~~-39- ~~drilling or workover, operation and abandonment;~~

~~waste~~We depend on our senior management;, geothermal resource and other technical employees. The loss of these employees could harm our business. Our future operating results depend to a large extent upon the continued contribution of key senior managers and personnel.

~~injection~~Our ~~well~~success ~~classifications;~~depends on the skills, experience and efforts of our people, particularly our senior management, geothermal resource and other technical employees. The geothermal industry is relatively small with a limited number of individuals with the management, technical and operational expertise necessary to run and operate facilities. In addition, many of our workers have significant and unique knowledge on how to manage and operate geothermal facilities. The loss of the services of one or more members of our senior management or of numerous employees with critical skills could have a material adverse effect upon us. As of the date of this report, the Company has executed employment agreements with key senior managers, but does not have key-man insurance on any of them.

~~land~~There ~~reclamation;~~are some risks for which we do not or cannot carry insurance. Because our current operations are limited in scope, the Company carries property, public liability insurance and directors’ and officers’ liability coverage, but does not currently insure against other risks. As its operations progress, the Company will acquire additional coverage consistent with its operational needs, but the Company may become subject to liability for pollution or other hazards against which it cannot insure or cannot insure at sufficient levels or against which it may elect not to insure because of high premium costs or other reasons.

~~financial~~Our ~~assurance,~~officers ~~such~~and directors may have conflicts of interests arising out of their relationships with other companies. Several of our directors and officers serve (or may agree to serve) as directors ~~posting~~or ~~bonds;~~officers of other companies or have significant shareholdings in other companies. To the extent that such other companies may participate in ventures in which the Company may participate, the directors may have a conflict of interest in negotiating and concluding terms respecting the extent of such participation.

~~controlling~~Risks ~~air,~~Related ~~water~~to ~~and~~Our ~~waste~~Growth ~~emissions.~~

~~Any~~Our ~~noncompliance~~growth ~~with~~prospects ~~these~~depend ~~laws~~in ~~and~~part ~~regulations~~on ~~could~~our ~~subject us~~ability to further ~~material~~develop ~~administrative, civil~~ or ~~criminal~~acquire ~~penalties~~geothermal or other ~~liabilities~~renewable energy power generation facilities and ~~could~~resources, ~~lead~~which are subject to asubstantial ~~curtailment~~risks. Because orproduction ~~shut~~from ~~down~~geothermal ofproperties ~~one~~generally ordeclines ~~more~~as both water and temperature is depleted, with the rate of ~~our~~decline ~~plants.~~depending on ~~Additionally~~reservoir characteristics, our ~~compliance~~geothermal ~~with~~resources ~~these~~will ~~laws~~decline ~~may~~as ~~result~~we incontinue to ~~increased~~produce ~~costs~~electricity ~~to our~~unless ~~operations~~we orconduct ~~our~~other successful exploration, ~~acquisition~~ and development activities or supplement the current amounts of ~~new~~water ~~plants~~that orwe inject ~~may~~into ~~result~~the inreservoir ~~decreased~~with ~~production~~sufficient water from ~~our~~other ~~existing~~sources, ~~plants~~or both. WeThe acquisition ~~are~~and ~~unable~~development ~~to predict~~of ~~the~~geothermal ~~ultimate~~power ~~cost~~generation offacilities ~~complying~~and resources ~~with~~is ~~these~~complex, ~~regulations.~~expensive, ~~Pollution~~time consuming and ~~similar~~ ~~environmental~~subject to substantial risks, ~~generally~~many of which are ~~not~~outside ~~fully~~of ~~insurable~~our control. In connection with the development of geothermal power generation facilities and resources, we must:

We• ~~use~~identify ~~industrial~~suitable ~~lubricants~~locations and ~~other~~appropriate ~~substances~~technology; at• ~~our projects~~secure ~~that~~rights ~~are or could become classified as hazardous substances. If any hazardous substances are found~~ to ~~have~~exploit ~~been released into~~ the ~~environment~~resources; at• ~~or by~~obtain ~~the~~sufficient ~~projects,~~capital ~~we could become liable for the investigation~~ and ~~removal~~revenue of those substances, regardless of their source or time of release. If we fail to comply with these laws, ordinances or regulations, we could be subject to civil or criminal liability, the imposition of liens or fines, and large expenditures to bring the projects into compliance. Furthermore, we can be held liable for the cleanup of releases of hazardous substances at other locations where we arranged for disposal of those substances, even if we did not cause the release at that location. The cost of any remediation activities in connection with a spill or other release of such substances could be significant. sources;

~~Our~~-40- geothermal facilities have been in operation for a substantial length of time, and current or future local, state and federal environmental and other laws and regulations may require substantial expenditures to remediate the properties or to otherwise comply with these laws and regulations.

We• ~~depend~~obtain onappropriate ~~our~~governmental ~~senior~~permits; ~~management,~~• ~~geothermal~~maintain ~~resource and~~cost ~~other~~controls ~~technical~~during ~~employees.~~construction; ~~The~~• ~~loss~~identify, ofhire ~~these~~and ~~employees~~retain ~~could~~a ~~harm~~qualified ~~our business.~~work ~~Our~~force; ~~future~~• ~~operating~~obtaining ~~results~~Power ~~depend~~Purchase toAgreements; aand ~~large~~• ~~extent~~negotiating ~~upon~~engineering, ~~the continued~~construction, ~~contribution of key senior managers~~ and ~~personnel~~procurement agreements.

~~-37-~~We may be unsuccessful in accomplishing any of these matters or in doing so on a timely basis. In our exploration efforts, we may not find commercially productive reservoirs or, if we do, the remote location of the resource may hinder our access to markets or delay our production. In addition, project development is subject to various environmental, engineering and construction risks. Although we may attempt to minimize the financial risks in the development of a power generation facility by obtaining all required governmental permits and approvals and arranging adequate financing prior to the commencement of construction, the development of a power project may require us to expend significant sums for preliminary engineering, permitting, legal and other expenses before we can determine whether a project is feasible, economically attractive or financeable.

~~Our~~In ~~success~~addition, ~~depends~~community onopposition ~~the~~could ~~skills,~~delay ~~experience~~or ~~and~~prevent ~~efforts of~~us ~~our~~from ~~people,~~obtaining ~~particularly~~the ~~our~~necessary ~~senior~~approvals ~~management,~~The ~~geothermal~~process ~~resource~~for ~~and~~obtaining ~~other~~initial ~~technical~~environmental, ~~employees.~~siting ~~The~~and ~~geothermal~~other ~~industry~~governmental ispermits ~~relatively~~and ~~small~~approvals ~~with~~is complicated aand ~~limited number~~lengthy, ofoften ~~individuals~~taking ~~with~~more ~~the~~than ~~management~~one year, ~~technical~~ and ~~operational~~is ~~expertise necessary~~subject to significant ~~run~~uncertainties. ~~and~~If ~~operate~~we ~~facilities.~~are Inunable ~~addition,~~to ~~many~~complete ofthe ~~our~~development ~~workers~~of ~~have~~a ~~significant~~facility, ~~and~~we ~~unique~~would ~~knowledge~~most onlikely ~~how~~not torecover ~~manage~~any ~~and~~of ~~operate~~our ~~geothermal facilities~~investment in the project. We ~~The~~cannot ~~loss~~assure ofyou ~~the~~that ~~services~~we ofwill ~~one~~be orsuccessful ~~more~~in ~~members~~the acquisition of ~~our senior~~additional ~~management~~geothermal resources or development of ~~numerous~~power ~~employees~~generation ~~with~~facilities ~~critical~~in ~~skills~~the ~~could~~future or ~~have~~that awe ~~material adverse~~will ~~effect~~be ~~upon~~able ~~us.~~to Assuccessfully ofcomplete ~~the~~construction ~~date~~ of ~~this~~our ~~report~~facilities currently in development, ~~the~~nor ~~Company~~can ~~has~~we ~~executed employment~~assure ~~agreements~~you ~~with~~that ~~key~~any ~~senior~~of ~~managers,~~these ~~but~~facilities ~~does~~of resources ~~not~~will ~~have~~be ~~key-man insurance~~profitable onor ~~any~~generate ofconsistent ~~them~~and reliable cash flow.

~~There~~We ~~are~~may ~~some~~decide ~~risks~~not ~~for~~to ~~which~~implement, weor domay not orbe ~~cannot carry~~successful ~~insurance.~~in ~~Because~~implementing, our ~~current~~5 ~~operations~~year ~~are~~strategic ~~limited~~plan infor ~~scope,~~the growth of the Company. There ~~carries~~are ~~property,~~uncertainties ~~public~~and ~~liability~~risks ~~insurance~~associated ~~and~~with ~~directors’~~the ~~and~~achieving our 5 ~~officers’~~year ~~liability~~growth ~~coverage,~~target. ~~but~~It ~~does~~is possible that we may not ~~currently~~be ~~insure~~successful ~~against~~in ~~other~~implementing one ~~risks~~or more elements of the plan. It is also possible that we may decide to Aschange, ~~its~~or ~~operations~~not ~~progress~~implement, one or more elements of the ~~Company~~plan. ~~will~~The ~~acquire~~growth ~~additional~~goals ~~coverage~~are ~~consistent~~provided ~~with~~as ~~its~~a ~~operational~~target ~~needs~~only, ~~but~~as we do not have direct control over the ~~Company~~timing associated ~~may~~with ~~become~~the ~~subject~~solicitation tofor power purchase agreements, transmission ~~liability~~interconnection agreements, or use permits allowing for ~~pollution~~the building of a new power plant. These or other ~~hazards~~factors ~~against~~could ~~which~~mean itthat ~~cannot~~we ~~insure~~decide to change or even ~~cannot~~abandon, ~~insure~~or atare ~~sufficient~~otherwise ~~levels~~unable to implement, one or ~~against~~more ~~which~~elements itof ~~may~~the ~~elect~~plan. Early stage project development costs may not tobe ~~insure~~recovered, in whole or in part, ~~because~~if one or more elements of ~~high~~the ~~premium~~plan are not successfully implemented. These costs orcould ~~other~~materially ~~reasons~~and adversely affect our business, financial condition, and cash flow and the price at which our common stock is traded.

Our ~~officers~~business ~~and~~development ~~directors~~activities may ~~have~~not ~~conflicts~~be ofsuccessful ~~interests~~and ~~arising~~our ~~out~~projects ofunder ~~their~~construction ~~relationships~~may ~~with~~not ~~other~~commence ~~companies~~operation as scheduled. ~~Several~~We ofare ~~our~~in ~~directors~~the process of developing and ~~officers~~constructing ~~serve~~a ~~(or~~number ~~may~~of ~~agree~~new power toplants. ~~serve)~~Our assuccess in developing a particular project is contingent upon ~~directors~~successfully orobtaining ~~officers~~Power ofPurchase ~~other~~Agreements, ~~companies~~satisfactorily ornegotiating engineering, ~~have~~procurement, ~~significant~~and ~~shareholdings~~construction inagreements, obtaining required ~~other~~permits, ~~companies~~and securing adequate financing. ToThese are followed by the ~~extent~~satisfactory completion ~~that~~of ~~such~~the ~~other~~power ~~companies~~plant construction and commissioning. We may ~~participate~~be unsuccessful in ~~ventures~~accomplishing inany ~~which~~of ~~the~~these ~~Company~~tasks ~~may~~on ~~participate,~~a ~~the~~timely ~~directors~~basis. ~~may~~Though ~~have~~we atry ~~conflict~~to minimize ofour ~~interest~~expenses inbefore ~~negotiating~~we ~~and~~can ~~concluding~~determine ~~terms~~whether ~~respecting~~a ~~the~~project ~~extent~~is offeasible, ~~such~~we may incur ~~participation.~~significant expense prior for preliminary engineering, permitting and legal support prior to securing financing.

~~Risks~~-41- ~~Related to Our Growth~~

~~Our~~Actual ~~growth~~costs ~~prospects~~of ~~depend~~construction inor ~~part~~operation onof ~~our~~a ~~ability to~~power ~~further~~plant ~~develop~~may orexceed ~~acquire~~estimates ~~geothermal~~used orin ~~other~~negotiation ~~renewable~~of ~~energy~~ power ~~generation facilities~~purchase and ~~resources,~~power financing ~~which are subject to substantial risks~~agreements. ~~Because~~ ~~production~~If ~~from~~the ~~geothermal~~actual ~~properties~~costs ~~generally~~of ~~declines~~construction asor ~~both~~operations ~~water~~exceed ~~and temperature is depleted, with~~ the ~~rate~~costs ofused ~~decline~~in ~~depending~~our ~~on reservoir~~economic ~~characteristics~~model, ~~our~~the ~~geothermal~~Company ~~resources~~may ~~will~~not ~~decline~~be asable ~~we continue~~ to build ~~produce~~the ~~electricity~~contemplated ~~unless~~power weplants, ~~conduct~~or ~~other~~if ~~successful~~constructed, ~~exploration~~may ~~and development~~not ~~activities~~be orable ~~supplement~~to operate ~~the~~profitably. ~~current~~The ~~amounts~~Company’s offinancing ~~water~~agreements ~~that~~may weprovide ~~inject~~for a ~~into~~priority ~~the~~payback ~~reservoir~~to ~~with~~our ~~sufficient~~lender ~~water from other sources,~~ or ~~both~~partner. ~~The acquisition~~If ~~and~~the ~~development~~actual costs of ~~geothermal~~construction or ~~power~~operations ~~generation~~exceed ~~facilities~~the ~~and resources~~anticipated ~~is complex~~costs, ~~expensive,~~we ~~time~~may ~~consuming~~not ~~and~~be ~~subject~~able to ~~substantial~~operate ~~risks,~~profitably ~~many~~or ofreceive ~~which~~the ~~are~~planned ~~outside~~share of ~~our~~cash ~~control.~~flow Inand ~~connection~~proceeds ~~with~~from the ~~development~~project. ~~of geothermal power generation facilities and resources, we must:~~

~~identify~~Our acquisition strategy could fail or present unanticipated problems for our business in the future, which could adversely affect our ability to make acquisitions or realize anticipated benefits of those acquisitions. Our growth strategy may include acquiring geothermal and other renewable energy businesses and properties. We may not be able to identify suitable ~~locations~~acquisition opportunities or finance and ~~appropriate~~complete ~~technology;~~any particular acquisition successfully. Furthermore, acquisitions involve a number of risks and challenges, including:

~~secure~~• ~~rights~~diversion of management’s attention; • the need to ~~exploit~~integrate acquired operations; • potential loss of key employees of the ~~resources~~acquired companies; • greater geographic dispersion of employees; • the potential that we may make bad acquisitions; • potential lack of operating experience in a geographic market of the acquired business; and • an increase in our expenses and working capital requirements.

~~obtain~~Any ~~sufficient~~of ~~capital~~these factors could materially and ~~revenue~~adversely ~~sources;~~affect our ability to achieve anticipated levels of cash flows from the acquired businesses or realize other anticipated benefits of those acquisitions.

~~obtain~~We ~~appropriate~~may ~~governmental~~not ~~permits;~~be able to successfully integrate companies that we may acquire in the future, which could materially and adversely affect our business, financial condition, future results and cash flow. Our strategy is to continue to expand in the future, including through acquisitions. Integrating acquisitions is often costly, and we may not be able to successfully integrate our acquired companies with our existing operations without substantial costs, delays or other adverse operational or financial consequences. Integrating our acquired companies involves a number of risks that could materially and adversely affect our business, including:

~~maintain~~• ~~cost~~failure ~~controls~~of ~~during~~the ~~construction~~acquired companies to achieve the results we expect; • inability to retain key personnel of the acquired companies; • risks associated with unanticipated events or liabilities; and

~~identify,~~-42- ~~hire and retain a qualified work force;~~

~~-38-~~• the difficulty of establishing and maintaining uniform standards, controls, procedures and policies, including accounting controls and procedures.

~~obtaining~~If ~~Power~~any ~~Purchase~~of ~~Agreements;~~our acquired companies suffers performance problems, the same could adversely affect the reputation of our group of companies and could materially and adversely affect our business, financial condition, future results and cash flow.

~~negotiating~~Our ~~engineering,~~development ~~construction~~activities are inherently very risky. The high risks involved in the development of a geothermal resource must be emphasized. The development of geothermal resources at our projects is such that there cannot be any assurance of success. Exploration costs are high and are not fixed. The geothermal resource cannot be relied upon until substantial development, including drilling and ~~procurement~~testing, ~~agreements~~has taken place. The costs of development drilling are subject to numerous variables such as unforeseen geologic conditions underground which could result in substantial cost overruns. Drilling for geothermal resources can result in well depths that are relatively deep with well costs typically proportionate to the depth and geology encountered. Drilling may involve unprofitable efforts, not only from dry wells, but also from wells that do not produce sufficient volumes to generate net revenues that provide a profit after drilling, operating and other costs.

WeOur drilling operations may be ~~unsuccessful~~curtailed, indelayed ~~accomplishing~~or ~~any~~cancelled as ofa ~~these~~result ~~matters~~of ~~or in~~numerous ~~doing~~factors, somany onof awhich ~~timely~~are ~~basis.~~beyond In our ~~exploration efforts~~control, ~~we may not find~~including ~~commercially~~economic ~~productive~~conditions, ~~reservoirs~~mechanical orproblems, iftitle ~~we do~~problems, ~~the~~weather ~~remote location of the~~conditions, ~~resource~~compliance ~~may~~with ~~hinder~~governmental ~~our~~requirements ~~access~~and toshortages ~~markets~~ or ~~delay~~delays ~~our~~of ~~production. In addition,~~equipment ~~project development is subject to various environmental, engineering~~ and ~~construction~~ ~~risks~~services. ~~Although~~If weour ~~may~~drilling ~~attempt~~activities toare ~~minimize~~not ~~the~~successful, ~~financial~~we ~~risks~~could inexperience ~~the development of~~ a ~~power~~material ~~generation~~adverse ~~facility~~effect byon ~~obtaining~~our ~~all~~future ~~required governmental~~results ~~permits and approvals and arranging adequate financing prior to the commencement~~ of ~~construction,~~operations ~~the development of a power project may require us to expend significant sums for preliminary engineering, permitting, legal~~ and ~~other~~ ~~expenses before we can determine whether a project is feasible,~~financial ~~economically attractive or financeable~~condition.

In addition, ~~community~~to ~~opposition could delay or prevent us from obtaining~~ the ~~necessary~~substantial ~~approvals~~risk ~~The~~that ~~process~~wells ~~for~~drilled ~~obtaining~~will ~~initial~~not ~~environmental~~be productive, ~~siting~~or ~~and~~may ~~other~~decline ~~governmental~~in ~~permits~~productivity ~~and~~after ~~approvals~~commencement isof production, ~~complicated~~hazards ~~and~~such ~~lengthy,~~as ~~often~~unusual ~~taking~~or ~~more~~unexpected ~~than~~geologic ~~one~~formations, ~~year~~pressures, ~~and is subject to~~downhole ~~significant~~conditions, ~~uncertainties.~~mechanical Iffailures, weblowouts, ~~are~~cratering, ~~unable~~explosions, ~~to complete the development of a~~chemical ~~facility~~corrosion, weuncontrollable ~~would~~flows ~~most~~of ~~likely~~well ~~not~~fluids, ~~recover~~pollution ~~any~~and ofother ~~our~~physical ~~investment in the project.~~and Weenvironmental ~~cannot~~risks ~~assure~~are ~~you~~inherent ~~that we will be successful~~ in ~~the acquisition of additional~~ geothermal ~~resources~~exploration orand ~~development~~production. ofThese hazards ~~power~~could ~~generation~~result ~~facilities~~ in ~~the~~substantial ~~future or~~losses ~~that~~to weus ~~will~~due ~~be able~~ to ~~successfully~~injury ~~complete~~and ~~construction~~loss of ~~our facilities~~life, ~~currently~~severe indamage ~~development,~~to ~~nor~~and ~~can~~destruction weof ~~assure~~property ~~you~~and ~~that~~equipment, ~~any~~pollution ofand ~~these facilities of~~other ~~resources~~environmental ~~will~~damage ~~be profitable or generate consistent~~ and ~~reliable~~suspension ~~cash~~of ~~flow~~operations.

WeOur ~~may~~exploration ~~decide~~and ~~not~~development toactivities ~~implement, or~~ may not be commercially successful in. ~~implementing,~~Exploration ~~our~~activities 5involve ~~year~~numerous ~~strategic plan for the growth of the Company.~~risks, ~~There~~including ~~are uncertainties and risks associated with~~ the ~~achieving~~risk ~~our 5 year growth target. It is possible~~ that weno ~~may~~commercially ~~not~~productive bereservoirs ~~successful~~will ~~in implementing~~be ~~one or more elements of the plan~~discovered. ItIn ~~is also possible that we may decide to change~~addition, orthe ~~not~~future ~~implement,~~cost ~~one~~and ortiming ~~more elements~~ of ~~the plan. The growth goals are provided as a target only~~drilling, ascompleting ~~we do not have direct control over the timing~~and ~~associated~~producing ~~with~~wells ~~the~~is ~~solicitation~~often ~~for power purchase agreements, transmission interconnection agreements, or use permits allowing for the building of a new power plant~~uncertain. ~~These or other factors could mean that we decide to change or even abandon~~Furthermore, ordrilling ~~are~~operations ~~otherwise unable to implement, one or more elements of the plan. Early stage project development costs~~ may ~~not~~ be ~~recovered~~ curtailed, indelayed ~~whole~~ or incanceled ~~part, if~~as ~~one~~a orresult ~~more elements~~ of ~~the~~a ~~plan~~variety ~~are~~of ~~not successfully implemented. These costs could materially and adversely affect our business~~factors, ~~financial condition,~~including: ~~and cash flow and the price at which our common stock is traded.~~

~~Our~~• ~~business~~unexpected ~~development~~drilling ~~activities~~conditions; ~~may~~irregularities ~~not be successful and our projects under construction may not commence operation as scheduled. We are~~ in ~~the~~formations; ~~process~~equipment offailures ~~developing~~or ~~and~~accidents; ~~constructing~~• acompliance ~~number~~with ofgovernmental ~~new power~~regulations; ~~plants.~~• ~~Our~~unavailability ~~success~~or inhigh ~~developing~~cost a particular project is contingent upon successfully obtaining Power Purchase Agreements, satisfactorily negotiating engineering, procurement, and construction agreements, obtaining required permits, and securing adequate financing. These are followed by the satisfactory completion of ~~the~~drilling power plant construction and commissioning. We may be unsuccessful in accomplishing any of these tasks on a timely basis. Though we try to minimize our expenses before we can determine whether a project is feasiblerigs, weequipment ~~may~~or ~~incur significant expense prior for preliminary engineering, permitting and legal support prior to securing financing.~~labor;

~~-39-~~Our decisions to purchase, explore, develop and exploit prospects or properties depend in part on data obtained through geophysical and geological analyses, production data and engineering studies, the results of which are often uncertain. Because of these factors, we could incur losses as a result of exploratory drilling expenditures. Poor results from exploration activities could have a material adverse effect on our future cash flows, results of operations and financial position.

~~Actual~~-43- costs of construction or operation of a power plant may exceed estimates used in negotiation of power purchase and power financing agreements. If the actual costs of construction or operations exceed the costs used in our economic model, the Company may not be able to build the contemplated power plants, or if constructed, may not be able to operate profitably. The Company’s financing agreements may provide for a priority payback to our lender or partner. If the actual costs of construction or operations exceed the anticipated costs, we may not be able to operate profitably or receive the planned share of cash flow and proceeds from the project.

~~Our~~Development ~~acquisition~~and ~~strategy~~expansion ~~could~~are ~~fail~~dependent oron ~~present unanticipated problems for our business in~~ the ~~future, which could adversely affect our~~ ability to successfully ~~make~~complete ~~acquisitions~~drilling oractivity. ~~realize~~Drilling ~~anticipated~~and ~~benefits~~exploration ~~of those~~are ~~acquisitions.~~the ~~Our~~main ~~growth~~methods ~~strategy~~of ~~may~~establishing ~~include~~new ~~acquiring~~reserves. ~~geothermal~~However, ~~and other~~drilling ~~renewable energy businesses~~ and ~~properties. We~~ exploration may ~~not~~ be ~~able~~curtailed, todelayed ~~identify suitable acquisition opportunities~~ or ~~finance~~cancelled ~~and~~as ~~complete any particular acquisition successfully. Furthermore, acquisitions involve~~ a ~~number~~result of ~~risks and challenges, including~~:

~~diversion~~• availability of ~~management’s~~equipment, ~~attention~~particularly drilling rigs and well casing; • lack of acceptable prospective acreage; • inadequate capital resources; • weather; • compliance with governmental regulations; and • mechanical difficulties; • opposition to development.

~~the~~The ~~need~~power togeneration ~~integrate~~industry ~~acquired~~is ~~operations;~~characterized by intense competition, and we encounter pricing pressure from electric utilities, community choice aggregators and other power producers and power marketers, that could materially and adversely affect our growth plans.

~~potential~~The ~~loss~~power generation industry is characterized by intense competition. In recent years, there has been increasing competition in the sale of ~~key~~electricity, ~~employees~~in part due to excess capacity in a number of U.S. markets and an emphasis on short duration contracts or “spot” market power. This increased competition has contributed to a reduction in electricity prices. We expect that power purchasers interested in long-term power purchase agreements will engage in “competitive bid” solicitations to satisfy their demands. This competition could adversely affect our ability to obtain PPAs and the ~~acquired~~price paid for electricity by the relevant power purchasers. There is also increasing competition between electric utilities, municipal power companies;, and community choice aggregators that is putting further pressure on power purchasers to reduce the prices at which they purchase electricity from us.

~~greater~~Natural ~~geographic~~gas ~~dispersion~~prices and oil prices are volatile, and lower prices for these commodities could affect the electricity prices we are able to obtain in future PPA contracts. Development of ~~employees;~~our new plants depends on the prices we are able to negotiate in our long term PPAs. The prices of those PPAs in today’s market are associated with both the demand for renewable energy, as well as the prices and demand for natural gas in the United States markets and the price of oil in our Central American markets. The markets for these commodities are volatile, and modest drops in prices can affect significantly price levels obtainable on new PPA contracts. Prices fluctuate widely in response to relatively minor changes in the supply and demand for oil and gas, market uncertainty and a variety of additional factors beyond our control, such as:

• domestic and foreign supply of oil and gas; • price and quantity of foreign imports; • actions of the ~~potential~~Organization ~~that~~of wePetroleum ~~may~~Exporting ~~make~~Countries ~~bad~~and ~~acquisitions~~state-controlled oil companies relating to oil price and production controls; • domestic and foreign governmental regulations;

~~potential~~-44- ~~lack of operating experience in a geographic market of the acquired business; and~~

an• ~~increase~~political conditions in ~~our~~or ~~expenses~~affecting other oil producing and ~~working~~gas ~~capital~~producing ~~requirements~~countries, including conflicts in the Middle East and conditions in South America and Russia; • weather conditions, as evidenced by recent hurricanes; • technological advances affecting oil and gas consumption; • overall U.S. and global economic conditions; and • price and availability of alternative fuels.

~~Any~~Further, ofoil ~~these~~and ~~factors~~gas ~~could~~prices ~~materially~~do ~~and~~not ~~adversely~~necessarily ~~affect~~fluctuate in direct relationship to each other. Because our geothermal reserves are valued ~~ability~~similar to ~~achieve~~gas ~~anticipated~~reserves, ~~levels~~our offinancial ~~cash~~results ~~flows~~are more sensitive to movements in gas prices. Lower gas prices decrease our potential revenues available from future long term PPAs, but have little impact on the ~~acquired~~actual ~~businesses~~proved reserves we orcan ~~realize~~produce ~~other~~economically, ~~anticipated~~unlike ~~benefits~~typical ofoil ~~those~~and ~~acquisitions~~gas fields that require extensive ongoing drilling to sustain production.

WeOur ~~may~~foreign ~~not~~projects beexpose ~~able~~us to ~~successfully~~risks ~~integrate~~related ~~companies~~to the ~~that~~application weof ~~may~~foreign ~~acquire~~laws, intaxes, ~~the~~economic ~~future~~conditions, ~~which~~labor ~~could~~supply ~~materially~~ and ~~adversely affect~~ ~~our business~~relations, ~~financial~~political ~~condition,~~conditions ~~future results~~ and ~~cash~~policies ~~flow.~~of ~~Our strategy~~foreign ~~is to continue to expand in the future~~governments, ~~including~~any ~~through acquisitions.~~of ~~Integrating~~which ~~acquisitions~~risks ~~is often costly, and we~~ may ~~not~~delay ~~be able to successfully integrate our acquired companies with our existing operations without substantial costs, delays~~ or ~~other~~reduce ~~adverse operational or financial consequences. Integrating~~ our ~~acquired~~ability ~~companies~~to ~~involves~~profit afrom ~~number of risks that~~such ~~could materially and adversely affect our business, including:~~ projects.

~~failure~~We have development projects outside of the ~~acquired~~United ~~companies~~States. For example, the El Ceibillo project is located in Guatemala. Our foreign development is subject to ~~achieve~~regulation by various foreign governments and regulatory authorities and is subject to the ~~results~~application of foreign laws. Such foreign laws or regulations may not provide for the same type of legal certainty and rights, in connection with our contractual relationships in such countries, as are afforded to our projects in the United States, which may adversely affect our ability to receive revenues or enforce our rights in connection with our foreign operations. In addition, the laws and regulations of some countries may limit our ability to hold a majority interest in some of the projects that we may ~~expect;~~develop or acquire, thus limiting our ability to control the development, construction and operation of such projects. Our foreign development is also subject to significant political, economic and financial risks, which vary by country, and include:

~~inability~~• toChanges ~~retain~~in ~~key~~government policies or personnel; of• Changes in general economic conditions; • Restrictions on currency transfer or convertibility; • Changes in labor relations; • Political instability and civil unrest; • Changes in the ~~acquired~~local ~~companies~~electricity market; • Breach or repudiation of important contractual undertakings by governmental entities; and • Expropriation and confiscation of assets and facilities.

We plan to obtain political risk insurance in connection with our foreign project, when appropriate, but note that such political risk insurance does not mitigate all of the above-mentioned risks. ~~associated~~In addition, insurance proceeds received pursuant to a political risk insurance policy, where applicable, may not be adequate to cover all losses sustained as a result of any covered risks and may at times be pledged in favor of the lenders to a project as collateral. Also, insurance may not be available in the future with ~~unanticipated~~the ~~events~~scope of orcoverage ~~liabilities;~~and in amounts of coverage adequate to insure against such risks and disturbances.

~~the~~-45- ~~difficulty of establishing and maintaining uniform standards, controls, procedures and policies, including accounting controls and procedures.~~

~~-40-~~Our foreign project may expose us to risks related to fluctuations in currency rates, which may reduce our profits from such projects and operations. Risks attributable to fluctuations in currency exchange rates can arise when any foreign subsidiary borrows funds or incurs operating or other expenses in one type of currency but receive revenues in another. In such cases, an adverse change in exchange rates can reduce such subsidiary's ability to meet its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary or increase such subsidiary's overall expenses. In addition, the imposition by foreign governments of restrictions on the transfer of foreign currency abroad or restrictions on the conversion of local currency into foreign currency would have an adverse effect on the operations of our foreign project and may limit or diminish the amount of cash and income that we receive from such foreign projects.

IfChanges ~~any~~in costs and technology may significantly impact our business by making our power plants less competitive. A basic premise of our ~~acquired~~business ~~companies~~model ~~suffers~~is ~~performance~~that ~~problems~~generating baseload power at central geothermal power plants achieves economies of scale and produces electricity at a competitive price. However, gas-fired systems may under certain economic ~~the~~conditions ~~same~~produce ~~could~~electricity ~~adversely~~at ~~affect~~lower ~~the~~average ~~reputation~~short ofterm prices than our geothermal ~~group~~plants. ofIn ~~companies~~addition, there are other technologies that can produce electricity at competitive prices, most notably fossil fuel power systems, hydroelectric systems, wind-turbines and photovoltaic (solar) cells. Research ~~could~~and ~~materially~~development activities are ongoing to seek improvements in such alternate technologies and ~~adversely~~their ~~affect~~cost of producing electricity is gradually declining. It is possible that advances will further reduce the cost of alternate methods of power generation to a level below that of most geothermal power generation technologies such that the competitive advantage of our ~~business,~~projects ~~financial~~may ~~condition~~be significantly impaired. Intermittent renewable energy sources such as solar and wind, ~~future~~have already seen such cost reductions allowing them to offer their ~~results~~intermittent power and ~~cash~~substantially ~~flow~~lower prices.

~~Our~~Risks ~~development~~Related activities are inherently very risky. The high risks involved in the development of a geothermal resource must be emphasized. The development of geothermal resources at our projects is such that there cannot be any assurance of success. Exploration costs are high and are not fixed. The geothermal resource cannot be relied upon until substantial development, including drilling and testing, has taken place. The costs of development drilling are subject to ~~numerous~~Our ~~variables~~Power ~~such~~Purchase asAgreements unforeseen geologic conditions underground which could result in substantial cost overruns. Drilling for geothermal resources can result in well depths that are relatively deep with well costs typically proportionate to the depth and geology encountered. Drilling may involve unprofitable efforts, not only from dry wells, but also from wells that do not produce sufficient volumes to generate net revenues that provide a profit after drilling, operating and other costs.

~~Our~~A ~~drilling~~force ~~operations~~majeure ~~may~~event, bedisruption ~~curtailed,~~of ~~delayed~~existing transmission or ~~cancelled as~~a forced outage affecting a ~~result~~project ofor ~~numerous~~unexpected ~~factors,~~operating expenses ~~many~~could ofreduce ~~which~~our ~~are~~net ~~beyond~~income and materially and adversely affect our business, ~~control~~financial condition, ~~including~~future results and cash flow. If a plant ~~economic~~experiences ~~conditions~~a force majeure event, ~~mechanical~~such ~~problems~~as a fire, ~~title~~earthquake ~~problems~~or flood, ~~weather~~we ~~conditions~~would be excused from our obligations to deliver electricity under the PPAs to which we are parties. However, the power purchasers under those PPAs may/will not be ~~compliance~~required to make any energy payments with ~~governmental~~respect ~~requirements~~to ~~and~~the ~~shortages~~affected project or plant ~~delays~~so long as the force majeure event continues and, pursuant to certain of our ~~equipment~~PPAs, will have the right to prematurely terminate the PPA altogether. Additionally, to the extent that a forced outage has occurred, a power purchaser may not be required to make any energy payments to the affected project, and ~~services.~~if as Ifa result the project fails to attain certain performance requirements under certain of our ~~drilling~~PPAs, ~~activities~~the ~~are~~purchaser ~~not~~may ~~successful~~have the right to prematurely terminate the PPA altogether. As a consequence, we ~~could~~may ~~experience~~not receive any net revenues from athe ~~material~~affected ~~adverse~~project ~~effect~~or onplant ~~our~~other ~~future~~than ~~results~~the ofproceeds ~~operations~~from any business interruption insurance that may apply to the force majeure event or forced outage after the relevant waiting period, and ~~financial~~we may incur significant ~~condition.~~liabilities in respect of past amounts required to be refunded.

In-46- addition to the substantial risk that wells drilled will not be productive, or may decline in productivity after commencement of production, hazards such as unusual or unexpected geologic formations, pressures, downhole conditions, mechanical failures, blowouts, cratering, explosions, chemical corrosion, uncontrollable flows of well fluids, pollution and other physical and environmental risks are inherent in geothermal exploration and production. These hazards could result in substantial losses to us due to injury and loss of life, severe damage to and destruction of property and equipment, pollution and other environmental damage and suspension of operations.

~~Our~~In ~~exploration~~addition, ~~and~~we ~~development~~rely ~~activities~~on ~~may~~transmission ~~not~~lines ~~be commercially~~owned ~~successful.~~by ~~Exploration~~local utilities ~~activities~~to ~~involve~~deliver ~~numerous~~all ~~risks, including~~of the ~~risk~~electricity that nowe ~~commercially~~generate ~~productive~~to ~~reservoirs~~the ~~will be~~purchasers ~~discovered.~~of Inour ~~addition,~~electricity. If the ~~future~~transmission ~~cost~~system ~~and~~were ~~timing~~to ofexperience ~~drilling,~~a ~~completing~~force majeure ~~and~~event or a forced outage which prevented it from transmitting the ~~producing~~electricity ~~wells~~from isour ~~often~~projects ~~uncertain.~~to ~~Furthermore~~a power purchaser, ~~drilling~~the ~~operations~~power ~~may~~purchaser would not be required to make energy payments for that electricity with respect to the ~~curtailed,~~affected ~~delayed~~project orso ~~canceled~~long as asuch ~~result~~force ofmajeure aevent ~~variety~~or offorced ~~factors, including:~~outage continues.

~~unexpected~~Any ~~drilling~~of ~~conditions;~~these ~~irregularities~~events incould ~~formations;~~significantly ~~equipment~~increase the expenses ~~failures~~incurred by our projects or ~~accidents;~~reduce the overall generating capacity of our projects and could significantly reduce or entirely eliminate the revenues generated by one or more of our projects, which in turn would reduce our net income and could materially and adversely affect our business, financial condition, future results and cash flow.

~~compliance~~Payments ~~with~~under ~~governmental~~our ~~regulations;~~PPAs may be reduced if we are unable to forecast our production adequately. Under the terms of certain of our PPAs, if we do not deliver electricity output within 90% to 110% of our forecasted amount, payments for the amount delivered will be reduced, possibly significantly. For example if the plant produces more than 110% of the power as forecasted then we would receive reduced revenue for the amount over the forecast figure. If the plant produces less than 90% of the forecast amount for unexcused reasons, such as normal plant breakdowns and maintenance, then we may be subject to a replacement power costs, depending on the prevailing power market conditions. The agreement moves the power price to the market price instead of contracted price, and the reduction in revenue could be perhaps 30 percent of that amount. As a risk mitigation element, we are not subject to this adjustment until year three of the contract and then we are able to submit a new forecast every three months thereby limiting this exposure.

~~unavailability~~Our orfailure ~~high~~to ~~cost~~supply the contracted capacity under some of ~~drilling~~our ~~rigs~~PPAs with investor-owned electric utilities in states that have renewable portfolio standards may result in the imposition of penalties. The terms of certain of our PPAs require that we make payments to the relevant power purchaser in an amount equal to such purchaser's replacement costs for renewable energy that we are required to but do not provide as required under the PPA and which such power purchaser obtains from an alternate source. In addition, ~~equipment~~we ormay be ~~labor;~~required to make payments to the relevant power purchaser in an amount equal to its replacement costs relating to any renewable energy credits we do not provide as required under the relevant PPA. All of which could materially and adversely affect our business, financial condition, future results and cash flow.

~~Our~~Industry ~~decisions~~competition tomay ~~purchase,~~impede ~~explore,~~our ~~develop~~growth and ~~exploit~~ability to ~~prospects~~enter into PPAs on terms favorable to us, or ~~properties~~at ~~depend~~all, inwhich ~~part~~would onnegatively impact ~~data~~our ~~obtained~~revenue. ~~through~~The ~~geophysical~~electrical ~~and~~power generation industry, of which ~~geological~~geothermal ~~analyses~~power is a sub-component, ~~production~~is ~~data~~highly competitive and ~~engineering~~we ~~studies,~~may ~~the~~not ~~results~~be able to compete successfully or grow our business. We compete in areas of ~~which~~pricing, ~~are~~grid ~~often~~access ~~uncertain~~and markets. ~~Because~~The ofindustry ~~these~~in ~~factors,~~the weWestern ~~could~~United ~~incur~~States ~~losses~~is complex as ait is composed of public utility districts, cooperatives and ~~result~~investor-owned power companies. Many of ~~exploratory~~the ~~drilling~~participants ~~expenditures~~produce and distribute electricity. ~~Poor~~Their ~~results~~willingness to purchase electricity from ~~exploration~~an independent ~~activities~~producer ~~could~~may ~~have~~be based on a ~~material~~number ~~adverse~~of ~~effect~~factors and not solely on ~~our~~pricing ~~future~~and surety ~~cash~~of ~~flows~~supply. If we cannot enter into PPAs on terms favorable to us, or at ~~results~~all, it would negatively impact our revenue and our decisions regarding development of additional ~~operations~~properties. Additionally, the credit quality of newly formed power purchasers may negatively impact our ability to finance our power purchase projects and ~~financial~~may ~~position~~negatively impact their ability to pay for the contracted power in the future.

-4147-

~~Development~~Changes in costs and ~~expansion~~technology ~~are~~of ~~dependent~~other onbaseload renewable ~~the~~electricity ~~ability~~sources tomay significantly impact our business by making ~~successfully~~our ~~complete~~power ~~drilling~~plants ~~activity~~less competitive. ~~Drilling~~A ~~and~~basic ~~exploration~~premise of our business model is that our geothermal power plants generate baseload power at a competitive price. While there are other renewable energy technologies that can also produce ~~the~~baseload ~~main~~electricity, ~~methods~~such as biomass, fuel cell, and hydroelectric systems, most of ~~establishing~~these ~~new~~alternative ~~reserves~~technologies currently produce electricity at a higher average price than our geothermal plants. However, ~~drilling~~research and ~~exploration~~development activities are ongoing to seek improvements in such alternate technologies and their cost of producing electricity may begradually ~~curtailed,~~decline. ~~delayed~~It oris ~~cancelled~~possible asthat advances will further reduce the cost of alternate methods of power generation to a ~~result~~level that is equal to or below that of: most geothermal power generation technologies. If this were to happen, the competitive advantage of our power plants may be significantly impaired.

~~availability~~Risks ofRelated ~~equipment,~~to ~~particularly~~Our ~~drilling~~Liquidity ~~rigs~~ and ~~well casing;~~Capital Resources

~~lack~~Substantial leverage and debt service obligations may adversely affect our cash flows, liquidity and operations. We have substantial indebtedness that we may be unable to service and that restricts our activities. Our ability to meet our debt service obligations and repay, extend, or refinance our outstanding indebtedness will depend primarily upon the operational performance of ~~acceptable~~our ~~prospective~~geothermal ~~acreage;~~power generation, the prices that we receive for the electricity that we generate, risk management activities, as well as general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In addition, this indebtedness has important consequences, including:

~~inadequate~~• limiting our ability to borrow additional amounts for working capital, ~~resources~~capital expenditures, debt service requirements, entering into other renewable energy businesses, or other purposes; • limiting our ability to use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service the debt; • increasing our vulnerability to general adverse economic and industry conditions; • limiting our ability to or increasing the costs of refinance indebtedness; and • limiting our ability to enter into marketing, hedging, optimization and trading transactions by reducing the number of counterparties with whom we can transact and the volume of those transactions.

~~weather;~~We have a need for substantial additional financing and will have to significantly delay, curtail or cease operations if we are unable to secure such financing. The Company requires substantial additional financing to fund the cost of continued expansion of and the development of our projects. Also, the Company requires funds for other operating activities, and to finance the growth of our business, including the construction and commissioning of power generation facilities. We may not be able to obtain the needed funds on terms acceptable to us or at all.

~~compliance~~-48- ~~with governmental regulations; and~~

~~mechanical~~Further, ~~difficulties;~~if additional funds are raised by issuing equity securities, significant dilution to our current shareholders may occur and new investors may get rights that are preferential to current shareholders. Alternatively, we may have to bring in joint venture partners to fund further development work, which would result in reducing our interests in the projects.

~~opposition~~We may be unable to obtain the financing we need to pursue our growth strategy and any future financing we receive may be less favorable to us than our current financing arrangements, either of which may adversely affect our ability to expand our operations. Our geothermal power plants generally have been financed using leveraged financing structures, consisting of non-recourse debt obligations and partnership arrangements. Each of our projects under development and those projects and businesses we may seek to acquire will require substantial capital investment. Our continued access to capital with acceptable terms is necessary for the success of our growth strategy. Our attempts to obtain future financings may not be successful or on favorable terms, and are dependent on numerous factors including general economic and capital market conditions, investor confidence, the continued success of current projects, the credit quality of the projects being financed, the political situation in the state in which the project is located and the continued existence of tax laws which are conducive to raising capital. Market conditions and other factors may not permit future project and acquisition financings on terms similar to those previously received. If we are not able to obtain financing for our power plants on a non-recourse basis, we may have to finance them using direct equity investments, which may have a dilutive effect on our common stock or incur additional recourse debt.

~~The~~It ~~power generation industry~~ is ~~characterized~~very bycostly ~~intense competition,~~to ~~and~~place wegeothermal ~~encounter~~resources ~~pricing pressure from electric utilities,~~into ~~community~~commercial ~~choice~~production. ~~aggregators~~Before ~~and~~the ~~other~~sale ~~power~~of ~~producers~~any ~~and~~ power ~~marketers~~can occur, ~~that~~it ~~could~~will ~~materially~~be ~~and~~necessary ~~adversely~~to ~~affect~~construct ~~our~~a ~~growth~~gathering ~~plans.~~and ~~The~~disposal ~~power~~system, ~~generation~~a ~~industry~~power ~~is characterized by intense~~plant, ~~competition.~~and Ina ~~recent~~transmission ~~years~~line, ~~there~~and ~~has~~considerable ~~been~~administrative ~~increasing~~costs ~~competition~~would ~~in the sale~~be ~~of electricity~~incurred, intogether ~~part~~with ~~due~~the todrilling ~~excess~~of ~~capacity~~production inand ainjection ~~number of U~~wells.S. ~~markets and~~Future anexpansion ~~emphasis~~of onpower ~~short~~production ~~duration~~and ~~contracts~~other oropportunities ~~“spot”~~may ~~market~~result ~~power.~~in significantly ~~This~~ increased ~~competition~~ ~~has~~capital ~~contributed~~costs related to aincreased ~~reduction~~production inand injection ~~electricity~~well ~~prices.~~drilling Weand ~~expect~~higher ~~that power~~costs ~~purchasers~~for ~~interested~~labor inand ~~long-term~~materials. ~~power~~To ~~purchase~~fund expenditures ~~agreements~~of ~~will~~this ~~engage in~~magnitude, ~~“competitive~~we ~~bid”~~may ~~solicitations~~have to ~~satisfy~~find ~~their~~a ~~demands.~~joint ~~This~~venture ~~competition~~participant ~~could~~with ~~adversely~~substantial ~~affect~~financial ~~our~~resources ~~ability~~or toexpand ~~obtain PPAs and~~ the ~~price~~current ~~paid~~ownership ~~for~~of existing ~~electricity~~joint byventure ~~the relevant power purchasers~~partners. There iscan ~~also~~be ~~increasing competition~~no ~~between~~assurance ~~electric~~that ~~utilities,~~a ~~municipal~~participant ~~power~~can ~~companies,~~be found and, ~~community choice~~if ~~aggregatorsthat~~found, isit ~~putting~~would ~~further~~result ~~pressure~~in onus ~~power~~having ~~purchasers~~ to substantially reduce our ~~the~~interest ~~prices~~in atthe ~~which they purchase electricity from us~~project.

~~Natural~~We ~~gas~~may ~~prices~~be ~~and~~unable ~~oil~~to ~~prices~~realize ~~are~~our ~~volatile,~~strategy ~~and~~of ~~lower~~utilizing the ~~prices~~tax ~~for~~and ~~these~~other ~~commodities~~incentives ~~could~~available ~~affect~~for ~~the~~developing ~~electricity~~geothermal ~~prices~~power weprojects ~~are able~~ to ~~obtain~~attract instrategic ~~future~~alliance ~~PPA~~partners, ~~contracts.~~which ~~Development~~may ofadversely affect our ~~new~~ability ~~plants depends on~~to ~~the~~complete ~~prices~~these weprojects. ~~are~~Part ~~able~~of ~~to negotiate in~~ our ~~long~~business ~~term~~strategy ~~PPAs.~~is ~~The~~to ~~prices~~utilize ~~of those~~the ~~PPAs~~tax inand ~~today’s~~other ~~market~~incentives ~~are~~available ~~associated~~to ~~with~~developers ~~both~~of ~~the~~geothermal ~~demand~~power ~~for renewable energy,~~generating asplants ~~well~~to asattract ~~the~~strategic ~~prices~~alliance ~~and~~partners ~~demand~~with ~~for~~the ~~natural~~capital ~~gas~~sufficient into complete ~~the~~these ~~United~~projects. ~~States~~Many ~~markets and~~of the ~~price~~incentives ofavailable ~~oil~~for inthese ~~our~~projects ~~Central~~are new ~~American~~and ~~markets~~highly complex. ~~The~~There ~~markets~~can ~~for~~be ~~these commodities~~no ~~are~~assurance ~~volatile,~~that ~~and~~we ~~modest~~will ~~drops~~be successful in structuring ~~prices~~agreements ~~can~~that ~~affect significantlyprice~~are ~~levels~~attractive ~~obtainable~~to onpotential ~~new~~strategic ~~PPA contracts~~alliance partners. ~~Prices~~If ~~fluctuate widely~~we inare ~~response~~unable to ~~relatively~~do ~~minor~~so, ~~changes~~we inmay ~~the~~be ~~supply~~unable ~~and~~to ~~demand~~complete ~~for oil~~the ~~and~~development ~~gas,~~of ~~market~~our ~~uncertainty~~geothermal ~~and~~power aprojects ~~variety~~and ofour ~~additional~~business ~~factors~~could ~~beyond our~~be ~~control, such as:~~harmed.

~~domestic~~-49- ~~and foreign supply of oil and gas;~~

~~price~~Our ~~and~~debt ~~quantity~~instruments ofimpose ~~foreign~~significant ~~imports~~operating and financial restrictions on us; any failure to comply with these restrictions could have a material adverse effect on our liquidity and our operations. The instruments governing our outstanding debt impose significant operating and financial restrictions on our geothermal operating subsidiaries. These restrictions could adversely affect us by limiting our ability to plan for or react to market conditions or to meet our capital needs. These restrictions limit our ability to, among other things:

~~actions~~• ofmake ~~the~~prepayments ~~Organization~~on ofor ~~Petroleum~~purchase ~~Exporting~~indebtedness ~~Countries~~in ~~and state-controlled~~whole ~~oil~~or ~~companies~~in ~~relating~~part; • pay dividends to ~~oil~~us ~~price~~or make other distributions to us thereby limiting our ability to use available cash to pay dividends to stockholders, repurchase our capital stock or make other investments in geothermal projects or other renewable energy businesses; • make certain investments, including capital expenditures; • enter into transactions with affiliates; • create or incur liens to secure debt; • consolidate or merge with another entity, or allow one of our subsidiaries to do so; • lease, transfer or sell assets and ~~production~~use ~~controls~~proceeds of permitted asset leases, transfers or sales; • incur dividend or other payment restrictions affecting certain subsidiaries; • engage in certain business activities; and • acquire facilities or other businesses

~~domestic~~In ~~and~~addition, ~~foreign~~any ~~governmental~~debt ~~regulations;~~facilities that we enter into in the future are likely to contain similar or additional covenants.

~~political~~Our ~~conditions~~ability into orcomply ~~affecting~~with ~~other~~these ~~oil~~covenants ~~producing~~may be affected by events beyond our control, and ~~gas~~any ~~producing~~material deviations from our forecasts could ~~countries~~require us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We cannot assure you that such waivers, amendments ~~including~~or ~~conflicts~~alternative infinancing ~~the~~could ~~Middle~~be ~~East~~obtained, ~~and~~or ~~conditions~~if inobtained, ~~South~~would be ~~America~~on ~~and~~terms ~~Russia;~~acceptable to us.

If we are unable to comply with the terms of the documents governing our indebtedness, we may be required to refinance all or a portion of our indebtedness or to obtain additional financing or sell assets. However, we may be unable to refinance or obtain additional financing because of our existing levels of indebtedness and the debt incurrence restrictions under our existing indentures and other debt agreements. If our cash flow is insufficient and refinancing or additional financing is unavailable, we may be forced to default on our indebtedness. Such a default or other breach of the covenants or restrictions contained in any of our existing or future debt instruments could result in an event of default under those instruments and, due to cross-42default and cross-acceleration provisions, under our other debt instruments. Upon an event of default under our debt instruments, the debt holders could elect to declare the entire debt outstanding thereunder to be due and payable and could terminate any commitments they had made to supply us with further funds. If any of these events occur, we cannot assure you that we will have sufficient funds available to repay in full the total amount of obligations that become due as a result of any such acceleration, or that we will be able to find additional or alternative financing to refinance any accelerated obligations.

~~weather~~-50- ~~conditions, as evidenced by recent hurricanes;~~

~~technological~~Risks ~~advances~~Related ~~affecting~~to ~~oil~~Government ~~and gas consumption;~~Regulation

~~overall~~We ~~U.S.~~are ~~and~~subject ~~global~~to ~~economic~~complex ~~conditions;~~government ~~and~~regulation which could adversely affect our operations.

~~price~~Our activities are subject to complex and ~~availability~~stringent environmental and other governmental laws and regulations. The exploration and production of ~~alternative~~geothermal ~~fuels~~energy requires numerous permits, approvals and certificates from appropriate federal, state and local governmental agencies, including state and local agencies, whose regulations typically are more stringent than in other states or localities, as well as compliance with environmental protection legislation and other regulations. While we believe that we have obtained the requisite approvals and permits for our existing operations and that our business is operated in accordance with applicable laws, we remain subject to a varied and complex body of laws and regulations that both public officials and private individuals may seek to enforce. Existing laws and regulations could be changed or reinterpreted, or new laws and regulations may become applicable to us that could increase our costs associated with compliance or otherwise harm our business and results of operations. We may be unable to obtain all necessary licenses, permits, approvals and certificates for proposed projects. Intricate and changing environmental and other regulatory requirements may necessitate substantial expenditures to obtain and maintain permits. If a project is unable to function as planned due to changing requirements or local opposition, it may create expensive delays, extended periods of non-operation or significant loss of value in a project.

~~Further,~~Under ~~oil~~certain ~~and~~circumstances, ~~gas~~the ~~prices~~United doStates ~~not~~Office ~~necessarily fluctuate in~~of ~~direct~~Natural ~~relationship~~Resource toRevenue ~~each~~(“ONR”) ~~other.~~may ~~Because~~require that our ~~geothermal~~operations ~~reserves~~on ~~are valued~~federal ~~similar~~leases tobe ~~gas~~suspended ~~reserves,~~or ~~our~~terminated. ~~financial~~These ~~results~~circumstances ~~are~~include ~~more~~our ~~sensitive~~failure to ~~movements~~ inpay ~~gas~~royalties ~~prices.~~or ~~Lower~~our ~~gas~~failure ~~prices~~to ~~decrease~~comply ~~our~~with ~~potential~~safety ~~revenues~~and ~~available from~~environmental ~~future~~regulations. ~~long~~The ~~term~~requirements ~~PPAs,~~imposed ~~but~~by ~~have~~these ~~little~~laws ~~impact~~and onregulations ~~the~~are frequently ~~actual~~changed ~~proved~~and ~~reserves~~subject ~~we can~~to ~~produce~~new ~~economically~~interpretations, ~~unlike~~and ~~typical~~if ~~oil~~such ~~and~~were ~~gas~~to occur, ~~fields~~could ~~that~~negatively ~~require extensive~~impact ~~ongoing~~our ~~drilling~~results toof ~~sustain~~operations ~~production~~and cash flows.

~~Our~~Rules ~~foreign~~adopted ~~projects~~by ~~expose us to risks related to~~ the ~~application~~ ~~of foreign laws~~BLM, ~~taxes,~~as ~~economic~~directed ~~conditions,~~by ~~labor~~the ~~supply~~Energy ~~and relations,~~Policy ~~political conditions and policies~~ Act of ~~foreign governments~~2005, ~~any~~require ~~of which~~competitive ~~risks~~auction ~~may delay or reduce our ability to profit from such projects. We have development projects outside~~ of ~~the~~all ~~United~~geothermal ~~States.~~leases ~~For example,~~on ~~the~~Federal ~~El Ceibillo project is located in Guatemala~~lands. ~~Our foreign~~ ~~development~~Competitive isleasing ~~subject to regulation by various foreign governments and regulatory authorities and~~ is ~~subject~~significantly toincreasing the ~~application~~cost of ~~foreign~~obtaining ~~laws.~~leases ~~Such~~on ~~foreign~~Federal ~~laws or regulations may not provide for the same type of legal certainty and rights~~land, inis ~~connection~~adding ~~with our contractual relationships in such countries, as are afforded~~ to ~~our projects in~~ the ~~United~~capital ~~States,~~costs ~~which~~needed ~~may adversely affect our ability~~ to ~~receive~~develop ~~revenues or enforce our rights in connection with our~~geothermal ~~foreign~~projects, ~~operations.~~is Inincreasing ~~addition,~~ the ~~laws~~total ~~and~~electrical ~~regulations~~power ofprices ~~some~~needed ~~countries may limit our ability~~ to ~~hold~~make a ~~majority interest in some of the projects that we~~ ~~may~~geothermal ~~develop~~project orviable ~~acquire, thus limiting our ability to control the development, construction~~ and ~~operation~~is ofmaking ~~such~~it ~~projects.~~more ~~Our~~difficult ~~foreign~~to ~~development~~acquire ~~is also~~additional ~~subject~~adjacent tolands ~~significant~~for ~~political,~~reservoir ~~economic~~protection and ~~financial risks, which vary by country, and include:~~ exploration.

~~Changes~~If Federal lands or any Federal involvement are included in ~~government~~any geothermal ~~policies~~development, requirements of the National Environmental Policy Act ("NEPA") will be triggered. Most of the geothermal resources in the United States are located in the western states, where the Federal Government often is the largest landowner. If a NEPA action is triggered, such as an Environmental Impact Statement or ~~personnel;~~Environmental Assessment, a project delay of one to two years and a cost of $1,000,000 to $2,000,000 or more may be incurred while the environmental permitting process is completed. NEPA not only can impact the property where the geothermal resource is located, but includes the siting and construction of transmission lines. Environmental legislation is evolving in a manner that means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

~~Changes~~-51- ~~in general economic conditions;~~

~~Restrictions~~In onthe ~~currency~~states ~~transfer~~of orIdaho, ~~convertibility~~Nevada California, and Oregon, drilling for geothermal resources is governed by specific rules. In Nevada drilling operations are governed by the Division of Minerals (Nevada Administrative Code Chapter 534A); in Idaho by the Idaho Department of Water Resources (IDAPA 37 Title 03 Chapter 04); in California by the Division of Oil, Gas, and Geothermal Resources (Public Resources Code Title 14 Chapter 4); and in Oregon by the Division of Oil, Gas and Mineral Industries (Division 20 Geothermal Regulation). These rules require drilling permits and govern the spacing of wells, rates of production, prevention of waste and other matters, and, may not allow or may restrict drilling activity, or may require that a geothermal resource be unitized (shared) with adjoining land owners. Such laws and regulations may increase the costs of planning, designing, drilling, installing, operating and abandoning our geothermal wells, the power plant and other facilities. State environmental requirements and permits, such as the Idaho Department of Environmental Quality, and Air Quality Permit to Construct, include public disclosure and comment. It is possible that a legal protest could be triggered through one of the permitting processes that would delay construction and increase cost for one of our projects. The state of Oregon has an Energy Facility Siting Council that must issue a site certificate for any geothermal energy facilities of 35 megawatts or higher.

~~Changes~~Because inof ~~labor~~these ~~relations;~~state and federal regulations, we could incur liability to governments or third parties for any unlawful discharge of pollutants into the air, soil or water, including responsibility for remediation costs. We could potentially discharge such materials into the environment:

~~Political~~• ~~instability~~from a well or drilling equipment at a drill site; • leakage of fluids or airborne pollutants from gathering systems, pipelines, power plant and ~~civil~~storage ~~unrest~~tanks; • damage to geothermal wells resulting from accidents during normal operations; and • blowouts, cratering and explosions.

~~Changes~~Because the requirements imposed by such laws and regulations are frequently changed, we cannot assure you that laws and regulations enacted in the ~~local~~future, ~~electricity~~including ~~market;~~changes to existing laws and regulations or bonding requirements, will not adversely affect our business by increasing cost and the time required to explore and develop geothermal projects. In addition, because some of our project properties were previously operated by others, we may be liable for environmental damage caused by such former operators.

~~Breach~~Changes in the legal and regulatory environment affecting our projects could significantly harm our business financial position and results of operations. Our operations are subject to extensive regulation and, therefore, changes in applicable laws or ~~repudiation~~regulations, or interpretations of ~~important~~those ~~contractual~~laws ~~undertakings~~and byregulations, could result in increased ~~governmental~~compliance ~~entities;~~costs, the need for additional capital expenditures or the reduction of certain benefits currently available to our projects. The structure of federal and state energy regulation currently is, and may continue to be, subject to challenges, modifications, the imposition of additional regulatory requirements, and restructuring proposals. We may not be able to obtain all regulatory approvals that may be required in the future, or any necessary modifications to existing regulatory approvals, or maintain all required regulatory approvals. In addition, the cost of operation and maintenance and the operating performance of geothermal power plants may be adversely affected by changes in certain laws and regulations, including tax laws.

~~Expropriation~~-52- ~~and confiscation of assets and facilities.~~

WeThe ~~plan~~reduction toor ~~obtain~~elimination ~~political~~of ~~risk~~government ~~insurance~~incentives could inadversely ~~connection~~affect ~~with~~our business, financial condition, future results and cash flows. Construction and operation of our ~~foreign~~geothermal ~~project~~power plants have benefited, ~~when~~and ~~appropriate~~may benefit in the future, ~~but~~from ~~note~~public policies and government incentives that ~~such~~support ~~political~~renewable ~~risk insurance~~energy ~~does~~and ~~not~~enhance ~~mitigate~~the ~~all~~economic feasibility of these projects. The most important tax rule that affects our business is the ~~above-mentioned~~Production ~~risks.~~Tax InCredit ~~addition~~(“PTC”) or Investment Tax Credit (“ITC”), ~~insurance~~which ~~proceeds~~is ~~received~~available ~~pursuant~~ to aencourage ~~political~~the ~~risk~~development ~~insurance~~of ~~policy,~~new ~~where~~geothermal plants. ~~applicable~~Legislation enacted as part of the 2016 “Fiscal Cliff” efforts resulted in the extension of the 30% PTC or ITC with eligibility for projects that started construction before December 31, ~~may~~2016. There is not bea ~~adequate~~cash grant component to the ~~cover~~ITC ~~all~~credit ~~losses~~so ~~sustained~~there asis a ~~result~~risk ofrelated ~~any~~to monetizing the credit. The loss of ~~covered~~the ~~risks~~PTC ~~and~~or ~~may~~ITC atis ~~times~~a berisk ~~pledged~~that could result in ~~favor~~making the development of ~~the~~new projects ~~lenders~~uneconomic. Additionally, current IRS guidance states that projects that are placed into service by December 31, 2018 do not have to ashow ~~project~~continuous asconstruction. ~~collateral~~Projects placed into service after that date could have some or all of their tax credit eligibility challenged. ~~Also~~Additional policies and incentives include accelerated depreciation tax benefits, ~~insurance~~renewable ~~may~~portfolio standards, ~~not~~carbon betrading ~~available~~mechanisms, inand ~~the~~rebates. ~~future~~Some ~~with~~of these measures have been implemented at the ~~scope~~federal level, while others have been implemented by different states. The availability and continuation of ~~coverage~~these public policies and government inincentives ~~amounts~~have a significant effect on the economics and viability of ~~coverage~~our ~~adequate~~development. toAny ~~insure~~changes ~~against~~to such ~~risks~~public ~~and~~policies, or any reduction in or ~~disturbances~~elimination of such Government incentives could affect us negatively.

~~-43-~~Risks Related to Ownership of Our Common Stock

~~Our~~The ~~foreign~~public ~~project~~market ~~may~~for ~~expose~~our uscommon tostock ~~risks~~is ~~related~~not ~~to fluctuations~~that ~~in currency rates,~~ liquid which ~~may~~could ~~reduce~~result ~~our~~in ~~profits~~purchasers ~~from~~being ~~such~~unable ~~projects and operations. Risks attributable~~ to ~~fluctuations~~liquidate intheir ~~currency exchange~~investment. ~~rates~~The ~~can~~market ~~arise~~price ~~when~~for ~~any~~shares ~~foreign subsidiary borrows funds or incurs operating or other expenses in one type~~ of ~~currency~~our ~~but~~common ~~receive~~stock ~~revenues~~may inbe ~~another.~~highly ~~In such~~volatile ~~cases,~~and ancould ~~adverse~~be ~~change~~subject ~~in exchange rates can reduce such subsidiary's ability~~ to ~~meet~~wide ~~its debt service obligations, reduce the amount of cash and income we receive from such foreign subsidiary or increase such subsidiary's overall expenses~~fluctuations. InSome ~~addition, the imposition by foreign governments~~ of ~~restrictions on~~ the ~~transfer~~factors ofthat ~~foreign currency abroad or restrictions on the conversion of~~could ~~local~~negatively ~~currency~~affect ~~into foreign currency would have an adverse effect on the operations of~~ our ~~foreign~~share ~~project~~price ~~and may limit or diminish the amount of cash and income that we receive from such foreign projects.~~ include:

~~Changes~~• inactual ~~costs~~or ~~and~~anticipated ~~technology~~variations ~~may~~in ~~significantly impact~~ our ~~business~~reserve byestimates ~~making~~and ~~our~~quarterly ~~power~~operating ~~plants~~results; ~~less~~• ~~competitive.~~changes Ain ~~basic premise~~electricity ofprices; ~~our~~• ~~business~~changes ~~model~~in isour ~~that~~funds ~~generating~~from ~~baseload~~operations ~~power~~or atearnings ~~central geothermal~~estimates; ~~power~~• ~~plants~~publication ~~achieves economies~~ of ~~scale~~research ~~and~~reports ~~produces~~about ~~electricity~~us ~~at a~~or ~~competitive~~the ~~price.~~exploration ~~However,~~and ~~gas-fired~~production ~~systems~~industry; ~~may~~• ~~under~~increases ~~certain~~in ~~economic conditions~~market ~~produce~~interest ~~electricity~~rates atwhich ~~lower~~may ~~average~~increase ~~short term prices than~~ our ~~geothermal~~ ~~plants.~~cost Inof ~~addition,~~capital; ~~there~~• ~~are~~changes ~~other~~in ~~technologies~~applicable ~~that~~laws ~~can~~or ~~produce electricity at competitive prices~~regulations, ~~most~~court ~~notably~~rulings ~~fossil fuel power systems, hydroelectric systems, wind-turbines~~ and ~~photovoltaic~~enforcement ~~(solar) cells. Research~~ and ~~development~~legal ~~activities~~actions; ~~are~~• ~~ongoing~~changes ~~to seek improvements~~ in ~~such~~market ~~alternate technologies~~valuations ~~and their cost~~ of ~~producing~~similar ~~electricity~~companies; is• ~~gradually~~adverse ~~declining.~~market ~~It is~~reaction ~~possible~~to ~~that~~any ~~advances~~increased ~~will~~indebtedness ~~further~~we ~~reduce~~incur in the ~~cost~~future; of• ~~alternate~~additions ~~methods~~or ~~of power~~departures ~~generation to a level below that~~ of ~~most~~key ~~geothermal~~management ~~power~~personnel; ~~generation technologies~~• ~~such~~actions ~~that~~by ~~the competitive advantage of~~ our ~~projects~~stockholders; ~~may~~• ~~be significantly~~speculation ~~impaired.~~in ~~Intermittent~~the ~~renewable~~press ~~energy~~or ~~sources~~investment ~~such as solar and wind, have already seen such cost reductions allowing them to offer their intermittent power and substantially lower prices.~~ community;

~~Risks~~-53- ~~Related to Our Power Purchase Agreements~~

A• ~~force~~large ~~majeure~~volume ~~event,~~of ~~disruption~~sellers of ~~existing transmission or a forced outage affecting a project or unexpected operating expenses could reduce~~ our ~~net~~common ~~income~~stock and materially and adversely affect our business, financial condition, future results and cash flow. If a plant experiences a force majeure event, such as a fire, earthquake or flood, we would be excused from our obligations to deliver electricity under the PPAs to which we are parties. However, the power purchasers under those PPAs may/will not be required to make any energy payments with respect to the affected project or plant so long as the force majeure event continues and, pursuant to ~~certain of~~ our ~~PPAs,~~resale ~~will~~registration ~~have~~statement ~~the~~with ~~right to prematurely terminate the PPA altogether. Additionally, to the extent that~~ a ~~forced~~relatively ~~outage~~small ~~has~~volume ~~occurred,~~of apurchasers; ~~power purchaser may not be required to make any energy payments to the affected project,~~ and ~~if as~~• ageneral ~~result~~market the project fails to attain certain performance requirements under certain of our PPAs, the purchaser may have the right to prematurely terminate the PPA altogether. As a consequence, we may not receive any net revenues from the affected project or plant other than the proceeds from any business interruption insurance that may apply to the force majeure event or forced outage after the relevant waiting period, and weeconomic ~~may incur significant liabilities in respect of past amounts required to be refunded~~conditions.

~~-44-~~The market price of our common stock could be volatile, which could cause the value of your investment to decline. Securities markets worldwide experience significant price and volume fluctuations. This market volatility, as well as general economic, market or political conditions, could reduce the market price of our common stock in spite of our operating performance. In addition, our operating results could fall short of the expectations of market analysts and investors, and in response, the market price of our common stock could decrease significantly. You may be unable to resell your shares of our common stock at or above the initial offering price.

InThe ~~addition,~~market wefor ~~rely~~our oncommon ~~transmission~~stock ~~lines~~is ~~owned~~volatile. byThe ~~local~~trading price ~~utilities~~of toour ~~deliver~~common ~~all~~stock ofon the ~~electricity~~NYSE ~~that~~American weLLC ~~generate~~(“NYSE toAmerican”) ~~the~~is ~~purchasers~~subject to offluctuations ~~our~~in ~~electricity.~~response Ifto, ~~the~~among ~~transmission~~other ~~system~~things, ~~were~~quarterly tovariations ~~experience~~in operating aand ~~force~~financial results, and general economic and market conditions. In ~~majeure~~addition, ~~event~~statements or achanges ~~forced~~in ~~outage~~opinions, ~~which~~ratings, ~~prevented~~or itearnings ~~from~~estimates ~~transmitting the~~made ~~electricity~~by ~~from~~brokerage ~~our~~firms ~~projects~~or toindustry aanalysts ~~power~~relating ~~purchaser,~~to ~~the~~our ~~power~~market ~~purchaser~~or ~~would~~relating to ~~not~~our becompany ~~required~~could toresult ~~make~~in ~~energy~~an ~~payments~~immediate ~~for~~and ~~that~~adverse ~~electricity~~effect ~~with~~on ~~respect~~the tomarket ~~the~~price ~~affected~~of ~~project~~our socommon ~~long~~stock. asThe ~~such~~highly ~~force~~volatile ~~majeure~~nature ~~event~~of orour ~~forced~~stock ~~outage~~price may cause ~~continues~~investment losses for our shareholders.

~~Any~~You ofmay ~~these~~experience ~~events~~dilution ~~could~~of ~~significantly~~your ~~increase~~ownership interests due to the ~~expenses~~future issuance of additional shares of our common stock. We ~~incurred~~may byin the future issue our ~~projects~~previously orauthorized ~~reduce~~and unissued securities, resulting in the ~~overall~~dilution ~~generating~~of ~~capacity~~the ownership interests of our present ~~projects~~stockholders. ~~and~~We ~~could~~are ~~significantly~~currently ~~reduce~~authorized orto ~~entirely~~issue ~~eliminate~~250,000,000 ~~the~~shares ~~revenues~~of common ~~generated~~stock. byThe ~~one~~potential orissuance ~~more~~of such additional shares of common stock may create downward pressure on the trading price of our ~~projects,~~common ~~which~~stock. inWe ~~turn~~may ~~would~~also issue ~~reduce~~additional shares of our ~~net~~common stock or other securities that are ~~income~~convertible ~~and~~into ~~could~~or ~~materially~~exercisable ~~and~~for ~~adversely~~common ~~affect~~stock ~~our~~in ~~business,~~connection ~~financial~~with the hiring ~~condition~~of personnel, future ~~results~~acquisitions, ~~and~~future ~~cash~~private ~~flow.~~placements of our securities for capital raising purposes, or for other business purposes.

~~Payments~~Failure ~~under~~to ~~our~~comply ~~PPAs~~with regulatory requirements may adversely beaffect ~~reduced~~our ifstock price and business. As a public company, we are ~~unable~~ subject to ~~forecast~~numerous ~~our~~governmental ~~production~~and ~~adequately.~~stock ~~Under~~exchange requirements, ~~the~~with ~~terms~~which ofwe ~~certain~~believe ofwe ~~our~~are in compliance. The Sarbanes-Oxley Act ~~PPAs,~~of if2002 we(“SOX”) doand ~~not~~the ~~deliver~~SEC ~~electricity~~have ~~output~~requirements ~~within~~that ~~90%~~we may fail to ~~110%~~meet ofby ~~our~~the ~~forecasted~~required ~~amount~~deadlines or we may fall out of compliance with, ~~payments~~such ~~for~~as the ~~amount~~internal controls ~~delivered~~assessment, ~~will~~reporting beand ~~reduced~~auditor attestation, ~~possibly~~as applicable, which are ~~significantly~~required under Section 404 of SOX. ~~For~~The ~~example~~Company ifhas ~~the~~documented ~~plant~~and ~~produces~~tested ~~more~~its internal ~~than~~control ~~110%~~procedures ofin order to satisfy the ~~power~~requirements asof Section 404 ~~forecasted~~of ~~then~~SOX. weSOX ~~would~~requires ~~receive~~an ~~reduced~~annual ~~revenue~~assessment ~~for~~by management of the ~~amount~~effectiveness of the Company’s internal control over financial reporting, as well as an attestation report by the Company’s independent auditors on internal controls ~~forecast~~over ~~figure~~financial reporting. If ~~the~~we ~~plant~~fail ~~produces~~to ~~less~~achieve ~~than~~and ~~90%~~maintain of the ~~forecast~~adequacy ~~amount~~of ~~for~~our ~~unexcused~~internal ~~reasons~~controls, as such asstandards ~~normal~~are ~~plant~~modified, ~~breakdowns~~supplemented ~~and~~or ~~maintenance,~~amended ~~then~~from time to time, we may not be ~~subject~~able to aensure ~~replacement~~that ~~power~~we ~~costs,~~can ~~depending~~conclude on ~~the~~an ~~prevailing~~ongoing basis ~~power~~that we have effective internal controls over financial reporting in ~~market~~accordance ~~conditions~~with Section 404 of SOX. ~~The~~Moreover, ~~agreement~~effective ~~moves~~internal ~~the~~controls ~~power~~are necessary ~~price~~for us to ~~the~~produce ~~market~~reliable ~~price~~financial reports and are important to help ~~instead~~prevent offinancial ~~contracted~~fraud. ~~price~~If we cannot provide reliable financial reports or prevent fraud, ~~and~~our ~~the~~business ~~reduction~~and inoperating ~~revenue~~results could be ~~perhaps~~harmed, ~~30 percent~~investors ofcould ~~that~~lose ~~amount.~~confidence Asin aour reported ~~risk~~financial ~~mitigation element~~information, weand ~~are~~the ~~not~~trading ~~subject~~price toof ~~this~~our stock could drop ~~adjustment~~significantly. ~~until~~Our ~~year~~failure ~~three~~to ofmeet ~~the~~regulatory ~~contract~~requirements and ~~then~~exchange welisting standards ~~are~~may ~~able~~result toin ~~submit~~actions asuch ~~new~~as the delisting of our stock impacting our ~~forecast~~stock’s ~~every~~liquidity; ~~three~~SEC ~~months~~enforcement ~~thereby~~actions; ~~limiting~~and ~~this~~securities ~~exposure~~claims and litigation.

~~Our failure to supply the contracted capacity under some of our PPAs with investor~~-~~owned~~54- electric utilities in states that have renewable portfolio standards may result in the imposition of penalties. The terms of certain of our PPAs require that we make payments to the relevant power purchaser in an amount equal to such purchaser's replacement costs for renewable energy that we are required to but do not provide as required under the PPA and which such power purchaser obtains from an alternate source. In addition, we may be required to make payments to the relevant power purchaser in an amount equal to its replacement costs relating to any renewable energy credits we do not provide as required under the relevant PPA. All of which could materially and adversely affect our business, financial condition, future results and cash flow.

~~Industry~~We ~~competition~~do ~~may~~not ~~impede~~anticipate ~~our~~paying ~~growth~~any ~~and~~dividends ~~ability to enter into PPAs~~ on ~~terms favorable to us, or at all, which would negatively impact~~ our ~~revenue. The electrical power generation industry, of which~~common ~~geothermal~~stock ~~power is a sub-component, is highly competitive and we may not be able to compete successfully or grow our business. We compete~~ in ~~areas of pricing, grid access and markets. The industry in~~ the ~~Western~~foreseeable ~~United States is complex as it is composed of public utility districts, cooperatives and investor-owned power companies~~future. Many of the participants produce and distribute electricity. Their willingness to purchase electricity from an independent producer may be based on a number of factors and not solely on pricing and surety of supply. If we cannot enter into PPAs on terms favorable to us, or at all, it would negatively impact our revenue and our decisions regarding development of additional properties.

~~-45-~~We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock, as we intend to use cash flow generated by operations to expand our business. We may enter into other borrowing arrangements in the future that restrict our ability to declare or pay cash dividends on our common stock.

~~Additionally,~~A ~~the~~substantial ~~credit~~percentage ~~quality~~ of ~~newly~~our ~~formed~~shares ~~power~~are held by a ~~purchasers~~small group of stockholders whose interests may ~~negatively~~conflict ~~impact~~with the interests of our ~~ability~~other tostockholders. ~~finance~~As of December 31, 2017, our ~~power~~largest ~~purchase~~three ~~projects~~shareholders consisted of JCP Investment Management, LLC beneficially owning 2,871,448 shares (14.8%), Bradley Louis Radoff beneficially owning 1,923,000 shares (9.9%), and ~~may~~Private ~~negatively~~Management ~~impact~~Group, ~~their~~Inc. ~~ability~~beneficially owning 1,818,042 shares (9.4%), collectively totaling approximately 34.0% of our outstanding common stock. As a result of these stockholders’ beneficial ownership of our outstanding common stock, they could exert significant influence on the election of our directors and decisions on matters submitted to ~~pay~~a ~~for~~vote of our shareholders, including mergers, consolidations and the ~~contracted~~sale ~~power~~of all or insubstantially all of our assets. This concentration of ownership of our shares could delay or prevent proxy contests, mergers, tender offers, or other purchases of our shares that might otherwise give our stockholders the opportunity ~~future~~to realize a premium over the then-prevailing market price for our shares. This concentration of ownership may also adversely affect our stock price. Future sales of common stock by these stockholders could cause our stock price to decline.

~~Changes~~Future insales ~~costs and technology~~ of ~~other~~common ~~baseload renewable~~stock ~~electricity sources may significantly impact our business~~ by ~~making our~~some ~~power plants less competitive. A basic premise~~ of our ~~business model~~insider isstockholders ~~that~~could cause our ~~geothermal~~stock ~~power~~price ~~plants~~to ~~generate baseload power at a competitive price~~decline. ~~While~~As ~~there~~of ~~are~~the ~~other~~date ~~renewable energy technologies that can also produce~~of ~~baseload~~this ~~electricity~~report, ~~such~~our asdirectors ~~biomass,~~and ~~fuel~~officers ~~cell,~~collectively ~~and~~held ~~hydroelectric systems~~4, ~~most~~060,809 ofshares ~~these alternative technologies currently produce electricity at a higher~~of ~~average~~and ~~price~~options ~~than~~for our ~~geothermal~~common ~~plants. However~~stock, ~~research~~representing ~~and~~approximately ~~development activities~~16.9% ~~are~~of ~~ongoing~~issued ~~to seek improvements in such alternate technologies~~ and ~~their~~outstanding ~~cost~~common ~~of producing electricity may gradually decline~~stock. ItSales isof ~~possible~~such ~~that advances~~shares ~~will~~in ~~further reduce~~ the ~~cost~~public ofmarket, ~~alternate~~as ~~methods~~well ~~of power generation~~as toshares awe ~~level~~may ~~that~~issue isupon ~~equal~~exercise ~~to or below that~~ of ~~most~~outstanding ~~geothermal~~options, ~~power~~could ~~generation technologies.~~cause ~~If this were to happen,~~ the ~~competitive~~market price ~~advantage~~ of our ~~power plants~~common ~~may~~stock beto ~~significantly impaired~~decline.

~~Risks~~If ~~Related~~securities toor industry equity analysts do not publish research or reports about our business, our stock price and trading volume could be adversely affected. To the extent one develops, the trading market for our common stock will depend in part on the research and reports that securities or industry equity analysts publish about us or our business. Our common ~~Liquidity~~stock is not currently and ~~Capital~~may never be covered by securities and ~~Resources~~industry equity analysts. If no securities or industry equity analysts commence coverage of our company, the trading price of our stock would be negatively impacted. In the event we obtain securities or industry equity analyst coverage of our common stock, if one or more of the equity analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these equity analysts ceases coverage of our company or fails to regularly publish reports on us, interest in the purchase of our stock could decrease, which could cause our stock price or trading volume to decline.

~~Substantial~~-55- leverage and debt service obligations may adversely affect our cash flows, liquidity and operations. We have substantial indebtedness that we may be unable to service and that restricts our activities. Our ability to meet our debt service obligations and repay, extend, or refinance our outstanding indebtedness will depend primarily upon the operational performance of our geothermal power generation, the prices that we receive for the electricity that we generate, risk management activities, as well as general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In addition, this indebtedness has important consequences, including:

~~limiting~~Provisions under Delaware law, our ~~ability~~certificate toof incorporation ~~borrow~~and ~~additional~~bylaws ~~amounts~~could ~~for~~delay ~~working~~or ~~capital~~prevent a change in control of our company, which could adversely affect the price of our common stock. The existence of some provisions ~~capital~~under ~~expenditures~~Delaware law, ~~debt~~our ~~service~~certificate ~~requirements~~of incorporation and bylaws could delay or prevent a change in control of the Company, ~~entering~~which ~~into~~could adversely affect the price of our common stock. Delaware law imposes restrictions on mergers and other ~~renewable~~business combinations between us and any holder of 15% or more of our ~~energy~~outstanding ~~businesses~~common stock. Our certificate of incorporation and bylaws prohibit our stockholders from taking action by written consent absent approval by all of our Board of Directors. Further, orour ~~other~~stockholders ~~purposes;~~will not have the power to call a special meeting of stockholders.

~~limiting~~Risks ~~our~~Related ~~ability~~ to ~~use operating cash flow in other areas of our business because we must dedicate a substantial portion of these funds to service~~ the ~~debt;~~ Merger

~~increasing~~There ~~our~~are ~~vulnerability~~a variety of risks, contingencies and other uncertainties associated with the Merger that could result in the delay or the failure of the Merger to ~~general~~be ~~adverse~~completed. ~~economic~~The Company’s ability to complete the Merger is subject to risks and ~~industry~~uncertainties, including, but not limited to, failure to satisfy required closing conditions; to the Merger, including the failure to obtain necessary shareholder, regulatory or other approvals, or complete the Merger in a timely manner or at all. No assurance can be given that the required approvals will be obtained and, even if all such approvals are obtained, no assurance can be given as to the terms, conditions and timing of the approvals or that they will satisfy the terms of the Merger Agreement. Even if certain necessary approvals are obtained, the Company may still be subjected to conditions that could result in a material delay in, or the abandonment of, the Merger or otherwise have an adverse effect on the Company. More generally, the occurrence of any event, change or other circumstances that could give rise to the right of a party to terminate the Merger Agreement, including such a circumstance where the Company would be required to pay Ormat a termination fee equal to 3% of the Merger Consideration (approximately $3.2 million). As a result, one or more conditions to closing of the Merger may not be satisfied and the Merger may not be completed.

~~limiting~~Any ~~our~~delay ~~ability~~in tocompleting the Merger may adversely affect the Company or ~~increasing~~shareholders, including but not limited to delaying the ~~costs~~time at which shareholders may receive consideration for their shares of ~~refinance~~the ~~indebtedness;~~ Company and further subjecting the Merger to the occurrence of any other event, change or circumstance that may lead to the abandonment of the Merger.

~~limiting~~The ~~our~~Company ~~ability~~is subject to ~~enter~~certain ~~into~~risks ~~marketing~~during the pendency of the Merger that may have an adverse effect on the Company’s business. During the pendency of the Merger, ~~hedging~~the Company and its subsidiaries may be subject to business uncertainties, ~~optimization~~merger-related costs and ~~trading~~certain ~~transactions~~operating byrestrictions. ~~reducing~~For instance, the ~~number~~Merger ofAgreement ~~counterparties~~restricts ~~with~~the Company ~~whom~~from wetaking ~~can~~certain specified actions while the Merger is pending ~~transact~~without ~~and~~first obtaining Ormat’s prior written consent. These restrictions may limit the ~~volume~~Company from pursuing attractive business opportunities, change or prevent certain strategic decisions from being made or cause or prevent any other changes to the Company’s business prior to completion of ~~those~~the ~~transactions~~Merger or termination of the Merger Agreement.

~~We have a need for substantial additional financing and will have to significantly delay~~Additionally, ~~curtail or cease operations if we are unable to secure such financing. The Company requires substantial additional financing to fund~~ the ~~cost~~ability of ~~continued~~the ~~expansion~~Company ofor ~~and~~its ~~the~~subsidiaries ~~development of our~~to ~~projects.~~retain ~~Also~~customers, ~~the~~retain ~~Company~~and ~~requires~~hire ~~funds~~key ~~for~~personnel ~~other~~and ~~operating~~maintain ~~activities,~~relationships ~~and~~with tovendors ~~finance the growth of our business, including the construction~~ and ~~commissioning~~ ofsuppliers ~~power generation facilities. We~~ may ~~not~~ be ~~able~~subject to ~~obtain~~disruption ~~the needed~~due ~~funds on terms acceptable~~ to usuncertainty orassociated with atthe ~~all. Further~~Merger, ifwhich ~~additional~~could ~~funds are~~have ~~raised~~an byadverse ~~issuing~~effect ~~equity~~on ~~securities,~~the ~~significant~~results ~~dilution~~of tooperations, ~~our~~cash ~~current~~flows ~~shareholders may occur~~ and ~~new~~financial ~~investors~~position ~~may~~of ~~get~~the ~~rights~~Company ~~that~~and ~~are~~its ~~preferential~~operating ~~to current shareholders~~subsidiaries. ~~Alternatively,~~The weCompany’s management may ~~have~~also tobe distracted ~~bring~~from inongoing ~~joint~~business ~~venture~~operations ~~partners~~due to ~~fund further development work, which would result in reducing our interests in~~ the ~~projects~~Merger.

-4656-

WeFurther, ~~may be unable to obtain~~ the ~~financing~~Company’s wedirectors ~~need to pursue our growth strategy~~ and ~~any~~executive ~~future~~officers ~~financing we receive~~ may ~~be less~~ ~~favorable to us than our current financing arrangements, either of which may adversely affect our ability to expand our operations. Our geothermal power plants generally~~ have ~~been~~interests ~~financed~~in using leveraged financing structures, consisting of non-recourse debt obligations and partnership arrangements. Each of our projects under development and those projects and businesses we may seek to acquire will require substantial capital investment. Our continued access to capital with acceptable terms is necessary for the ~~success~~Merger ofthat ~~our~~are ~~growth strategy.~~different ~~Our~~from, ~~attempts to obtain future financings may not be successful~~ or ~~on favorable~~in ~~terms,~~addition ~~and are dependent on numerous factors including general economic and capital market conditions~~to, ~~investor confidence,~~ the ~~continued~~ ~~success~~interests of ~~current projects,~~ the ~~credit~~Company ~~quality~~shareholders ofgenerally. ~~the~~These ~~projects~~interests ~~being~~may ~~financed, the~~cause ~~political situation in~~ the Company’s ~~state~~directors ~~in which the project is located~~ and ~~the continued~~executive ~~existence~~officers ~~of tax laws which are conducive~~ to ~~raising~~view ~~capital.~~the ~~Market conditions~~Merger ~~and~~differently ~~other factors may not permit future project~~ and ~~acquisition~~ ~~financings~~more onfavorably ~~terms~~than ~~similar~~the toCompany ~~those~~shareholders ~~previously received. If we are not able to obtain financing for our power plants on a non-recourse basis, we~~ may ~~have~~view ~~to finance them using direct equity investments which may have a dilutive effect on our common stock~~it. ~~or incur additional recourse debt.~~

ItFailure ~~is very costly~~ to ~~place~~complete ~~geothermal~~the ~~resources~~Merger ~~into commercial~~and/or ~~production.~~the ~~Before~~restrictions on the ~~sale~~Company offrom ~~any~~pursuing ~~power~~alternatives ~~can occur, it will be necessary~~ to ~~construct~~the aMerger ~~gathering~~could ~~and~~negatively ~~disposal~~affect ~~system, a power plant,~~the ~~and~~Company’s ashare ~~transmission line~~price, ~~and~~future ~~considerable~~business ~~administrative costs would be incurred, together with the drilling of production~~ and ~~injection~~financial ~~wells~~results. ~~Future~~Completion ~~expansion~~ of ~~power~~the ~~production~~Merger ~~and~~is ~~other~~not ~~opportunities~~assured ~~may~~and ~~result~~is ~~in significantly~~subject ~~increased~~to ~~capital~~risks, ~~costs~~including ~~related~~the torisks ~~increased production and~~that ~~injection~~approval ~~well~~of ~~drilling~~the ~~and~~transaction ~~higher~~by ~~costs~~our ~~for~~shareholders ~~labor~~or ~~and~~by ~~materials.~~governmental Toagencies ~~fund~~will ~~expenditures~~not ofbe ~~this~~obtained ~~magnitude,~~or wethat ~~may~~certain ~~have~~other toclosing ~~find~~conditions awill ~~joint~~not ~~venture~~be ~~participant~~satisfied. ~~with~~If ~~substantial~~the ~~financial~~Merger ~~resources~~is ornot ~~expand~~completed, the ~~current~~Company’s ~~ownership~~ongoing ofbusiness ~~existing~~and financial ~~joint~~results ~~venture~~may ~~partners. There can~~ be noadversely ~~assurance~~affected ~~that~~and athe ~~participant~~Company ~~can~~will be ~~found~~ ~~and,~~subject ~~if found, it would result in us having~~ to ~~substantially reduce our~~several ~~interest~~risks, ~~in the project.~~ including:

We• ~~may~~having beto ~~unable~~pay tocertain ~~realize~~significant ~~our~~transaction ~~strategy~~costs ofrelating ~~utilizing~~to the ~~tax~~ ~~and~~Merger ~~other~~without ~~incentives~~receiving ~~available~~the ~~for~~benefits ~~developing~~of ~~geothermal~~the ~~power~~Merger; ~~projects~~• ~~to attract~~the ~~strategic~~trading ~~alliance~~price ~~partners,~~of ~~which~~the ~~may~~Company’s ~~adversely~~shares ~~affect~~changing, ~~our~~to ~~ability~~the ~~to complete~~extent ~~these~~that ~~projects.~~the ~~Part~~current trading price of ~~our~~the ~~business~~Company’s ~~strategy~~shares isreflects toan ~~utilize~~assumption that the ~~tax~~ ~~and~~Merger ~~other~~will ~~incentives~~be ~~available~~completed; • potentially having to ~~developers~~pay Ormat up to 3% of ~~geothermal~~the ~~power~~Merger ~~generating plants~~Consideration to(approximately$3.2 ~~attract~~million) ~~strategic~~in ~~alliance~~specific ~~partners~~circumstances, ~~with~~including ~~the~~without ~~capital~~limitation, ~~sufficient~~a ~~to complete~~change ~~these~~in ~~projects.~~or ~~Many~~withdrawal of ~~the~~our ~~incentives~~board ~~available~~of ~~for~~directors’ ~~these~~recommendation ~~projects~~to ~~are new~~our ~~and~~shareholders ~~highly~~or ~~complex.~~termination ~~There~~to ~~can~~accept bean noalternative ~~assurance~~takeover ~~that~~proposal; we• ~~will~~litigation berelated ~~successful~~to ~~in structuring~~any ~~agreements~~failure ~~that~~to ~~are~~complete ~~attractive~~the toMerger; • potential ~~strategic~~reduction ~~alliance partners.~~of Ifvalue weoffered ~~are~~by ~~unable~~others to dothe ~~so,~~Company wein ~~may~~any befuture ~~unable~~business tocombination; ~~complete~~and ~~the development~~• erosion of ~~our~~customer, ~~geothermal~~vendor, ~~power~~supplier ~~projects~~ and ~~our~~employee ~~business~~confidence ~~could~~in ~~be harmed~~the Company.

~~-47-~~Further, the Company’s legal remedy in the event of breach of the Merger Agreement (whether willfully, intentionally, unintentionally or otherwise) by Ormat or Merger Sub is limited to receipt of the Ormat termination fee, equal to 3% of the Merger Consideration (approximately $3.2 million), and the Company may not be entitled to such fee at all in certain circumstances.

~~Our~~Pursuant ~~debt~~to ~~instruments~~the ~~impose~~terms ~~significant~~of ~~operating~~the ~~and~~Merger Agreement, the Company is ~~financial~~restricted ~~restrictions~~from onpursuing ~~us;~~alternative ~~any~~takeover ~~failure~~proposals to ~~comply~~the ~~with~~Merger. ~~these~~Should the ~~restrictions~~Company pursue an alternative takeover proposal instead of the Merger, there ~~could~~can ~~have~~be no guarantee that such a ~~material~~pursuit ~~adverse~~would ~~effect~~be onmore ~~our~~successful ~~liquidity~~or ~~and~~favorable ~~our~~to the ~~operations.~~Company ~~The~~or ~~instruments~~its ~~governing~~shareholders, ~~our~~either ~~outstanding~~in ~~debt~~terms ~~impose~~of ~~significant operating~~the costs and ~~financial~~expenses ~~restrictions~~to pursue onan ~~our~~alternative ~~geothermal~~takeover ~~operating~~proposal, ~~subsidiaries. These~~the ~~restrictions~~type ~~could~~or ~~adversely~~amount ~~affect~~of usconsideration that may be received by ~~limiting~~shareholders, ~~our~~the ~~ability~~likelihood or time it takes to complete ~~plan~~an alternative takeover proposal, or for any other reason. Restrictions on the Company pursuing alternative takeover proposals may also deter and/or make ~~react~~it todifficult ~~market~~for ~~conditions~~an otherwise interested third party to acquire or propose to ~~meet~~acquire ~~our~~the ~~capital~~Company ~~needs.~~prior ~~These~~to ~~restrictions~~the completion of the Merger, even one that may ~~limit~~be ~~our~~deemed ~~ability~~of greater value to the Company’s shareholders than the current offer by Ormat. Furthermore, ~~among~~the ~~other~~concept ~~things:~~of a termination fee may result in that third party’s offering a lower value to the Company’s shareholders than such third party might otherwise have offered.

~~make~~-57- ~~prepayments on or purchase indebtedness in whole or in part;~~

~~pay~~The ~~dividends~~nature toof usthe orall-cash ~~make~~Merger ~~other~~Consideration ~~distributions~~prevents the toCompany’s usshareholders ~~thereby~~from ~~limiting~~participating ~~our~~in future growth. ~~ability~~The toCompany’s ~~use~~shareholders ~~available~~will ~~cash~~be toreceiving ~~pay~~a ~~dividends~~fixed toamount ~~stockholders,~~of ~~repurchase~~cash ~~our~~for ~~capital~~their stock orand ~~make~~will ~~other~~not ~~investments~~be compensated for any increase in ~~geothermal~~the ~~projects~~value of the Company or ~~other~~Ormat during the pre-closing period or following the closing, which ~~renewable~~may ~~energy~~prevent ~~businesses;~~the Company’s shareholders from realizing any further upside to the Merger.

~~make~~Legal ~~certain~~claims ~~investments~~or investigations could result in an injunction preventing completion of the Merger, ~~including~~the ~~capital~~payment ~~expenditures;~~of damages in the event the Merger is completed and/or may otherwise adversely affect the Company’s business, financial condition or results of operations.

~~enter~~Transactions ~~into~~such ~~transactions~~as ~~with~~the ~~affiliates;~~Merger are often subject to shareholder lawsuits and other legal claims or investigations by regulators, legislators and law enforcement officials, and the Company cannot guarantee the success in responding or defending against any such lawsuits, claims or investigations. Further, responding or defending to these lawsuits, claims and investigations, regardless of the merits, can incur additional time and expenses, which may have an adverse effect on the Company’s business, financial condition or results of operations.

~~create~~Item or1B. ~~incur~~Unresolved ~~liens~~Staff ~~to secure debt;~~ Comments

~~consolidate or merge with another entity, or allow one of our subsidiaries to do so;~~ None.

~~lease,~~-58- ~~transfer or sell assets and use proceeds of permitted asset leases, transfers or sales;~~

~~incur~~Item ~~dividend~~2. ~~or other payment restrictions affecting certain subsidiaries;~~ Property

~~engage~~The Company has interests in ~~certain~~nine ~~business~~different ~~activities;~~geothermal resource areas in the Western United States and one area in Guatemala, Central America. The resource areas in the United States are located in Idaho (1), Oregon (2), and Nevada (5) and California (1). The properties include the Raft River area located in southeastern Idaho, the two properties located in southeastern Oregon, and four properties in northwestern Nevada, the WGP Geysers area located in northern California at the Geysers, and the El Ceibillo area located in central Guatemala (near Guatemala City).

~~acquire~~The ~~facilities~~Company oroperates ~~other~~three ~~businesses~~commercial power plants located in the Western United States. The Raft River Unit I, Idaho plant became commercially operational on January 3, 2008. The Neal Hot Springs, Oregon plant achieved commercial operation on November 16, 2012. The San Emidio, Nevada plant was acquired in May 2008. The acquired facility was replaced with a new power plant, located on private land that became commercially operational in May 2012.

In-59- ~~addition, any debt facilities that we enter into in the future are likely to contain similar or additional covenants.~~

~~Our~~WESTERN ~~ability~~UNITED toSTATES ~~comply~~REGIONAL ~~with~~LOCATION ~~these~~MAP covenants may be affected by events beyond our control, and any material deviations from our forecasts could require us to seek waivers or amendments of covenants or alternative sources of financing or to reduce expenditures. We cannot assure you that such waivers, amendments or alternative financing could be obtained, or if obtained, would be on terms acceptable to us.

If we are unable to comply with the terms of the documents governing our indebtedness, we may be required to refinance all or a portion of our indebtedness or to obtain additional financing or sell assets. However, we may be unable to refinance or obtain additional financing because of our existing levels of indebtedness and the debt incurrence restrictions under our existing indentures and other debt agreements. If our cash flow is insufficient and refinancing or additional financing is unavailable, we may be forced to default on our indebtedness. Such a default or other breach of the covenants or restrictions contained in any of our existing or future debt instruments could result in an event of default under those instruments and, due to cross-~~default and cross~~60-~~acceleration~~ provisions, under our other debt instruments. Upon an event of default under our debt instruments, the debt holders could elect to declare the entire debt outstanding thereunder to be due and payable and could terminate any commitments they had made to supply us with further funds. If any of these events occur, we cannot assure you that we will have sufficient funds available to repay in full the total amount of obligations that become due as a result of any such acceleration, or that we will be able to find additional or alternative financing to refinance any accelerated obligations.

~~-48-~~Neal Hot Springs, Oregon

~~Risks~~Neal ~~Related~~Hot toSprings ~~Government~~is ~~Regulation~~a geothermal resource located in Eastern Oregon. The Company acquired the Neal Hot Springs geothermal energy and surface rights in September 2006. A 22 megawatt (net) annual average geothermal power plant was developed by USG Oregon LLC, and is currently in operation at this site. The project has four production wells and nine injection wells at the project.

WeSignificant ~~are~~Lease/Royalty ~~subject~~Terms to complex government regulation which could adversely affect our operations. Our activities are subject to complex and stringent environmental and other governmental laws and regulations. The exploration and production of geothermal energy requires numerous permits, approvals and certificates from appropriate federal, state and local governmental agencies, including state and local agencies, whose regulations typically are more stringent than in other states or localities, as well as compliance with environmental protection legislation and other regulations. While we believe that we have obtained the requisite approvals and permits for our existing operations and that our business is operated in accordance with applicable laws, we remain subject to a varied and complex body of laws and regulations that both public officials and private individuals may seek to enforce. Existing laws and regulations could be changed or reinterpreted, or new laws and regulations may become applicable to us that could increase our costs associated with compliance or otherwise harm our business and results of operations. We may be unable to obtain all necessary licenses, permits, approvals and certificates for proposed projects. Intricate and changing environmental and other regulatory requirements may necessitate substantial expenditures to obtain and maintain permits. If a project is unable to function as planned due to changing requirements or local opposition, it may create expensive delays, extended periods of non-operation or significant loss of value in a project.

~~Under~~Approximately ~~certain~~521 ~~circumstances,~~acres ~~the~~of ~~United~~geothermal ~~States~~rights ~~Office~~at ofNeal Hot ~~Natural~~Springs ~~Resource~~are ~~Revenue~~owned ~~(“ONR”)~~by ~~may~~Cyprus ~~require~~Gold ~~that~~Exploration ~~our~~Corporation ~~operations~~(50%), onJR ~~federal~~Land and ~~leases~~Livestock be(25%), ~~suspended~~and orUSG ~~terminated~~Oregon LLC (25%). ~~These~~Royalty ~~circumstances~~for ~~include~~the ~~our~~two ~~failure~~private toleases is ~~pay~~paid ~~royalties~~on orthe ~~our~~gross ~~failure~~revenue tofrom ~~comply~~energy ~~with~~sales ~~safety~~paid ~~and~~by ~~environmental~~Idaho Power Company under ~~regulations~~the PPA. The ~~requirements~~JR ~~imposed~~Land by& ~~these~~Livestock ~~laws~~lease ~~and~~has ~~regulations~~a ~~are~~3% royalty for the first five ~~frequently~~years ~~changed~~of ~~and~~production, ~~subject~~increases to ~~new~~4% ~~interpretations~~for years 6-15, and ifthen ~~such~~to ~~were~~5% tofor the ~~occur,~~remainder ~~could~~of ~~negatively~~the ~~impact~~lease ~~our~~term. ~~results~~The ofCyprus ~~operations~~lease establishes a 2% royalty for the first ten years and ~~cash~~then ~~flows.~~escalates to 3% for the remainder of the lease.

~~Rules~~-61- adopted by the BLM, as directed by the Energy Policy Act of 2005, require competitive auction of all geothermal leases on Federal lands. Competitive leasing is significantly increasing the cost of obtaining leases on Federal land, is adding to the capital costs needed to develop geothermal projects, is increasing the total electrical power prices needed to make a geothermal project viable and is making it more difficult to acquire additional adjacent lands for reservoir protection and exploration.

IfSan ~~Federal lands or any Federal involvement are included in any geothermal development~~Emidio, ~~requirements~~Nevada of the National Environmental Policy Act ("NEPA") will be triggered. Most of the geothermal resources in the United States are located in the western states, where the Federal Government often is the largest landowner. If a NEPA action is triggered, such as an Environmental Impact Statement or Environmental Assessment, a project delay of one to two years and a cost of $1,000,000 to $2,000,000 or more may be incurred while the environmental permitting process is completed. NEPA not only can impact the property where the geothermal resource is located, but includes the siting and construction of transmission lines. Environmental legislation is evolving in a manner that means stricter standards, and enforcement, fines and penalties for non-compliance are more stringent. Environmental assessments of proposed projects carry a heightened degree of responsibility for companies and directors, officers and employees. The cost of compliance with changes in governmental regulations has a potential to reduce the profitability of operations.

~~-49-~~In 2008, the Company acquired a 3.6 megawatt operating geothermal power plant and all associated private and federal geothermal leases and certain ground water rights in the San Emidio Valley and at Gerlach, Nevada. The San Emidio project is located approximately 75 air miles north of Reno, Nevada. The Gerlach property is locate immediately northwest of Gerlach Nevada. The San Emidio assets include the geothermal power project, 17,846 (27.9 square miles) acres of geothermal leases, and ground water rights used for cooling water. The Gerlach assets include 2,986 acres (4.7 square miles) of BLM and private geothermal leases. The Gerlach leases are located along a geologic structure known to host geothermal features including the Great Boiling Spring and the Fly Ranch Geyser.

In ~~the states of Idaho~~2012, ~~Nevada~~USG ~~California,~~completed ~~and Oregon, drilling for geothermal resources is governed by specific rules. In Nevada drilling operations are governed by~~ the ~~Division~~San ofEmidio ~~Minerals~~Phase ~~(Nevada~~I ~~Administrative~~repower ~~Code Chapter 534A)~~project; ~~in Idaho by the Idaho Department of Water Resources (IDAPA 37~~ ~~Title~~a 039.0 ~~Chapter~~megawatt 04(net); inannual ~~California~~average byfacility ~~the~~located ~~Division~~on ofprivate ~~Oil,~~land ~~Gas,~~owned ~~and Geothermal Resources (Public Resources Code Title 14 Chapter 4); and in Oregon~~ by ~~the~~ ~~Division~~USG ~~of Oil, Gas and Mineral Industries (Division 20 Geothermal Regulation)~~Nevada. ~~These~~ ~~rules~~Phase ~~require~~I ~~drilling~~repowering ~~permits~~was ~~and~~completed ~~govern~~utilizing the ~~spacing~~existing ~~of wells, rates of~~ production~~, prevention of waste and other matters, and, may not allow or may~~ ~~restrict drilling activity, or may require that a geothermal resource be unitized (shared) with adjoining land owners. Such laws~~ and ~~regulations~~injection ~~may increase the costs of planning, designing, drilling, installing, operating and abandoning our geothermal~~ wells~~, the power plant and other facilities~~. State environmental requirements and permits, such as the Idaho Department of Environmental Quality, and Air Quality Permit to Construct, include public disclosure and comment. It is possible that a legal protest could be triggered through one of the permitting processes that would delay construction and increase cost for one of our projects. The state of Oregon has an Energy Facility Siting Council that must issue a site certificate for any geothermal energy facilities of 35 megawatts or higher.

~~Because~~Significant ofLease/Royalty ~~these~~Terms state and federal regulations, we could incur liability to governments or third parties for any unlawful discharge of pollutants into the air, soil or water, including responsibility for remediation costs. We could potentially discharge such materials into the environment:

~~from~~A ageothermal ~~well~~unit orwas ~~drilling~~established ~~equipment~~for the operating project by the Company in 2010 with the approval and oversight of the Bureau of Land Management. The Unit allows USG Nevada LLC to allocate expenses among the federal and private geothermal leases within the Unit and legally establishes the percentage of private and federal land that contributes to geothermal production known as the Participating Area. The Participating Area at aSan ~~drill~~Emidio totals ~~site;~~583.68 acres and includes 336.93 acres (57.7%) of private property and 246.75 acres (42.3%) of federally managed land.

~~leakage~~-62- ~~of fluids or airborne pollutants from gathering systems, pipelines, power plant and storage tanks;~~

~~damage~~The tolease ~~geothermal~~agreement ~~wells~~with ~~resulting~~the ~~from~~Kosmos ~~accidents~~Company ~~during~~establishes ~~normal~~a 1.75% ~~operations;~~royalty on gross electricity sales for the first 120 months of production and 3.5% royalty thereafter. The federal leases have a 10% netback royalty. The netback calculation is based on gross electricity sales less the transmission and generation cost deductions. In 2014 the equivalent federal royalty is 1.6% of gross electricity sales.

~~blowouts~~Raft River, ~~cratering~~Idaho ~~and explosions.~~

~~Because~~The ~~the~~Raft ~~requirements~~River ~~imposed~~project bycomprises ~~such~~two ~~laws~~packages ~~and~~of ~~regulations~~property that ~~are~~include ~~frequently~~the ~~changed,~~Raft weRiver ~~cannot~~Energy ~~assure~~I ~~you~~LLC ~~that~~(“RREI”) ~~laws~~leases, and ~~regulations~~leases ~~enacted in~~held by the Company. ~~future,~~RREI ~~including~~operates ~~changes~~the toUnit ~~existing~~I ~~laws~~facility ~~and~~at ~~regulations~~Raft orRiver ~~bonding~~which became ~~requirements,~~commercially ~~will~~operational ~~not~~on ~~adversely~~January ~~affect~~3, ~~our~~2008. ~~business~~Leases byassigned ~~increasing~~to ~~cost~~RREI ~~and~~by the ~~time~~Company ~~required~~included toeight ~~explore~~private ~~and develop~~ geothermal ~~projects. In addition~~leases, ~~because some~~one of ~~our~~which ~~project~~is ~~properties~~owned ~~were~~by ~~previously~~the Company. ~~operated~~The byCompany ~~others,~~retains wedirect ~~may~~control ~~be liable~~over ~~for~~four ~~environmental~~private ~~damage~~leases ~~caused~~and byone federal ~~such~~lease ~~former~~outside ~~operators.~~the RREI position.

~~Changes~~All ~~in the legal and regulatory environment affecting our projects could significantly harm our business financial position and results~~ of operations. Our operations are subject to extensive regulation and, therefore, changes in applicable laws or regulations, or interpretations of those laws and regulations, could result in increased compliance costs, the ~~need~~leases ~~for additional capital expenditures or the reduction of certain benefits currently available to our projects. The structure of federal and state energy regulation currently is, and~~ may ~~continue to~~ be~~, subject~~ toextended ~~challenges,~~indefinitely ~~modifications,~~as ~~the~~long ~~imposition of additional regulatory~~as ~~requirements,~~production ~~and~~is ~~restructuring~~maintained ~~proposals.~~from ~~We may not be able to obtain all regulatory approvals that may be required in~~ the ~~future,~~lease oreither ~~any~~individually ~~necessary modifications to existing regulatory approvals,~~ or ~~maintain~~as ~~all~~a ~~required~~geothermal ~~regulatory approvals~~unit. InThe ~~addition,~~Company ~~the cost of operation~~ and ~~maintenance~~RREI ~~and~~hold ~~the operating~~a ~~performance~~total of ~~geothermal~~4830 ~~power~~acres; ~~plants~~720 ~~may~~acres beof ~~adversely~~federal ~~affected~~geothermal byrights ~~changes in certain laws~~ and ~~regulations~~4,316 ~~including~~acres ~~tax~~of ~~laws.~~private leases.

-5063-

~~The~~Significant ~~reduction~~Lease/Royalty orTerms elimination of government incentives could adversely affect our business, financial condition, future results and cash flows. Construction and operation of our geothermal power plants have benefited, and may benefit in the future, from public policies and government incentives that support renewable energy and enhance the economic feasibility of these projects. The most important tax rule that affects our business is the Production Tax Credit (“PTC”) or Investment Tax Credit (“ITC”), which is available to encourage the development of new geothermal plants. Legislation enacted as part of the 2016 “Fiscal Cliff” efforts resulted in the extension of the 30% PTC or ITC with eligibility for projects that started construction before December 31, 2016. There is not a cash grant component to the ITC credit so there is a risk related to monetizing the credit. The loss of the PTC or ITC is a risk that could result in making the development of new projects uneconomic. Additionally, current IRS guidance states that projects that are placed into service by December 31, 2018 do not have to show continuous construction. Projects placed into service after that date could have some or all of their tax credit eligibility challenged. Additional policies and incentives include accelerated depreciation tax benefits, renewable portfolio standards, carbon trading mechanisms, and rebates. Some of these measures have been implemented at the federal level, while others have been implemented by different states. The availability and continuation of these public policies and government incentives have a significant effect on the economics and viability of our development. Any changes to such public policies, or any reduction in or elimination of such Government incentives could affect us negatively.

~~Risks~~The ~~Related~~private leases have 10 year primary terms with the rights of unitization and extensions. Private leases have varying royalty rates commensurate with other federal and private leases held by the Company and our subsidiaries. Most of the private leases are subject to ~~Ownership~~a 10% netback royalty which is based on gross electricity sales less the transmission and generation cost deductions. In 2014, USG’s equivalent federal netback royalty was equivalent to 1.6% of ~~Our~~gross ~~Common~~electricity ~~Stock~~sales where it was applied.

The ~~public~~federal ~~market~~lease, ~~for~~established ~~our~~on ~~common~~August ~~stock~~1, 2007, is ~~not~~held ~~that liquid~~by ~~which~~the ~~could~~Company ~~result~~and inhas ~~purchasers~~a ~~being~~primary ~~unable~~term toof ~~liquidate~~10 ~~their investment~~years. After the primary term, The Company ~~market~~has ~~price~~the ~~for~~right ~~shares~~to ofextend ~~our~~the ~~common~~contract ~~stock~~in ~~may~~accordance bewith ~~highly~~regulation ~~volatile~~43 ~~and~~CFR ~~could~~subpart be3207. ~~subject~~The toroyalty ~~wide~~under ~~fluctuations.~~the ~~Some~~lease is 1.75% of gross proceeds for the first ~~factors~~10 ~~that~~years ~~could~~of production and 3.5% thereafter. At Raft River, royalty rates ~~negatively~~have ~~affect~~not ~~our~~exceeded ~~share~~rental ~~price~~payments. ~~include:~~

~~actual~~A orprivate ~~anticipated~~geothermal ~~variations~~unit was established for the operating project in ~~our~~December ~~reserve~~2015. ~~estimates~~The ~~and~~Unit ~~quarterly~~establishes the geologic production area. A ~~operating~~Participating ~~results;~~Area of 1640 was established in May 2015. The Participating Area is that area that is reasonably expected to contribute to power production. Production is allocated based on the percentage of each property in relation to the entire Participating Area.

~~changes~~-64- ~~in electricity prices;~~

~~changes~~El inCeibillo, ~~our~~Republic ~~funds~~of ~~from~~Guatemala ~~operations or earnings estimates;~~

~~publication~~The Company successfully acquired a geothermal energy rights concession in the Republic of ~~research~~Guatemala, ~~reports~~which ~~about~~was usgranted orby the ~~exploration~~Guatemalan government. It consists of 24,710 acres (100 square kilometers) and ~~production~~is located ~~industry;~~14 miles southwest of Guatemala City, the capital. The concession provides sub-surface geothermal rights only, and does not provide access to the surface that is owned by private landowners. The concession had an initial five year term for the development and construction of a power plant, which was extended by three years in 2015. There are no royalties due to the government for use of the geothermal resource.

~~increases~~The inprimary ~~market~~area of interest ~~rates~~within ~~which~~the ~~may~~concession ~~increase~~is ~~our~~the ~~cost~~El Ceibillo project, located near the town of ~~capital;~~Amatitlan, in a developed industrial zone immediately adjacent to the highway that connects Guatemala City to the Port of San Jose on the Pacific coast. An office and staff are located in Guatemala City, and 80 acres of surface land within the concession area is under lease.

~~changes~~-65- ~~in applicable laws or regulations, court rulings and enforcement and legal actions;~~

~~changes~~Crescent inValley ~~market~~and ~~valuations~~Lee ofHot ~~similar~~Springs, ~~companies;~~Nevada

~~adverse~~On ~~market~~December ~~reaction~~16, to2014, ~~any~~U.S. ~~increased~~Geothermal ~~indebtedness~~completed wethe ~~incur~~acquisition of inEPR ~~the~~and EPR’s lease holdings at Crescent Valley and Lee Hot Springs, ~~future;~~ Nevada.

~~additions~~The orCrescent ~~departures~~Valley property encompasses 21,319 acres of private ~~key~~and ~~management~~federal ~~personnel;~~geothermal resources leased by EPR and 2,640 acres of geothermal resources leased by U.S. Geothermal Inc. Upon closing the acquisition the Company our first well. The well is located on private surface and mineral estate in section 3, Township 28 North Range 49 East and is intended to qualify potential future power plant construction for the 30% renewable energy investment tax credit. The Crescent Valley property includes 55 independent leases ranging in size from 10 acres to 4,100 acres and an average parcel size of 314 acres. EPR’s private leases have a 15 year term with annual rent that escalates at year five and at year 10.

~~actions~~Significant byLease/Royalty ~~our~~Terms ~~stockholders;~~

~~speculation~~Annual inlease rental payment obligations at Crescent Valley are approximately $109,138 and royalty obligations during potential future power production vary for private leases from 3% to 5% of gross sales. Royalty rates for federal geothermal leases are 1.75% of gross revenue for the ~~press~~first or10 ~~investment~~years and ~~community;~~3.5% thereafter.

The Lee Hot Springs property encompasses 2,560 acres of federal lands located approximately 17 miles south of Fallon, NV. The federal leases are N-5173679 and N-73930. The annual rental is $2,560 and a standard federal royalty is 1.75% of gross revenue for the first 10 years and 3.5% thereafter.

~~large~~-66- ~~volume of sellers of our common stock pursuant to our resale registration statement with a relatively small volume of purchasers; and~~

~~general~~WGP ~~market~~Geysers, ~~and~~California ~~economic conditions.~~

~~The~~Western ~~market~~GeoPower ~~price~~Inc. of(“WGP”) ~~our~~is ~~common~~a ~~stock~~wholly ~~could~~owned besubsidiary ~~volatile,~~of ~~which~~U.S. ~~could~~Geothermal ~~cause the value of your investment to decline~~Inc. ~~Securities markets~~WGP’s ~~worldwide~~property ~~experience~~includes ~~significant~~surface ~~price~~ and ~~volume~~geothermal ~~fluctuations.~~rights ~~This~~that ~~market~~consist ~~volatility,~~of asfederal ~~well~~geothermal aslease ~~general~~CA-51000 ~~economic,~~and ~~market~~one orprivate ~~political~~geothermal ~~conditions,~~lease ~~could~~with ~~reduce~~no ~~the~~expiration. ~~market~~The ~~price~~total ofproject ~~our~~acreage ~~common~~is ~~stock~~2,267 ~~in spite of our operating performance~~acres. InThe ~~addition,~~site ~~our~~has ~~operating results could fall short of the~~been ~~expectations~~re-permitted ofwith ~~market~~Sonoma ~~analysts~~County ~~and~~for ~~investors,~~construction and inoperation ~~response, the market price~~ of ~~our~~up ~~common~~to ~~stock~~a ~~could decrease significantly~~38. ~~You may be unable to resell~~5 ~~your~~megawatt ~~shares~~geothermal ofpower ~~our common stock at or above the initial offering price~~plant.

The ~~market~~project ~~for~~is ~~our~~located ~~common~~at ~~stock~~the issite ~~volatile.~~of ~~The~~the ~~trading~~former ~~price~~Pacific Gas ofand ~~our~~Electric ~~common~~(PG&E) ~~stock~~Unit on15 ~~the~~project, ~~NYSE~~which ~~MKT~~once ~~LLC~~had ~~(“NYSE~~a ~~MKT”~~62 megawatt (gross) capacity ispower ~~subject~~plant. toDuring ~~fluctuations~~10 years of operation, the PG&E plant declined in ~~response~~production to, ~~among~~approximately ~~other~~38 ~~things,~~megawatts ~~quarterly~~before ~~variations~~it was shut down in ~~operating~~l989 and ~~financial~~all ~~results,~~of ~~and~~the ~~general~~wells ~~economic~~were plugged and ~~market conditions~~abandoned. InThe ~~addition,~~project is located within the ~~statements~~broader orGeysers ~~changes~~geothermal infield ~~opinions,~~which ~~ratings,~~covers ora ~~earnings~~total ~~estimates~~of ~~made~~approximately by20,000 ~~brokerage~~acres ~~firms~~in orthe ~~industry~~Mayacamas ~~analysts~~Mountains ~~relating~~in toSonoma ~~our~~County ~~market~~and orLake ~~relating~~County, ~~to our~~California, ~~company~~approximately ~~could~~75 ~~result~~miles innorth anof ~~immediate~~San ~~and~~Francisco. ~~adverse~~The ~~effect~~Geysers ongeothermal resource is the ~~market~~largest ~~price~~producing ~~of our~~geothermal ~~common~~field ~~stock.~~in ~~The~~the ~~highly~~world, ~~volatile~~and ~~nature~~has ofbeen ~~our~~generating greater ~~stock~~than ~~price~~850 ~~may~~megawatts ~~cause investment~~of ~~losses~~power for ~~our~~more ~~shareholders~~than 30 years.

~~You~~Significant ~~may~~Lease/Royalty ~~experience~~Terms dilution of your ownership interests due to the future issuance of additional shares of our common stock. We may in the future issue our previously authorized and unissued securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue 250,000,000 shares of common stock. The potential issuance of such additional shares of common stock may create downward pressure on the trading price of our common stock. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with the hiring of personnel, future acquisitions, future private placements of our securities for capital raising purposes, or for other business purposes.

~~Failure~~There tois ~~comply~~no ~~with~~annual ~~regulatory~~rental ~~requirements~~or ~~may adversely~~royalty ~~affect~~for ~~our~~the ~~stock~~421 ~~price~~acre ~~and business. As a public~~private ~~company,~~parcel weowned ~~are~~by ~~subject to numerous governmental and stock exchange requirements, with which we believe we are in compliance~~WGP. The ~~Sarbanes-Oxley~~Abril ~~Act of~~Ranch ~~2002~~mineral ~~(“SOX”)~~lease ~~and~~payment ~~the~~for ~~SEC~~an ~~have~~additional ~~requirements that we may fail to meet by the~~410 ~~required~~acres ~~deadlines or we may fall out~~ of ~~compliance~~geothermal ~~with,~~rights ~~such~~is ~~as the internal controls assessment~~$10,500 ~~reporting and auditor attestation, as applicable, which are required under Section 404 of SOX~~annually. The ~~Company~~Filly-Brown ~~has documented and tested its~~properties ~~internal~~include ~~control~~214 ~~procedures~~acres ~~in order to satisfy the requirements~~ of ~~Section~~surface ~~404 of~~access ~~SOX.~~rights ~~SOX~~and ~~requires~~50% ~~an annual assessment by management~~ of the ~~effectiveness~~mineral ~~of the~~rights ~~Company’s~~owned ~~internal control over financial reporting, as well as an attestation report~~ by ~~the~~Western ~~Company’s independent auditors on internal controls over financial reporting~~GeoPower. IfDuring ~~we fail to achieve and maintain the adequacy of our internal controls~~production, ~~as such standards are modified, supplemented or amended from~~ ~~time~~the togeothermal ~~time,~~royalty wepayment may not be able to ensure that we can conclude on an ongoing basis that we have effective internal controls over financial reporting in accordance with Section 404 of SOX. Moreover, effective internal controls are necessary for usAbril toRanch ~~produce~~is ~~reliable financial reports and are important to help prevent financial fraud~~4.25% Ifof wegross ~~cannot~~revenue ~~provide~~at ~~reliable financial reports or~~a ~~prevent~~power ~~fraud, our business and operating results could be harmed, investors could lose confidence in our reported financial information, and the trading~~ price of ~~our~~$100/MW ~~stock~~or ~~could~~less ~~drop significantly. Our failure to meet regulatory requirements~~ and ~~exchange~~is ~~listing standards~~consistent ~~may~~with ~~result~~market ~~in actions such as the delisting of our stock impacting our stock’s liquidity; SEC enforcement actions; and securities claims and litigation~~conditions.

-5267-

WeVale ~~do not anticipate paying any dividends on our common stock in the foreseeable future. We do not expect to declare or pay any cash or other dividends in the foreseeable future on our common stock~~Butte, asOregon we intend to use cash flow generated by operations to expand our business. We may enter into other borrowing arrangements in the future that restrict our ability to declare or pay cash dividends on our common stock.

AVale ~~substantial~~Butte ~~percentage~~and ofthe ~~our~~Vale ~~shares~~Butte ~~are~~Geothermal ~~held~~Resource byArea ais ~~small~~located ~~group~~in ofEastern ~~stockholders~~Oregon ~~whose~~and ~~interests~~borders ~~may~~the ~~conflict~~east ~~with~~side of the ~~interests~~City of ~~our~~ ~~other stockholders~~Vale. AsIn ~~of December 31, 2016, our largest three~~the ~~shareholders~~first ~~consisted~~quarter of ~~JCP Investment Management~~2014, ~~LLC~~U.S. ~~beneficially~~Geothermal ~~owning 2,855,005 shares (15~~Inc.~~1%),~~ ~~Bradley~~acquired ~~Louis~~393 ~~Radoff~~acres ~~beneficially~~of ~~owning 1,825,000~~geothermal ~~shares~~energy ~~(9.6%),~~ and ~~Private~~surface ~~Management~~rights ~~Group,~~under ~~Inc.~~six ~~beneficially owning 1,591,847 shares~~ (~~8.4%~~6), ~~collectively~~leases. ~~totaling~~The ~~approximately~~leased ~~33.1%~~area ofis ~~our outstanding~~immediately ~~common~~adjacent ~~stock.~~to Asthe aCity ~~result~~ of ~~these~~Vale ~~stockholders’~~and ~~beneficial~~includes ~~ownership~~private ofsurface ~~our outstanding~~and ~~common~~mineral ~~stock~~estate, ~~they could exert significant influence on the election~~ ofVale ~~our~~City ~~directors~~owned resources and ~~decisions~~Malheur onCounty ~~matters~~owned ~~submitted~~resources. toThe aVale ~~vote~~Butte resource ofarea ~~our shareholders,~~has ~~including~~been ~~mergers,~~used ~~consolidations~~for ~~and~~direct ~~the~~use ~~sale~~heating offor ~~all~~many oryears. Geochemical ~~substantially~~analysis ~~all~~indicates ofa ~~our~~potential ~~assets.~~reservoir ~~This~~temperature ~~concentration~~ of ~~ownership~~311ºF ofto ~~our~~320ºF ~~shares~~and ~~could~~historical ~~delay~~drilling orin ~~prevent~~the ~~proxy~~area ~~contests,~~has ~~mergers,~~encountered ~~tender~~ground ~~offers,~~(rock) ortemperatures ~~other~~in ~~purchases~~excess of ~~our~~300°F. ~~shares~~Fault ~~that~~structures ~~might~~and ~~otherwise~~hydrologic ~~give~~characteristics ~~our~~have ~~stockholders the~~been ~~opportunity~~identified tothat ~~realize~~are asimilar ~~premium~~to ~~over~~ the ~~then-prevailing~~Neal ~~market~~Hot ~~price~~Springs ~~for~~site, ~~our shares.~~and ~~This~~those ~~concentration of ownership may also adversely affect our stock~~geologic ~~price.~~structures ~~Future~~are ~~sales~~contained ofwithin ~~common~~the ~~stock~~acquired ~~by these stockholders could cause our stock price to decline~~leases.

~~Future~~-68- sales of common stock by some of our insider stockholders could cause our stock price to decline. As of the date of this report, our directors and officers collectively held 4,614,133 shares of and options for our common stock, representing approximately 24.3% of issued and outstanding common stock. Sales of such shares in the public market, as well as shares we may issue upon exercise of outstanding options, could cause the market price of our common stock to decline.

IfSignificant ~~securities~~Lease/Royalty orTerms industry equity analysts do not publish research or reports about our business, our stock price and trading volume could be adversely affected. To the extent one develops, the trading market for our common stock will depend in part on the research and reports that securities or industry equity analysts publish about us or our business. Our common stock is not currently and may never be covered by securities and industry equity analysts. If no securities or industry equity analysts commence coverage of our company, the trading price of our stock would be negatively impacted. In the event we obtain securities or industry equity analyst coverage of our common stock, if one or more of the equity analysts who covers us downgrades our stock, our stock price would likely decline. If one or more of these equity analysts ceases coverage of our company or fails to regularly publish reports on us, interest in the purchase of our stock could decrease, which could cause our stock price or trading volume to decline.

~~Provisions~~Four ~~under~~private ~~Delaware~~leases ~~law,~~and ~~our~~the ~~certificate~~Vale ~~of incorporation~~City ~~and~~lease ~~bylaws~~are ~~could~~issued ~~delay~~for ~~or prevent~~ a period ~~change in control~~ of ~~our company,~~10 ~~which~~years ~~could~~with ~~adversely~~renewal ~~affect~~options while the ~~price~~Malheur ofCounty ~~our~~lease ~~common~~was issued ~~stock.~~for ~~The~~a ~~existence~~period of ~~some~~40 ~~provisions under~~years ~~Delaware~~with ~~law,~~renewal ~~our~~options. ~~certificate~~The oflease ~~incorporation~~agreements ~~and bylaws could delay or~~are ~~prevent~~consistent ~~a change~~ in ~~control~~terms of ~~the~~financial ~~Company, which could adversely affect the price of our common stock. Delaware law imposes restrictions on mergers~~ and ~~other~~ ~~business~~development ~~combinations~~requirements ~~between us~~ and ~~any~~have ~~holder~~a ~~of 15~~2% ~~or more of our~~ ~~outstanding~~royalty ~~common~~payment ~~stock.~~on ~~Our~~actual ~~certificate~~energy ofpaid ~~incorporation~~for ~~and bylaws prohibit our stockholders from taking action~~ by ~~written~~Idaho ~~consent~~Power ~~absent~~for ~~approval~~the byfirst ~~all~~10 ofyears ~~our Board~~ of ~~Directors.~~commercial ~~Further, our stockholders will not have the power to call a special meeting of stockholders~~production.

~~-53-~~Boise Administration Office, Idaho

~~The~~On ~~sale~~August of12, ~~our~~2013, ~~common stock under our ATM to Lincoln Park Capital (“LPC”) may cause dilution and~~ the ~~sale~~Company ofsigned ~~the~~a ~~shares~~five ofyear ~~common~~lease ~~stock~~agreement ~~acquired by LPC could cause the price of our common stock to decline. The ATM allows~~ for ~~the~~office ~~sale~~space ~~of up to $10,000,000 in shares of our common stock that we may issue~~ and ~~sell~~janitorial ~~to LPC pursuant to the terms of the Purchase Agreement, less any shares already sold under the Purchase Agreement~~services. The ~~number of~~lease ~~shares~~payments ~~ultimately~~are ~~offered for sale by LPC is dependent upon the number of~~due ~~shares~~in ~~purchased~~monthly byinstallments ~~LPC~~starting ~~under~~February ~~the~~1, ~~Purchase Agreement~~2014. The ~~purchase~~monthly ~~price~~payments ~~for the~~that ~~common~~begin ~~stock~~February to1, be2014 ~~sold~~have totwo ~~LPC~~components ~~pursuant~~which toinclude ~~the~~a ~~Purchase~~base ~~Agreement~~rate ~~will~~of ~~fluctuate~~$3,234 ~~based~~that ~~on the price of our common stock. It~~ is ~~anticipated~~not ~~that~~subject ~~shares will be sold over a period of up~~ to 30increase ~~months~~and ~~from the date of the initial purchase under the Purchase Agreement. Depending upon market liquidity at the time,~~ a ~~sale~~ ofrate ~~shares~~beginning ~~under the offering~~ at ~~any given time could cause the trading price of our common stock to decline. We can elect to direct purchases in our sole discretion. After LPC has acquired such shares~~$6,418 itthat ~~may~~is ~~sell all, some or~~adjusted ~~none~~annually ofaccording ~~such shares. Therefore, sales~~ to ~~LPC by us under~~ the ~~Purchase~~cost ~~Agreement may result in substantial dilution~~ of ~~the~~living ~~percentage ownership of other holders of our common stock~~index. The ~~sale~~contract ofincludes a ~~substantial number of shares of our common~~five ~~stock~~year ~~under~~extension the offering, or anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect salesoption. ~~However, we have the right to control the timing and amount of any sales of our shares to LPC and the Purchase Agreement may be terminated by us at any time at our discretion without any cost to us.~~

~~Item~~Land ~~1B.~~and ~~Unresolved~~Leases ~~Staff Comments~~

~~None~~The Company and its domestic subsidiaries control 65,434 acres of land in California, Idaho, Nevada, and Oregon. U.S. Geothermal owns approximately 2,536 acres of surface rights and 2,539 acres of geothermal rights while approximately 64,064 acres are controlled through geothermal development leases signed with the BLM, local governmental entities and private owners. The company’s average per acre lease rate is $9.00 per acre/year.

~~-54-~~BLM Leases

~~Item~~The 2Company and its subsidiaries have 27 federal geothermal leases issued in accordance with the Geothermal Steam Act by the BLM. ~~Property~~

~~The~~BLM ~~Company~~geothermal ~~has~~leases ~~interests~~grant inthe ~~nine~~lessee ~~different~~the right to drill for, extract, produce, remove, utilize, sell, and dispose of geothermal ~~resource~~resources ~~areas~~from inthe leased lands, along with the ~~Western~~right ~~United~~to ~~States~~build and ~~one~~maintain ~~area~~necessary improvements inon ~~Guatemala,~~the ~~Central~~leased ~~America~~land. Ownership of the geothermal resources and other ~~The~~minerals ~~resource~~beneath ~~areas~~the land is retained in the ~~United~~federal ~~States~~mineral ~~are~~estate. ~~located~~The geothermal inlease ~~Idaho~~grants ~~(1),~~exclusive ~~Oregon~~geothermal ~~(2)~~development rights. The BLM will, ~~and~~through ~~Nevada~~authority ~~(5)~~granted by federal regulations and ~~California~~planning ~~(1).~~requirements, ensure ~~The~~that ~~properties~~other ~~include~~federal ~~the~~activities ~~Raft~~do ~~River~~not ~~area~~unreasonably interfere with the ~~located~~geothermal inlessee’s ~~southeastern~~uses ~~Idaho,~~of the ~~two~~same ~~properties~~land. ~~located~~Most infederal ~~southeastern~~leases include ~~Oregon,~~stipulations and ~~five~~are ~~properties~~governed inby ~~northwestern~~federal ~~Nevada~~regulations, ~~the~~that ~~WGP~~require ~~Geysers~~geothermal development ~~area~~to ~~located~~ be conducted in ~~northern~~a ~~California~~workmanlike atmanner and in accordance with all applicable laws and BLM directives and to take all actions required by the ~~Geysers,~~BLM to protect the surface of and the Elenvironment ~~Ceibillo~~surrounding ~~area~~the ~~located~~land. inSurface ~~central~~protections ~~Guatemala~~and ~~(near~~environmental ~~Guatemala~~protection ~~City)~~requirements include protection of water quality, cultural and archeological resources, threatened or endangered plants or animals, migratory birds, wildlife, and visual quality standards.

The ~~Company~~BLM ~~operates~~also ~~three~~authorizes ~~commercial~~geothermal ~~power~~lessees ~~plants~~to ~~located~~enter ~~in the~~into ~~Western United States. The Raft River Unit I, Idaho plant became~~unit ~~commercially~~agreements ~~operational~~ on ~~January~~federal 3,lands ~~2008.~~to ~~The~~cooperatively ~~Neal~~develop ~~Hot~~a ~~Springs,~~geothermal ~~Oregon plant achieved commercial operation on November 16, 2012~~resource. The ~~San Emidio, Nevada plant~~ ~~was~~BLM ~~acquired~~reserves inthe ~~May~~right ~~2008.~~to ~~The~~specify ~~acquired~~rates ~~facility~~of ~~was~~development ~~replaced~~and ~~with~~to arequire ~~new power~~the ~~plant,~~geothermal ~~located~~lessee onto ~~private~~commit ~~land~~to ~~that~~a ~~became~~unitization ~~commercially operational in May 2012~~agreement.

Typical BLM leases have a primary term of ten years and may be renewed as long as geothermal resources are being explored. If resources are produced or utilized in commercial quantities, the lease can be renewed for up to forty years. If at the end of the forty-55year period geothermal steam is still being produced or utilized in commercial quantities and the lands are not needed for other purposes, the geothermal lessee will have a preferential right to renew the lease for a second forty-year term, under terms and conditions as the BLM deems appropriate. During the lease term the lessee is required to pay an annual per acre rental fee. The fee escalates according to a schedule until geothermal production begins. After production has commenced, the geothermal lessee is required to pay royalties on the amount or value of energy production, and any by-products that may be derived from geothermal production.

-5669-

~~Neal~~BLM ~~Hot~~leases ~~Springs~~issued after August 8, ~~OregonNeal~~2005 ~~Hot~~(The ~~Springs~~Energy isPolicy aAct of 2005) also have a primary term of ten years. If the geothermal ~~resource~~lessee ~~located~~does not inreach ~~Eastern~~commercial ~~Oregon~~production within the primary term, the BLM may grant two five-year extensions. ~~The~~If ~~Company~~the ~~acquired~~lessee is drilling a well for the ~~Neal~~purposes ~~Hot~~of ~~Springs~~commercial ~~geothermal~~production, ~~energy~~the lease may be extended for five years and ~~surface~~thereafter as ~~rights~~long as steam is being produced and used in ~~September~~commercial ~~2006.~~quantities Athe 22lease ~~megawatt~~may ~~(net)~~be ~~annual~~extended ~~average~~for ~~geothermal~~up ~~power~~to ~~plant~~thirty-five ~~was~~years. ~~developed~~If, byat ~~USG~~the ~~Oregon~~end of the extended ~~LLC~~thirty-five year term, ~~and~~geothermal steam is ~~currently~~still being produced or utilized in commercial ~~operation~~quantities atand ~~this~~the ~~site.~~lands ~~The~~are ~~project~~not ~~has~~needed ~~four~~for ~~production~~other purposes, the ~~wells~~geothermal ~~and~~lessee ~~nine~~will ~~injection~~have ~~wells~~a atpreferential right to renew the ~~project~~lease under terms and conditions as the BLM deems appropriate.

~~Significant~~BLM ~~Lease/Royalty~~leases ~~Terms~~are ~~Approximately~~issued ~~521 acres~~either ofcompetitively ~~geothermal~~or non-competitively. ~~rights~~Under atthe ~~Neal~~Energy ~~Hot~~Policy ~~Springs~~Act ~~are~~of ~~owned~~2005 byLessees ~~Cyprus~~who ~~Gold~~obtain leases ~~Exploration~~issued ~~Corporation~~through ~~(50%),~~a JRnon-competitive ~~Land~~process ~~and~~pay ~~Livestock~~an ~~(25%),~~annual ~~and~~rental ~~USG~~fee ~~Oregon~~equal ~~LLC (25%)~~to $1.00 per ~~Royalty~~acre for the ~~two~~first ~~private~~ten ~~leases~~years isand ~~paid~~$5.00 onper ~~the~~acre ~~gross~~each ~~revenue~~year ~~from~~thereafter. ~~energy~~Lessees ~~sales~~who ~~paid~~obtain bya ~~Idaho~~lease ~~Power~~through ~~Company~~a ~~under~~competitive ~~the~~bid ~~PPA.~~process ~~The~~pay JRa ~~Land~~rental &of ~~Livestock~~$2.00 ~~lease~~per ~~has~~acre afor the first year, $3%.00 ~~royalty~~per acre for the ~~first~~second ~~five~~through ~~years~~tenth year ofand ~~production~~$5.00 per acre each year thereafter. For BLM leases issued, effective, ~~increases~~or topending 4%on ~~for~~August ~~years~~8, ~~6-15~~2005, ~~and~~royalty ~~then~~rates toare 5%fixed ~~for~~between ~~the~~1.0 ~~remainder~~-2.5% of the ~~lease~~ ~~term.~~gross ~~The~~proceeds ~~Cyprus~~from ~~lease~~the ~~establishes~~sale aof 2%electricity ~~royalty~~during ~~for~~ the first ten years ~~and then~~of ~~escalates~~production tounder ~~3% for~~ the ~~remainder of the~~ lease.

~~-57-~~The royalty rate set by the BLM for geothermal resources produced for the commercial generation of electricity but not sold in an arm’s length transaction is 1.75% for the first ten years of production and 3.5% thereafter. The royalty rate for geothermal resources sold by the geothermal lessee or an affiliate in an arm’s length transaction is 10.0% of the gross proceeds from the arm’s length sale.

~~San~~Private ~~Emidio,~~Geothermal ~~Nevada~~Leases In 2008, the Company acquired a 3.6 megawatt operating geothermal power plant and all associated private and federal geothermal leases and certain ground water rights in the San Emidio Valley and at Gerlach, Nevada. The San Emidio project is located approximately 75 air miles north of Reno, Nevada. The Gerlach property is locate immediately northwest of Gerlach Nevada. The San Emidio assets include the geothermal power project, 17,846 (27.9 square miles) acres of geothermal leases, and ground water rights used for cooling water. The Gerlach assets include 2,986 acres (4.7 square miles) of BLM and private geothermal leases. The Gerlach leases are located along a geologic structure known to host geothermal features including the Great Boiling Spring and the Fly Ranch Geyser.

InU.S. ~~2012,~~Geothermal ~~USG~~and ~~completed~~its ~~the~~subsidiaries ~~San~~hold ~~Emidio~~geothermal ~~Phase~~rights through Ileases ~~repower~~with ~~project; a~~73 9individuals and companies.0 ~~megawatt~~The ~~(net)~~leases ~~annual~~authorize geothermal ~~average~~development ~~facility~~and ~~located~~operations on ~~private~~privately ~~land~~ owned ~~by USG~~geothermal ~~Nevada~~estates. ~~Phase~~In some Icases, ~~repowering~~the ~~was~~surface ~~completed~~ownership ~~utilizing~~is ~~the~~split ~~existing~~from ~~production and~~the ~~injection~~mineral ~~wells~~or geothermal ownership.

~~Significant~~Geothermal ~~Lease/Royalty~~leases ~~Terms~~grant Athe ~~geothermal~~exclusive ~~unit was~~right ~~established~~and privilege to drill for, ~~the~~produce, ~~operating~~extract, ~~project~~take byand ~~the~~remove ~~Company~~water, inbrine, ~~2010~~steam, ~~with~~steam ~~the~~power, ~~approval~~minerals (other than oil), salts, chemicals, gases (other than gases associated with oil), and ~~oversight~~other ofproducts ~~the~~produced ~~Bureau~~or ofextracted ~~Land~~through ~~Management~~geothermal development. The ~~Unit~~Company ~~allows~~and ~~USG Nevada~~its ~~LLC~~project tosubsidiaries ~~allocate~~are ~~expenses~~also ~~among~~granted non-exclusive rights pertaining to the ~~federal~~construction and ~~private~~operation ~~geothermal~~of ~~leases~~plants, ~~within~~structures, and facilities on the ~~Unit~~leased ~~and~~land. ~~legally~~The ~~establishes~~leases also grant the ~~percentage~~right to dispose of ~~private~~waste brine and ~~federal land~~other ~~that~~waste ~~contributes~~products toas ~~geothermal~~well ~~production known~~ as the ~~Participating~~right ~~Area.~~to ~~The~~re-inject ~~Participating~~into ~~Area~~the atleased ~~San~~land ~~Emidio~~water, ~~totals~~brine, ~~583.68~~steam, ~~acres~~ and ~~includes~~gases ~~336.93~~in ~~acres~~a ~~(57.7%)~~well or wells for the purpose of ~~private~~maintaining ~~property~~or ~~and~~restoring ~~246.75~~pressure in the productive ~~acres~~zones ~~(42.3%)~~beneath ofthe ~~federally~~leased ~~managed~~land or other land in the vicinity.

-5870-

~~The~~Lessors ~~lease~~reserve ~~agreement~~the ~~with~~right ~~the~~to ~~Kosmos~~conduct ~~Company~~other ~~establishes~~activities aon ~~1.75%~~the ~~royalty~~ leased onland ~~gross~~in ~~electricity~~a ~~sales~~manner ~~for~~that ~~the~~does ~~first~~not ~~120~~unreasonably ~~months~~interfere ofwith ~~production~~the ~~and~~geothermal ~~3.5%~~ lessee’s ~~royalty~~uses ~~thereafter~~of the same land. ~~The~~Activities ~~federal~~include ~~leases~~agricultural ~~have~~use a(farming ~~10%~~or grazing), ~~netback~~recreational ~~royalty~~use and other energy developments. ~~The netback~~Geothermal ~~calculation~~leases isare typically ~~based~~issued onfor ~~gross~~a ~~electricity~~primary ~~sales~~term ~~less~~of ~~the~~10 ~~transmission~~ years and ~~generation~~continue ~~cost~~for ~~deductions.~~as Inlong ~~2014~~as leased ~~the~~products ~~equivalent~~are ~~federal~~being ~~royalty~~produced or the lessee is ~~1.6%~~drilling, exploring, ofextracting, ~~gross~~processing, ~~electricity~~or ~~sales~~reworking operations on the leased land.

~~Raft~~Lease ~~River,~~payments ~~Idaho~~typically ~~The~~include ~~Raft~~annual ~~River~~rental that is based on ~~project~~a ~~comprises~~rate ~~two~~per ~~packages~~acre under lease and royalty payments on gross revenue from the generation of ~~property~~electricity. ~~that~~Leases also include ~~the~~a ~~Raft~~provision ~~River~~for ~~Energy~~royalty Ipayment ~~LLC~~on ~~(“RREI”)~~all ~~leases~~revenue from geothermal by-products. Leases typically have requirements for drilling, ~~and~~extraction ~~leases~~or ~~held~~processing byoperations on the ~~Company.~~leased ~~RREI~~land ~~operates~~within the primary ~~Unit~~term ~~I facility~~or atto ~~Raft~~conduct ~~River~~operations ~~which~~with ~~became~~reasonable ~~commercially~~diligence ~~operational~~until onlease products ~~January~~have 3been found, ~~2008~~extracted and processed in quantities deemed “paying quantities” by the lessee. The lessee has the right at any time within the ~~Leases~~primary ~~assigned~~term to ~~RREI~~terminate by the ~~Company~~lease ~~included~~and ~~eight~~surrender ~~private~~the ~~geothermal~~relevant ~~leases,~~land. If the ~~one~~lessee ofhas ~~which~~not iscommenced ~~owned~~operations byon leased land within the ~~Company~~primary term, the annual rentals typically increase. The ~~Company~~purpose ~~retains~~of ~~direct~~the ~~control~~increasing ~~over~~annual rental ~~four~~is ~~private~~to ~~leases~~encourage ~~and~~development ~~one~~which, ~~federal~~in ~~lease~~some ~~outside~~cases may generate higher payment to the ~~RREI~~lessor ~~position~~in the form of monthly royalty.

~~All~~Our ofleases typically require the ~~leases~~lessee ~~may~~to becarry ~~extended~~insurance, conduct ~~indefinitely~~operations asin ~~long~~accordance ~~as production~~with isall ~~maintained~~local, ~~from~~state, ~~the~~and ~~lease~~federal ~~either~~regulations, prevent ~~individually~~waste, orprotect asenvironmental aquality, ~~geothermal~~and promptly address any default ~~unit~~by lessee. The ~~Company~~lessor and ~~RREI~~lessee ~~hold~~are protected from automatic lease termination through a ~~total~~notice ofrequirement ~~6,002~~which ~~acres;~~must ~~1,686~~be ~~acres~~received ofby ~~federal geothermal~~the ~~rights~~lessee ~~and~~by 4certified mail,~~316~~ ~~acres~~and ofa ~~private~~30 ~~leases~~day period in which the lessee must make diligent efforts to correct the alleged default.

~~-59-~~Geothermal Development Concession in Guatemala

~~Significant~~U.S. ~~Lease/Royalty~~Geothermal ~~Terms~~Guatemala ~~The~~S.A. ~~private~~has ~~leases have~~acquired 10a ~~year~~24,700 ~~primary~~acre geothermal ~~terms~~concession ~~with~~from the ~~rights~~Ministry of ~~unitization~~Energy and ~~extensions~~Mines Guatemala C.A. The ~~Private~~site ~~leases~~is ~~have~~located ~~varying~~12.5 ~~royalty~~miles ~~rates~~southwest ~~commensurate~~of ~~with~~Guatemala ~~other~~City ~~federal~~ and ~~private~~ ~~leases~~2.5 ~~held~~miles bywest southwest of the ~~Company~~City ~~and~~of ~~our subsidiaries~~Amatitlan. ~~Most~~The ofgeothermal concession grants the ~~private~~rights ~~leases~~for ~~are~~subsurface ~~subject~~geothermal todevelopment, aand ~~10%~~established ~~netback~~milestones ~~royalty~~for development ~~which~~and isproduction. ~~based~~The onCompany ~~gross~~has ~~electricity~~negotiated and acquired a surface ~~sales~~lease ~~less~~from ~~the~~one ~~transmission~~landowner and ~~generation~~controls ~~cost~~80 ~~deductions.~~acres Inenabling ~~2014,~~geothermal ~~USG’s~~development. ~~equivalent~~The ~~federal~~lease ~~netback~~is ~~royalty~~similar ~~was~~in ~~equivalent~~term and conditions to ~~1.6%~~our ofleases ~~gross~~with ~~electricity~~private ~~sales~~landowners ~~where~~in itthe ~~was~~United ~~applied~~States for surface fee land.

~~The~~Item federal lease, established on August 1, 2007, is held by the Company and has a primary term of 10 years. After the primary term, The Company has the right to extend the contract in accordance with regulation 43 CFR subpart 3207. The royalty under the lease is 1.75% of gross proceeds for the first 10 years of production and 3.5% ~~thereafter.~~Legal ~~At Raft River, royalty rates have not exceeded rental payments.~~ Proceedings

AAs ~~private~~of ~~geothermal~~March ~~unit~~8, ~~was~~2018, ~~established~~management ~~for~~is ~~the~~not ~~operating project~~aware inof ~~December~~any ~~2015. The Unit establishes the geologic production area. A~~material ~~Participating~~current ~~Area~~or ofpending ~~1640~~legal ~~was~~proceedings ~~established~~ in ~~May~~which ~~2015.~~the ~~The~~Company ~~Participating Areea~~ is ~~that~~a ~~area~~party, ~~that is reasonably expected to contribute to power production.~~as ~~Production~~plaintiff isor ~~allocated~~defendant, ~~based~~or onwhich ~~the~~involve ~~percentage~~any of ~~each~~its ~~property in relation to the entire Participating Area~~properties.

-6071-

ElItem ~~Ceibillo,~~4. ~~Republic~~Mine ofSafety ~~Guatemala~~ Disclosures

~~The~~Not ~~Company successfully acquired a geothermal energy rights concession in the Republic of Guatemala, which was granted by the Guatemalan government~~applicable. It consists of 24,710 acres (100 square kilometers) and is located 14 miles southwest of Guatemala City, the capital. The concession provides sub-surface geothermal rights only, and does not provide access to the surface that is owned by private landowners. The concession had an initial five year term for the development and construction of a power plant, which was extended by three years in 2015. There are no royalties due to the government for use of the geothermal resource.

~~The~~-72- primary area of interest within the concession is the El Ceibillo project, located near the town of Amatitlan, in a developed industrial zone immediately adjacent to the highway that connects Guatemala City to the Port of San Jose on the Pacific coast. An office and staff are located in Guatemala City, and 80 acres of surface land within the concession area is under lease.

~~-61-~~PART II

~~Crescent~~Item ~~Valley and Lee Hot Springs, Nevada On December 16, 2014, U~~5.S. ~~Geothermal~~Market ~~completed~~for ~~the acquisition of EPR and EPR~~Registrant’s ~~lease~~Common ~~holdings~~Equity, atRelated ~~Crescent~~Stockholder ~~Valley~~Matters and ~~Lee~~Issuer ~~Hot~~Purchases ~~Springs,~~of ~~Nevada.~~Equity Securities

~~The~~NYSE ~~Crescent~~American Valley property encompasses 21,319 acres of private and federal geothermal resources leased by EPR and 2,640 acres of geothermal resources leased by U.S. Geothermal Inc. Upon closing the acquisition the Company began drilling the projects first production well. The well is located on private surface and mineral estate in section 3, Township 28 North Range 49 East and is intended to qualify potential future power plant construction for the 30% renewable energy investment tax credit. The Crescent Valley property includes 55 independent leases ranging in size from 10 acres to 4,100 acres and an average parcel size of 314 acres. EPR’s private leases have a 15 year term with annual rent that escalates at year five and at year 10.

~~Significant~~The ~~Lease/Royalty~~following ~~Terms~~table ~~Annual~~sets ~~lease~~forth ~~rental~~information relating to the ~~payment~~trading ~~obligations~~of atour ~~Crescent~~common ~~Valley~~stock ~~are~~from ~~approximately~~January ~~$109~~1,~~138~~ ~~and~~2015 ~~royalty obligations~~through ~~during~~December ~~potential~~31, ~~future~~2017, ~~power~~as adjusted ~~production~~for ~~vary~~the 1-for-6 ~~private~~share ~~leases from~~consolidation 3%described toin 5%Note 9 of ~~gross~~the consolidated ~~sales.~~financial ~~Royalty~~statements, ~~rates~~ for ~~federal~~the ~~geothermal~~Company’s ~~leases~~common ~~are~~stock trading ~~1.75%~~on ofthe ~~gross~~NYSE ~~revenue~~American, ~~for~~under the ~~first~~trade 10symbol ~~years~~“HTM”: ~~and 3.5% thereafter.~~

The Lee Hot Springs property encompasses 2,560 acres of federal lands located approximately 17 miles south of Fallon, NV. The federal leases are N-73679 and N-73930. The annual rental is $2,560 and a standard federal royalty is 1.75% of gross revenue for the first 10 years and 3.5% thereafter.

Sale Prices on the NYSE American
	High	Low
Year Ended December 31, 2017	($)	($)
First Quarter	4.92	3.99
Second Quarter	4.53	3.67
Third Quarter	4.63	3.80
Fourth Quarter	4.08	3.31

Year Ended December 31, 2016
First Quarter	4.08	3.12
Second Quarter	5.16	4.08
Third Quarter	5.34	4.20
Fourth Quarter	4.33	3.72

~~-62-~~As of March 1, 2018, we had approximately 12,400 beneficial stockholders.

~~WGP~~The ~~Geysers,~~Company ~~California~~has ~~Western GeoPower~~never ~~Inc.~~paid ~~(“WGP”)~~and isdoes anot ~~wholly~~intend ~~owned~~to ~~subsidiary~~pay ofdividends on ~~U.S.~~its ~~Geothermal~~common ~~Inc~~stock in the foreseeable future. ~~WGP~~Although the Company’s ~~property~~certificate ~~includes~~of ~~surface~~incorporation and ~~geothermal~~by-laws ~~rights~~do ~~that~~not ~~consist~~preclude payment of ~~two federal~~dividends, ~~geothermal~~we ~~leases~~currently ~~(CA-51000~~intend &to ~~CA-51001),~~retain ~~and~~any ~~one~~future ~~private~~earnings ~~geothermal~~for ~~lease with~~reinvestment noin ~~expiration~~our business. ~~The~~Any ~~total~~future ~~project~~determination ~~acreage~~to ispay ~~3,808~~cash ~~acres.~~dividends ~~The~~will ~~site~~be ~~has~~at ~~been~~the ~~re-permitted~~discretion ~~with~~of ~~Sonoma~~our ~~County~~board ~~for~~of ~~construction~~directors and ~~operation~~will be dependent upon our financial condition, results of upoperations, tocapital arequirements 38and other relevant factors.5 All of the shares of common stock are entitled to an equal share in any ~~megawatt~~dividend ~~geothermal~~declared ~~power~~and ~~plant~~paid.

~~The~~-73- project is located at the site of the former Pacific Gas and Electric (PG&E) Unit 15 project, which once had a 62 megawatt (gross) capacity power plant. During 10 years of operation, the PG&E plant declined in production to approximately 38 megawatts before it was shut down in l989 and all of the wells were plugged and abandoned. The project is located within the broader Geysers geothermal field which covers a total of approximately 20,000 acres in the Mayacamas Mountains in Sonoma County and Lake County, California, approximately 75 miles north of San Francisco. The Geysers geothermal resource is the largest producing geothermal field in the world, and has been generating greater than 850 megawatts of power for more than 30 years.

~~Significant~~Item ~~Lease/Royalty Terms There is no annual rental or royalty for the 421 acre private parcel owned by WGP~~6. ~~The~~Selected ~~Abril~~Financial Ranch rental payment for 410 acres of surface and geothermal rights was $16,783 in 2014 and is annually adjusted by the San Francisco/San Jose CPI index. The Filly-Brown properties include 214 acres of surface access rights and 50% of the mineral rights owned by Western GeoPower. The Geothermal royalty payments for Abril Ranch are being adjusted to 4.25% of gross revenue at a power price of $100/MW or less and is consistent with market conditions.Data

-63-

		For the Years Ended December 31,
	2017	2016	2015	2014	2013
Operating Revenues	$ 32,056,787	$ 31,481,675	$ 31,200,098	$ 30,968,782	$ 27,370,934
Operating Expenses	19,618,439	16,447,329	21,207,738	21,972,764	23,240,285
Income from Continuing Operations	1,411,561	4,160,348	6,336,498	4,589,297	4,130,649
Income (Loss) attributable to U.S. Geothermal Inc.	(2,267,981)	463,331	1,847,229	11,613,711	1,946,579
* Income (Loss) per share attributable to U.S. Geothermal Inc.	(0.12)	0.02	0.10	0.67	0.11
Cash dividends declared and paid per common share	-	-	-	-	-

~~Vale~~* - ~~Butte,~~Adjusted ~~Oregon~~for ~~Vale Butte and~~ the Vale Butte Geothermal Resource Area is located in Eastern Oregon and borders the east side of the City of Vale. In the first quarter of 2014, U.S. Geothermal Inc. acquired 393 acres of geothermal energy and surface rights under six (1-for-6~~) leases.~~ ~~The~~share ~~leased~~consolidation ~~area~~described is immediately adjacent to the City of Vale and includes private surface and mineral estate, Vale City owned resources and Malheur County owned resources. The Vale Butte resource area has been used for direct use heating for many years. Geochemical analysis indicates a potential reservoir temperature of 311ºF to 320ºF and historical drilling in ~~the~~Note ~~area~~9 ~~has encountered ground (rock) temperatures in excess~~ of ~~300°F. Fault structures and hydrologic characteristics have been identified that are similar to~~ the ~~Neal~~consolidated ~~Hot~~financial ~~Springs site, and those geologic structures are contained within the acquired leases~~statements.

-64-

	As of December 31,
	2017	2016	2015	2014	2013
Total Assets	$ 235,742,998	$ 243,424,332	$ 228,217,127 $	232,914,304	$ 232,765,297
Total Long-term Obligations	98,732,843	105,350,989	91,091,982	95,776,351	99,247,344

Significant Lease/Royalty Terms Four private leases and the Vale City lease are issued for a period of 10 years with renewal options while the Malheur County lease was issued for a period of 40 years with renewal options. The lease agreements are consistent in terms of financial and development requirements and have a 2% royalty payment on actual energy paid for by Idaho Power for the first 10 years of commercial production.

	* Income (loss) per share attributable to U.S. Geothermal Inc.	Operating Revenues	Gross Profit	Income (Loss) from Operations	Net Income (Loss) Attributable to U.S. Geothermal, Inc.
Year Ended December 31, 2014
1^stQuarter	0.08	8,501,965	4,783,941	2,547,091	1,339,420
2^ndQuarter	(0.07)	5,845,874	1,571,096	(1,308,330)	(1,152,813)
3^rdQuarter	0.00	6,737,005	2,939,672	695,817	81,780
4^thQuarter	0.64	9,883,938	5,731,213	2,654,719	11,345,324
Year Ended December 31, 2015
1^stQuarter	0.04	8,473,861	4,615,637	1,763,381	734,135
2^ndQuarter	(0.01)	5,861,180	1,801,996	(548,347)	(233,820)
3^rdQuarter	0.02	6,929,847	2,819,445	595,079	280,864
4^thQuarter	0.05	9,935,210	6,090,908	3,140,385	1,066,050
Year Ended December 31, 2016
1^stQuarter	0.01	8,503,276	4,523,697	1,277,795	151,392
2^ndQuarter	(0.03)	5,664,280	1,862,436	(684,667)	(493,717)
3^rdQuarter	(0.01)	6,733,294	2,869,422	178,230	(150,498)
4^thQuarter	0.05	10,580,825	5,778,791	2,813,990	956,154
Year Ended December 31, 2017
1^stQuarter	0.01	8,437,069	3,858,249	1,258,486	260,890
2^ndQuarter	(0.02)	6,311,112	1,811,162	(693,169)	(441,854)
3^rdQuarter	(0.09)	6,811,888	2,378,993	(1,320,146)	(1,826,826)
4^thQuarter	(0.02)	10,496,718	4,386,944	2,166,390	(260,191)

~~Boise~~-74- Administration Office, Idaho On August 12, 2013, the Company signed a five year lease agreement for office space and janitorial services. The lease payments are due in monthly installments starting February 1, 2014. The monthly payments that begin February 1, 2014 have two components which include a base rate of $3,234 that is not subject to increase and a rate beginning at $6,418 that is adjusted annually according to the cost of living index. The contract includes a five year extension option.

~~Land~~* - ~~and~~Adjusted for ~~Leases~~the 1-for-6 share consolidation described in Note 9 of the consolidated financial statements.

~~The~~Item ~~Company~~7. ~~and~~Management’s ~~its~~Discussion ~~domestic subsidiaries control 65,434 acres of land in California, Idaho, Nevada,~~ and ~~Oregon.~~Analysis ~~U.S. Geothermal owns approximately 2,536 acres~~ of ~~surface~~Financial ~~rights~~Condition and ~~2,539~~Results ~~acres~~ of geothermal rights while approximately 64,064 acres are controlled through geothermal development leases signed with the BLM, local governmental entities and private owners. The company’s average per acre lease rate is $9.00 per acre/year. Operations

~~BLM~~Historical ~~Leases~~Overview ~~The Company and its subsidiaries have 26 federal geothermal leases issued in accordance with the Geothermal Steam Act by the BLM.~~

~~BLM~~On ~~geothermal~~March ~~leases grant the lessee the right to drill for~~5, ~~extract,~~ ~~produce~~2002, ~~remove, utilize, sell, and dispose of geothermal resources from the leased lands, along with the right to build and maintain necessary improvements on the leased land~~U. ~~Ownership of the geothermal resources and other minerals beneath the land is retained in the federal mineral estate~~S. ~~The geothermal~~Geo-Idaho ~~lease~~entered ~~grants~~into ~~exclusive~~a ~~geothermal development rights. The BLM will,~~letter ~~through~~agreement ~~authority granted by federal regulations and planning requirements, ensure that other federal activities do not unreasonably interfere~~ with the ~~geothermal~~ ~~lessee’s~~owner ~~uses~~ of the ~~same~~Raft ~~land.~~River ~~Most~~project ~~federal~~located ~~leases~~in ~~include~~southeastern ~~stipulations and are governed by federal regulations~~Idaho, ~~that~~pursuant ~~require geothermal development~~ to bewhich ~~conducted~~Geo-Idaho inagreed ~~a workmanlike manner and in accordance with all applicable laws and BLM directives and~~ to ~~take~~acquire all ~~actions required by the BLM to protect the surface~~ of ~~and~~ the ~~environment~~real ~~surrounding the land. Surface~~property, ~~protections~~personal ~~and~~property ~~environmental protection requirements include protection of water quality, cultural~~ and ~~archeological~~permits ~~resources,~~that ~~threatened~~comprised orthe ~~endangered plants~~owner’s orinterest ~~animals,~~in ~~migratory birds, wildlife, and visual quality standards~~that project.

The ~~BLM~~Company ~~also~~signed ~~authorizes~~a ~~geothermal~~20 ~~lessees~~year PPA with Idaho Power on December 29, 2004 to ~~enter~~sell ~~into~~power ~~unit~~from the Phase I power plant at Raft River located near ~~agreements~~Malta, Idaho. Raft River Energy I LLC (“RREI”) was created on ~~federal~~August ~~lands~~18, to2005 for ~~cooperatively~~the ~~develop~~purpose aof ~~geothermal~~developing ~~resource~~Raft River Unit I. The limited liability company ~~BLM~~is ~~reserves~~a ~~the~~joint ~~right~~venture towith ~~specify~~Raft ~~rates~~River ofI ~~development~~Holdings, ~~and~~LLC, towhich ~~require~~is ~~the~~a subsidiary of ~~geothermal~~Goldman ~~lessee~~Sachs. toRREI ~~commit~~commenced tocommercial operations on January 3, 2008. The plant currently operates at a ~~unitization~~reduced ~~agreement~~output of approximately 9.4 megawatt net.

~~Typical~~In ~~BLM~~May ~~leases~~2008, ~~have~~the aCompany ~~primary~~acquired ~~term~~geothermal ofassets, ~~ten years and may be~~including ~~renewed~~an asold ~~long~~3.6 asnet ~~geothermal~~megawatt ~~resources~~nameplate ~~are~~generating ~~being~~capacity ~~explored.~~power Ifplant, ~~resources~~located ~~are~~in ~~produced~~Washoe ~~or utilized in commercial quantities~~County, ~~the~~Nevada ~~lease can be renewed~~ for upapproximately ~~to forty years~~$16.6 Ifmillion, atwhich ~~the~~included ~~end of~~certain ~~the~~ground ~~forty-year~~water ~~period~~rights. ~~geothermal~~The ~~steam~~upgraded, isnew ~~still~~plant ~~being~~became ~~produced~~commercially oroperational ~~utilized in~~on ~~commercial~~May ~~quantities~~25, ~~and~~2012. ~~the~~The ~~lands~~plant ~~are~~was ~~not~~originally ~~needed~~estimated ~~for~~to ~~other~~operate ~~purposes,~~at ~~the~~8.6 net ~~geothermal~~megawatts, ~~lessee~~but ~~will~~has ~~have~~been arerated ~~preferential right~~ to ~~renew~~10.0 ~~the~~megawatts ~~lease~~due ~~for~~to ahigher ~~second~~than expected ~~forty-year~~efficiency. ~~term,~~On ~~under~~February ~~terms~~15, ~~and~~2013, ~~conditions~~USG asNevada ~~the~~LLC ~~BLM~~signed ~~deems~~an ~~appropriate.~~agreement ~~During~~with SAIC ~~the~~as ~~lease~~part ~~term~~of ~~the~~a ~~lessee~~settlement isfor ~~required~~a to$2,000,000 ~~pay~~note anthat ~~annual~~will ~~per~~be ~~acre~~paid ~~rental~~in ~~fee. The~~quarterly ~~fee~~installments ~~escalates~~that ~~according~~are toscheduled athrough ~~schedule~~2018. ~~until~~A ~~geothermal~~long-term ~~production~~note ~~begins.~~held ~~After~~by ~~production~~Prudential ~~has~~Financial ~~commenced,~~Group ~~the~~was ~~geothermal~~finalized ~~lessee~~on isSeptember ~~required~~26, to2013. ~~pay~~The ~~royalties on~~Prudential ~~the~~loan ~~amount~~will orbe ~~value~~repaid ofwith ~~energy~~quarterly ~~production,~~payments ~~and any by-products~~ that ~~may~~are ~~be derived~~scheduled ~~from~~through ~~geothermal production~~2037.

~~-65-~~On September 5, 2006, the Company announced the acquisition of property for a geothermal project at Neal Hot Springs, Oregon located in eastern Oregon near the Idaho border. The property is 8.5 square miles of geothermal energy and surface rights. On May 5, 2008, the Company announced that drilling began on the first full size production well which was completed on May 23, 2009. In February 2009, the Company submitted a loan application for the project to the U.S. Department of Energy’s (“DOE”) Energy Efficiency, Renewable Energy and Advanced Transmission and Distribution Solicitation loan guarantee program under Title XVII of the Energy Policy Act of 2005. On May 26, 2009, the Company announced that it had been selected by the DOE to enter into due diligence review on a project loan. Construction of a drill pad was completed in August 2009. In September 2009, the Company began drilling its major production well. Enbridge Inc. became an equity partner in the project in April 2009. Equity ownership interest in the project has the Company owning 60%, and Enbridge owning 40%. The power plant became commercially operational on November 16, 2012.

BLM leases issued after August 8, 2005 (The Energy Policy Act of 2005) also have a primary term of ten years. If the geothermal lessee does not reach commercial production within the primary term, the BLM may grant two five-year extensions. If the lessee is drilling a well for the purposes of commercial production, the lease may be extended for five years and thereafter as long as steam is being produced and used in commercial quantities the lease may be extended for up to thirty75-~~five~~ years. If, at the end of the extended thirty-five year term, geothermal steam is still being produced or utilized in commercial quantities and the lands are not needed for other purposes, the geothermal lessee will have a preferential right to renew the lease under terms and conditions as the BLM deems appropriate.

~~BLM~~In ~~leases~~April ~~are~~2010, ~~issued either competitively or non-competitively. Under~~ the ~~Energy~~Company ~~Policy~~was ~~Act~~granted ~~of 2005 Lessees who obtain leases issued through~~ a ~~non-competitive~~geothermal ~~process pay an annual rental fee equal to $1.00~~energy ~~per~~rights ~~acre~~concession ~~for~~in the ~~first~~Republic ~~ten~~of ~~years~~Guatemala ~~and~~located ~~$5.00~~in ~~per~~Central ~~acre each year thereafter~~America. ~~Lessees~~Geophysics ~~who~~activities ~~obtain~~and athe ~~lease~~drilling ~~through a competitive bid process pay a rental~~ of ~~$2.00~~ ~~per acre for~~ the first ~~year,~~exploration ~~$3.00~~well ~~per acre for the second through tenth~~occurred ~~year~~during ~~and $5~~2013.00 ~~per~~A ~~acre~~25 ~~each~~megawatt ~~year~~flash ~~thereafter.~~steam ~~For~~plant ~~BLM~~is ~~leases issued, effective, or pending on August 8, 2005, royalty rates are fixed between 1~~planned.~~0 -2.5% of the gross proceeds from the sale of electricity during the first ten years of production under the lease.~~

~~The~~On ~~royalty~~April ~~rate~~22, ~~set~~2014, by the ~~BLM~~Company ~~for~~acquired ~~geothermal~~all ~~resources produced~~of ~~for~~ the ~~commercial~~ownership shares ~~generation~~ of ~~electricity~~a ~~but~~group ~~not~~of ~~sold~~companies inowned anby ~~arm’s length~~Ram ~~transaction~~Power ~~is 1~~Corp.~~75%~~ ~~for~~(“Ram”) ~~the~~that ~~first~~held ~~ten~~all interests ~~years~~in ofthe ~~production~~WGP ~~and~~Geysers ~~3.5% thereafter.~~project ~~The~~located ~~royalty~~in ~~rate~~Northern California for ~~geothermal~~a ~~resources~~total of ~~sold~~$6.78 bymillion. ~~the~~The ~~geothermal lessee~~assets oracquired anincluded ~~affiliate~~four inproduction/injection anwells, restricted ~~arm’s~~cash, ~~length~~land, ~~transaction~~geothermal iswater ~~10.0%~~rights, ofand ~~the~~an ~~gross proceeds~~inventory ~~from~~of ~~the~~new ~~arm’s length sale~~drill casing.

~~Private~~The ~~Geothermal~~Company ~~Leases~~completed ~~U.S. Geothermal~~an ~~and~~acquisition ~~its~~of ~~subsidiaries~~Earth ~~hold~~Power ~~geothermal~~Resources Inc. ~~rights~~(“EPR”) ~~through~~on ~~leases~~December ~~with~~12, ~~73 individuals and companies~~2014. ~~The~~Acquired ~~leases~~assets ~~authorize~~include geothermal ~~development and~~leases ~~operations~~that oncover ~~privately~~26,017 ~~owned~~acres ~~geothermal~~in ~~estates.~~the InState ~~some~~of ~~cases,~~Nevada ~~the~~representing ~~surface~~three potential ~~ownership~~projects is(Crescent ~~split~~Valley, ~~from~~Lee ~~the~~Hot ~~mineral~~Springs orand ~~geothermal~~Ruby ~~ownership~~Hot Springs).

~~Geothermal~~Factors ~~leases~~Affecting ~~grant~~Our ~~the~~Results exclusive right and privilege to drill for, produce, extract, take and remove water, brine, steam, steam power, minerals (other than oil), salts, chemicals, gases (other than gases associated with oil), and other products produced or extracted through geothermal development. The Company and its project subsidiaries are also granted non-exclusive rights pertaining to the construction and operation of ~~plants, structures,~~Operations and facilities on the leased land. The leases also grant the right to dispose of waste brine and other waste products as well as the right to re-inject into the leased land water, brine, steam, and gases in a well or wells for the purpose of maintaining or restoring pressure in the productive zones beneath the leased land or other land in the vicinity.

~~-66-~~Raft River Operating Agreement/Ownership

~~Lessors~~Original ~~reserve~~Agreement the right to conduct other activities on the leased land in a manner that does not unreasonably interfere with the geothermal lessee’s uses of the same land. Activities include agricultural use (farming or grazing), recreational use and other energy developments. Geothermal leases are typically issued for a primary term of 10 years and continue for as long as leased products are being produced or the lessee is drilling, exploring, extracting, processing, or reworking operations on the leased land.

~~Lease~~Originally, ~~payments~~the ~~typically~~Raft ~~include~~River ~~annual~~Energy ~~rental~~I ~~that~~LLC is(“RREI”) ~~based~~issued ontwo aclasses ~~rate~~of ~~per~~member ~~acre~~units, ~~under~~(Class ~~lease~~A and ~~royalty~~Class ~~payments~~B). onEach ~~gross~~class ~~revenue~~of ~~from~~ownership ~~the~~gives ~~generation~~the ofowner ~~electricity.~~participating ~~Leases~~rights ~~also~~in ~~include~~the abusiness ~~provision~~and ~~for~~results ~~royalty~~in ~~payment~~equity ownership onrisks. ~~all~~The ~~revenue~~rights ~~from~~attached ~~geothermal~~to ~~by-products.~~the ~~Leases~~different ~~typically~~classes ~~have~~will ~~requirements for~~vary ~~drilling~~over time, ~~extraction~~in accordance orwith ~~processing~~the ~~operations~~terms onof the ~~leased~~Membership ~~land~~Admission ~~within~~Agreement. ~~the~~The agreement ~~primary~~required ~~term~~RREI or to ~~conduct~~track ~~operations~~separately ~~with~~the ~~reasonable~~capital ~~diligence~~accounts ~~until~~of ~~lease products~~the ~~have~~members ~~been~~after November ~~found~~24, ~~extracted~~2006. ~~and~~For ~~processed~~income intax ~~quantities~~purposes, ~~deemed “paying quantities” by~~ the ~~lessee.~~Class ~~The~~A ~~lessee~~units ~~has~~received ~~the~~a ~~right~~greater proportion atof ~~any time within~~ the ~~primary~~ ~~term~~share toof ~~terminate~~losses ~~the lease~~ and ~~surrender~~other ~~the~~income ~~relevant~~tax ~~land~~benefits. IfThis ~~the~~includes ~~lessee~~the ~~has~~allocation ~~not~~of ~~commenced~~production ~~operations~~tax ~~on leased land within the primary term~~credits, ~~the annual~~which ~~rentals~~was ~~typically~~distributed ~~increase.~~99% ~~The~~to ~~purpose of~~ the ~~increasing annual rental~~Class isA tounits ~~encourage~~and ~~development~~1% ~~which,~~to inthe ~~some~~Class ~~cases~~B ~~may~~units ~~generate~~during ~~higher payment to~~ the ~~lessor~~first in10 ~~the~~years ~~form~~ of ~~monthly royalty~~production.

~~Our~~Purchase ~~leases~~Agreement ~~typically~~of ~~require~~Member ~~the~~Interest lessee to carry insurance, conduct operations in accordance with all local, state, and federal regulations, prevent waste, protect environmental quality, and promptly address any default by lessee. The lessor and lessee are protected from automatic lease termination through a notice requirement which must be received by the lessee by certified mail, and a 30 day period in which the lessee must make diligent efforts to correct the alleged default.

~~Geothermal~~On ~~Development~~December ~~Concession~~16, in2015, ~~Guatemala~~ the U.S. Geothermal ~~Guatemala S~~Inc.A. ~~has~~(holder ~~acquired~~of all Class B units) signed a ~~24,700~~purchase ~~acre~~agreement ~~geothermal~~with Goldman Sachs for the ~~concession~~acquisition ~~from~~of 450 Class A units of the ~~Ministry~~500 Class A units held by Goldman Sachs. The terms of ~~Energy~~the ~~and~~agreement ~~Mines~~specified ~~Guatemala~~the conversion of 450 A units to 450 C units.A All of the C units were acquired by U.S. Geothermal Inc. The ~~site~~remaining is50 ~~located~~A ~~12.5~~units ~~miles~~held ~~southwest~~by Goldman Sachs retain all of ~~Guatemala~~the ~~City~~benefits ~~and~~for 2income tax purposes that were held by the original 500 A units.5 ~~miles~~Effective ~~west~~December ~~southwest~~16, 2015, U.S. Geothermal Inc. will receive 95% of the available cash flow from the project for the ~~City~~total purchase price of ~~Amatitlan~~$5.1 million. The ~~geothermal~~agreement ~~concession~~includes ~~grants~~an ~~the~~option ~~rights~~ for ~~subsurface~~U.S. ~~geothermal~~Geothermal ~~development,~~Inc. ~~and~~to ~~established~~purchase ~~milestones~~residual interest in RREI for ~~development~~fair market value ~~and~~in ~~production~~December 2017. ~~The~~Allocations ~~Company~~of ~~has~~profits ~~negotiated~~ and ~~acquired~~losses awill ~~surface~~remain ~~lease~~99% ~~from~~to ~~one~~Goldman ~~landowner~~Sachs and ~~controls~~1% 80to ~~acres~~the ~~enabling~~U.S. ~~geothermal~~Geothermal ~~development~~Inc. ~~The~~until ~~lease~~December is31, 2017, after which ~~similar~~the inU.S. ~~term~~Geothermal ~~and~~Inc. ~~conditions~~would toreceive ~~our~~95% ~~leases~~of ~~with~~the ~~private~~allocation ~~landowners~~of inprofits ~~the~~and ~~United~~losses ~~States~~and ~~for~~Goldman ~~surface~~Sachs ~~fee~~will ~~land~~receive 5%.

~~Item~~On 3December 13, 2017, the Company entered into an agreement to acquire the remaining interest of RREI from Goldman Sachs. ~~Legal~~The ~~Proceedings~~acquisition was effective January 2, 2018, at which time RREI became a wholly-owned subsidiary. As a result, the Company now owns 100% of the income and 100% of available cash.

As-76- ~~of March 9, 2017, management is not aware of any material current or pending legal proceedings in which the Company is a party, as plaintiff or defendant, or which involve any of its properties.~~

~~-67-~~Power Purchase Agreements

~~Item~~Prior 4to the construction of a geothermal project, we typically enter into a Power Purchase Agreement (“PPA”) with a utility, which fixes the price of energy produced at a project for a 20 to 30 year period. ~~Mine~~Such ~~Safety~~PPAs ~~Disclosures~~are typically negotiated with a utility company and approved by a state utility commission or similar regulating body, or other major retail electric service provider, or with a large industrial consumer.

~~Not~~Our power purchase agreements generally provide for energy payments only and can include the “green” attributes for geothermal energy since geothermal energy is a source of renewable energy. Energy payments are calculated based on the amount of electrical energy delivered to the relevant power purchaser at a designated delivery point. The rates applicable to such payments are either fixed or subject to preset annual adjustments. Some PPAs provide for forfeiture of payments or payments of penalties if minimum target levels are not met.

~~-68-~~Neal Hot Springs, Oregon

~~PART~~The IIPPA for the Neal Hot Springs project was signed on December 11, 2009 with the Idaho Power Company. Idaho Power Company submitted the PPA to the Idaho Public Utilities Commission (“IPUC”) on December 28, 2009 and it was approved by the IPUC on May 20, 2010. The PPA has a 25 year term with a starting price of $96 per megawatt hour. The price escalates annually by up to 3.9% in the initial years and to as low as 1.0% during the last 10 years of the agreement. The approximate 25 year levelized price is $117.65 per megawatt hour.

~~Item~~San ~~5. Market for Registrant’s Common Equity~~Emidio, ~~Related~~Nevada ~~Stockholder Matters and Issuer Purchases of Equity Securities~~

~~NYSE~~On ~~MKT~~May ~~The~~31, ~~following~~2011, ~~table~~an ~~sets~~amended and restated PPA was signed with ~~forth~~Sierra ~~information~~Pacific ~~relating~~Power toCompany d/b/a NV Energy for the ~~trading~~sale of ~~our~~up ~~common~~to ~~stock~~19.9 megawatts ~~from~~of ~~January~~electricity 1,on an annual average basis. The PPA has a 25 year term ~~2014~~with ~~through~~a ~~December~~base ~~31,~~price ~~2016~~of $89.75 per megawatt hour, asand ~~adjusted~~a ~~for~~one ~~the~~percent ~~1-for-6~~annual escalation ~~share~~rate. ~~consolidation~~The electrical output from both Phase I and Phase II was to be ~~described~~sold inunder ~~Note~~the 8terms of the ~~consolidated~~amended ~~financial~~and ~~statements,~~restated ~~for~~PPA. ~~the~~The PPA required that ~~Company’s~~Phase ~~common~~II ~~stock~~had ~~trading~~to be on ~~the~~line ~~NYSE~~by ~~MKT~~December 2015, ~~under~~and since Phase II was not constructed, the ~~trade~~option ~~symbol~~expired. The PPA was approved by the Public Utility ~~“HTM”:~~Commission of Nevada on December 27, 2011.

Sale Prices on the NYSE MKT
	High	Low
Year Ended December 31, 2016	($)	($)
First Quarter	4.08	3.12
Second Quarter	5.16	4.08
Third Quarter	5.34	4.20
Fourth Quarter	4.33	3.72
Year Ended December 31, 2015
First Quarter	3.06	2.64
Second Quarter	3.30	2.76
Third Quarter	4.02	3.06
Fourth Quarter	3.84	3.36

Raft River Energy I LLC

~~TSXThe~~Raft ~~Company~~River ~~voluntarily~~Energy ~~delisted~~I LLC currently earns revenue from ~~the~~a 25 year, ~~TSX~~full-output ~~effective~~PPA ~~December~~with 31Idaho Power Company, ~~2015~~which allows power sales of up to 13 megawatts annual average. The ~~following~~PPA ~~table~~was ~~sets~~signed ~~forth~~on ~~information~~September 24, 2007 and expires ~~relating~~in toJanuary 2033 on the ~~trading~~anniversary of ~~our~~its ~~common~~commercial ~~stock~~operation ~~from~~date. ~~January~~The 1,price of ~~2014~~energy ~~through~~sold under the Idaho Power PPA is split into three seasons: power ~~December~~produced 31during the peak periods of July, ~~2015~~August, asNovember ~~adjusted~~and ~~for~~December will be purchased at 120% of the ~~1-for-6~~set ~~share~~price; ~~consolidation~~power ~~described~~produced in the three month low demand ~~Note~~season 8(March, April, May) will be purchased at 73.50% of the ~~consolidated~~set ~~financial~~price; ~~statements,~~and power ~~for~~produced in the ~~Company’s~~remaining ~~common stock~~five ~~trading~~months onof the ~~TSX~~year ~~under~~will be purchased at 100% of the ~~trade~~set ~~symbol~~price. ~~“GTH”:~~The PPA sets a first year average purchase price of $53.60 per megawatt hour. The $53.60 purchase price is escalated each year at a compound annual rate of 2.1% until year 12 (2020). From years 13 to 25 of the contract the escalation rate will drop to 0.6% per year.

Sale Prices on the TSX
	High	Low
Year Ended December 31, 2015	($)	($)
First Quarter	3.78	3.06
Second Quarter	4.02	3.42
Third Quarter	5.40	3.78
Fourth Quarter	5.28	4.50

-77-

AsOperating ~~of March 1, 2017, we had approximately 16,250 beneficial stockholders.~~ Results

~~The~~Comparison ~~Company~~of ~~has never paid and does not intend to pay dividends on its common stock in~~ the ~~foreseeable~~Year ~~future.~~Ended ~~Although~~December ~~the~~31, ~~Company’s certificate~~2017 ~~of incorporation~~ and ~~by-laws do not preclude payment of dividends, we currently intend to retain any future earnings for reinvestment in our business. Any future determination to pay cash dividends will be at~~ the ~~discretion~~ ~~of our board of directors and will be dependent upon our financial~~Year ~~condition,~~Ended ~~results~~December ~~of operations~~31, ~~capital~~2016 ~~requirements and other relevant factors. All of the shares of common stock are entitled to an equal share in any dividend declared and paid.~~

~~-69-~~For the year ended December 31 2017, the Company reported net loss attributable to U.S. Geothermal Inc. of $2,267,981 ($0.12 loss per share) which represented a $2,731,312 decrease from net income attributable to U.S. Geothermal Inc. of $463,331 reported in the year ended 2016 ($0.02 income per share). Both favorable and unfavorable variances were noted for plant operations. These variances are addressed by each individual plant. Significant favorable variances were reported for professional and management fees, and promotion costs. Notable unfavorable variances were reported for employee compensation and income tax expense.

~~Item~~Comparison 6.of ~~Selected~~the ~~Financial~~Year ~~Data~~Ended December 31, 2016 and the Year Ended December 31, 2015

	For the Years Ended December 31,
	2016	2015	2014	2013	2012
Operating Revenues	$ 31,481,675	$ 31,200,098	$ 30,968,782	$ 27,370,934	$ 9,758,946
Operating Expenses	16,447,329	21,207,738	21,972,764	23,240,285	14,090,471
Income (Loss) from Continuing Operations	4,160,348	6,336,498	4,589,297	4,130,649	(4,331,525)
Income (Loss) attributable to U.S. Geothermal Inc.	463,331	1,847,229	11,613,711	1,946,579	(2,958,567)
* Income (Loss) per share attributable to U.S. Geothermal Inc.	0.02	0.10	0.67	0.11	(0.20)
Cash dividends declared and paid per common share	-	-	-	-	-

For the year ended December 31 2016, the Company reported net income attributable to U.S. Geothermal Inc. of $463,331 ($0.02 income per share) which represented a $1,383,898 decrease from net income attributable to U.S. Geothermal Inc. of $1,847,229 reported in the year ended 2015 ($0.10 income per share). Unfavorable variances were reported in corporate administration, professional and management fees, promotion, and other income/expenses. A notable favorable variance was reported for income tax expense.

*Plant ~~- Adjusted for the 1-for-6 share consolidation described in Note 8 of the consolidated financial statements.~~Operations

	As of December 31,
	2016	2015	2014	2013	2012
Total Assets	$ 243,424,332	$ 228,217,127	$ 232,914,304 $	232,765,297	$ 240,496,096
Total Long-term Obligations	105,350,989	91,091,982	95,776,351	99,247,344	104,318,206

The Company’s energy production revenues and related operating costs originated from its three power plants. The Neal Hot Springs, Oregon (USG Oregon LLC) plant is located in Eastern Oregon and began commercial operations in November 2012. The San Emidio, Nevada (USG Nevada LLC) plant is located in the San Emidio Desert in the northwestern part of the State of Nevada and began operations in May 2012. The Raft River, Idaho (Raft River Energy I LLC) plant is located in South Eastern Idaho and began operations in January of 2008.

~~-70-~~A summary of energy sales by plant for the three years are as follows:

	* Income (loss) per share attributable to U.S. Geothermal Inc.	Operating Revenues	Gross Profit (Loss)	Income (Loss) from Operations	Net Income (Loss) Attributable to U.S. Geothermal, Inc.
		For the Year Ended December 31,
Year Ended December 31, 31, 2013
		2017				2016		2015
1st Quarter	0.08	7,086,990	4,102,509	2,235,079	1,388,523
		$			%*	$	%*	$	%*
2nd Quarter	(0.08)	4,973,076	1,012,227	(1,966,627)	(1,376,359)
Energy sales by plant:
3rd Quarter	0.00	5,760,495	2,461,352	186,198	(28,137)
Neal Hot Spring, Oregon		19,941,366			63.0	19,561,718	62.8	18,823,799	61.1
4th Quarter	0.12	9,550,373	5,635,824	3,675,999	1,962,552
San Emidio, Nevada		6,255,599			19.8	6,980,358	22.4	7,324,484	23.7
Year Ended December 31, 2014
Raft River, Idaho		5,463,472			17.3	4,599,936	14.8	4,693,913	15.2
1st Quarter	0.08	8,501,965	4,783,941	2,547,091	1,339,420
		31,660,437			100.0	31,142,012	100.0	30,842,196	100.0
2nd Quarter	(0.07)	5,845,874	1,571,096	(1,308,330)	(1,152,813)
3rd Quarter	0.00	6,737,005	2,939,672	695,817	81,780
4th Quarter	0.64	9,883,938	5,731,213	2,654,719	11,345,324
Year Ended December 31, 2015
1st Quarter	0.04	8,473,861	4,615,637	1,763,381	734,135
2nd Quarter	(0.01)	5,861,180	1,801,996	(548,347)	(233,820)
3rd Quarter	0.02	6,929,847	2,819,445	595,079	280,864
4th Quarter	0.05	9,935,210	6,090,908	3,140,385	1,066,050
Year Ended December 31, 2016
1st Quarter	0.01	8,503,276	4,523,697	1,277,795	151,392
2nd Quarter	(0.03)	5,664,280	1,862,436	(684,667)	(493,717)
3rd Quarter	(0.01)	6,733,294	2,869,422	178,230	(150,498)
4th Quarter	0.05	10,580,825	5,778,791	2,813,990	956,154

%* - ~~Adjusted~~represents ~~for~~ the ~~1-for-6~~percentage ~~share consolidation described in Note 8~~ of ~~the~~total ~~consolidated~~Company ~~financial statements~~energy sales.

~~Item~~-78- ~~7. Management’s Discussion and Analysis of Financial Condition and Results of Operations~~

~~Historical~~Neal ~~Overview~~Hot ~~On March 5~~Springs, ~~2002, U.S.~~Oregon ~~Geo-Idaho~~(USG ~~entered~~Oregon ~~into~~LLC) ~~a letter agreement with the owner of the Raft River~~Plant ~~project located in southeastern Idaho, pursuant to which Geo-Idaho agreed to acquire all of the real property, personal property and permits that comprised the owner’s interest in that project.~~ Operations

~~The~~Comparison ~~Company~~of ~~signed~~the aYear 20Ended ~~year PPA with Idaho Power on~~ December 29 31, ~~2004~~2017 toand ~~sell power from~~ the ~~Phase I power plant at Raft River located near~~Year ~~Malta~~Ended ~~Idaho.~~December ~~Raft River Energy I LLC (“RREI”) was created on August 18~~31, ~~2005~~2016 for the purpose of developing Raft River Unit I. The limited liability company is a joint venture with Raft River I Holdings, LLC, which is a subsidiary of Goldman Sachs. RREI commenced commercial operations on January 3, 2008. The plant currently operates at a reduced output of approximately 9.4 megawatt net.

~~-71-~~For the year ended December 31, 2017, the Neal Hot Springs plant reported subsidiary net plant income of $9,244,299, which was a decrease of $977,543 (9.6% decrease) from the net income of $10,221,842 reported in the year ended 2016.

InOverall, ~~May~~energy ~~2008,~~sales for the ~~Company~~year ~~acquired~~ended ~~geothermal~~2017 ~~assets~~increased $379,648 ~~including an~~(1.9% ~~old~~increase) 3from the prior year.6 ~~net~~The ~~megawatt~~contracted ~~nameplate~~rates ~~generating~~effectively increased ~~capacity~~2.3% ~~power~~during the year. During the current year the plant produced 172,805 ~~located~~megawatts ~~in Washoe~~of ~~County~~power which was a decrease of 6,753 ~~Nevada~~megawatts ~~for~~(3.8% decrease) ~~approximately~~from ~~$16~~the prior year.6 ~~million~~On January 5, ~~which~~2017, ~~included~~Unit ~~certain~~1 experienced mechanical ~~ground~~failures, ~~water~~primarily ~~rights.~~due ~~The~~to ~~upgraded,~~extreme ~~new~~cold ~~plant~~temperatures ~~became~~that ~~commercially~~resulted ~~operational~~in onoutages ~~May~~and ~~25,~~the ~~2012.~~loss ~~The~~of ~~plant~~a ~~was~~substantial ~~originally~~amount ~~estimated~~of tothat ~~operate~~Unit’s ~~at 8~~refrigerant.6 ~~net~~The Unit’s ~~megawatts,~~complications ~~but~~resulted ~~has~~in ~~been~~a ~~rerated~~total toof ~~10.0~~1,025 ~~megawatts~~lost ~~due~~production tohours ~~higher~~during ~~than expected~~the ~~efficiency.~~first Onquarter ~~February~~of ~~15,~~2017 ~~2013~~(1,146 ~~USG~~lost ~~Nevada~~for ~~LLC~~all ~~signed~~three anunits). ~~agreement~~The ~~with~~initial ~~SAIC~~repairs to asidentify ~~part~~and ofplug athe ~~settlement,~~damaged ~~for~~tubes awere $2completed on February 12,~~000~~ 2017,~~000~~ however, ~~note~~Unit ~~that~~1 ~~will~~operated beat ~~paid~~a inreduced ~~quarterly~~level through May 2017. Business ~~installments~~Interruption ~~that~~insurance ~~are~~provided ~~scheduled~~$727,235 ~~through~~of ~~2018.~~revenue Ato ~~long-term~~cover ~~note~~lost ~~held~~energy bysales ~~Prudential~~after ~~Financial~~the ~~Group~~first ~~was~~30 ~~finalized~~days onof ~~September~~lost ~~26, 2013~~generation. ~~The~~Without ~~Prudential~~the insurance coverage, ~~loan~~energy ~~will~~sales befor ~~repaid~~the ~~with~~first ~~quarterly~~quarter ~~payments~~would ~~that~~have ~~are~~decreased ~~scheduled~~9.0% ~~through~~from ~~2037~~the same quarter ended 2016.

OnPlant ~~September~~operating 5costs, ~~2006~~excluding depreciation, ~~the Company announced the acquisition of~~increased ~~property~~$1,442,886, ~~for~~which was a ~~geothermal~~32.3% ~~project~~increase atfrom ~~Neal~~the ~~Hot~~prior ~~Springs,~~year. ~~Oregon~~The ~~located in eastern~~largest ~~Oregon~~increases ~~near~~were ~~the~~related ~~Idaho~~to ~~border.~~taxes ~~The~~and ~~property~~field ismaintenance 8costs.5 ~~square~~For ~~miles~~the ofyear ~~geothermal~~ended ~~energy~~December ~~and surface rights. On May 5~~31, ~~2008~~2017, the ~~Company~~Plant ~~announced~~incurred ~~that~~property ~~drilling began~~taxes onof ~~the~~$1,103,071 ~~first full size production well~~ which was ~~completed~~an increase onof ~~May 23~~$738, ~~2009~~482 (202.6% Inincrease) ~~February~~from ~~2009,~~ the ~~Company~~year ~~submitted~~ended a2016. ~~loan~~For ~~application for~~ the ~~project~~first tothree ~~the~~years ~~U.S. Department~~ of ~~Energy’s (“DOE”) Energy Efficiency~~operations, ~~Renewable~~property ~~Energy and~~taxes ~~Advanced~~were ~~Transmission~~abated ~~and~~by ~~Distribution Solicitation loan guarantee program under Title XVII of~~ the ~~Energy Policy Act of 2005~~County. ~~On May 26, 2009, the Company~~The ~~announced~~abatement ~~that~~period itended ~~had~~in ~~been~~2016 ~~selected~~and by the ~~DOE~~first toproperty ~~enter~~tax ~~into~~payment ~~due diligence review on a project loan. Construction of a drill pad~~ was ~~completed~~made in ~~August~~ ~~2009.~~December ~~In September 2009, the Company began drilling its major production well~~2016. ~~Enbridge~~ ~~Inc.~~Calendar ~~became~~year an2017 ~~equity~~was ~~partner in~~ the ~~project~~first infull ~~April~~year ~~2009.~~of ~~Equity ownership~~assessed ~~interest in the project has the Company owning 60%, and Enbridge~~property ~~owning~~tax ~~40%. The power plant became commercially operational~~ on ~~November~~the ~~16, 2012~~Plant.

InDuring ~~April 2010,~~ the ~~Company~~year ~~was~~ended ~~granted~~December a31, ~~geothermal~~2017, ~~energy~~total field ~~rights~~maintenance ~~concession~~costs inincreased ~~the~~$324,304 ~~Republic~~(40.2% ofincrease) ~~Guatemala~~from ~~located~~the inprior ~~Central America~~year. ~~The~~For ~~Company~~the ~~signed~~current ayear, ~~Memorandum~~over of$761,000 ~~Understanding~~(not ~~with~~covered aby ~~broker~~insurance) ofin ~~electricity~~field inmaintenance ~~Central~~costs ~~America~~were incurred to ~~negotiate~~repair avaporizers, ~~PPA~~turbines ~~for~~and ~~the~~brine Elinjection ~~Ceibillo Project located near~~systems. ~~Guatemala~~Most ~~City in October 2012. The framework~~ of the ~~agreement~~repair ~~outlines~~costs awere ~~15 year~~needed ~~term~~for toUnit ~~deliver~~1. upTurbine torepairs 50were ~~megawatts~~incurred for ofboth ~~power~~Units at1 ~~competitive~~and ~~prevailing energy~~2. ~~prices~~In in the ~~region.~~fourth ~~Geophysics~~quarter ~~activities~~of ~~and~~2017, the ~~drilling~~plant ofwas ~~the first~~charged ~~exploration~~$250,413 ~~well~~for ~~occurred~~the ~~during~~rental ~~2013.~~of Areplacement 25pump ~~megawatt~~motors ~~flash~~owned ~~steam~~by ~~plant is targeted to be in operation in~~ the ~~first half of 2018~~Parent Company.

On-79- April 22, 2014, the Company acquired all of the ownership shares of a group of companies owned by Ram Power Corp.’s (“Ram”) that held all interests in the WGP Geysers project located in Northern California for a total of $6.78 million. The assets acquired included four production/injection wells, restricted cash, land, geothermal water rights, and an inventory of new drill casing.

~~The~~Summarized ~~Company~~statements ~~completed an acquisition~~ of ~~Earth~~operations ~~Power~~for ~~Resources Inc. (“EPR”) on December 12, 2014. Acquired assets include geothermal leases that cover 26,017 acres in~~ the ~~State~~Neal ~~of Nevada representing three potential projects (Crescent Valley, Lee~~ Hot Springs, Oregon ~~and~~plant ~~Ruby~~are ~~Hot~~as ~~Springs).~~follows:

-72-

	Year Ended December 31,
	2017				2016				Variance
	$		%*		$		%*		$		%**
Plant revenues:
Energy sales	19,941,366		100.0		19,561,718		100.0		379,648		1.9

Plant expenses:
Operations	5,909,791		29.7		4,466,905		22.8		(1,442,886	)	(32.3	)
Depreciation and amortization	3,257,304		16.3		3,281,787		16.8		24,483		0.7
	9,167,095		46.0		7,748,692		39.6		(1,418,403	)	(18.3	)

Operating income	10,774271		54.0		11,813,026		60.4		(1,038,755	)	(8.8	)

Other income (expense):
Interest expense	(1,537,040	)	(7.7	)	(1,597,980	)	(8.1	)	60,940		3.8
Interest income/other	7,068		0.0		6,796		0.0		272		4.0
	(1,529,972	)	(7.7	)	(1,591,184	)	(8.1	)	61,212		3.8

Subsidiary net income	9,244,299		46.3		10,221,842		52.3		(977,543	)	(9.6	)

~~Factors~~%* - represents ~~Affecting~~the ~~Our~~percentage ~~Results~~ of ~~Operations~~ total plant operating revenues.

~~Raft~~%** - represents ~~River~~the ~~Operating~~percentage ~~Agreement/Ownership~~of change from 2016 to 2017. Increases in revenues and decreases in expenses from the prior period to the current period are considered to be favorable and are presented as positive figures.

~~Original~~The ~~Agreement~~intercompany ~~Originally,~~elimination ~~the Raft~~adjustments ~~River~~for ~~Energy~~management ~~I LLC (“RREI”) issued two classes of member units, (Class A~~fees and ~~Class~~corporate ~~B).~~support ~~Each~~are ~~class~~not ofincorporated ~~ownership~~into ~~gives~~ the ~~owner~~presentation ~~participating rights in the business and results in equity ownership risks. The rights attached to the different classes will vary over time, in accordance with the terms~~ of the ~~Membership~~subsidiary’s ~~Admission~~net ~~Agreement.~~operating ~~The agreement required RREI to track separately the capital accounts of the members after November 24, 2006. For~~ income ~~tax purposes, the Class A units received a greater proportion of the share of losses and other income tax benefits~~. ~~This includes the allocation of production tax credits, which was distributed 99% to the Class A units and 1% to the Class B units during the first 10 years of production.~~

~~Purchase~~Comparison ~~Agreement~~ of ~~Member Interest On December 16, 2015,~~ the ~~U.S.~~Year ~~Geothermal~~Ended Inc. (holder of all Class B units) signed a purchase agreement with Goldman Sachs for the acquisition of 450 Class A units of the 500 Class A units held by Goldman Sachs. The terms of the agreement specified the conversion of 450 A units to 450 C units. All of the C units were acquired by U.S. Geothermal Inc. The remaining 50 A units held by Goldman Sachs retain all of the benefits for income tax purposes that were held by the original 500 A units. Effective December 1631, ~~2015,~~2016 ~~U.S.~~and ~~Geothermal Inc. will receive 95% of~~ the ~~available cash flow from the project for the total~~Year ~~purchase~~Ended ~~price of $5.1 million. The agreement includes an option for U.S. Geothermal Inc. to purchase residual interest in RREI for fair market value in~~ December ~~2017. Allocations of profits and losses will remain 99% to Goldman Sachs and 1% to the U.S. Geothermal Inc. until December~~ 31, ~~2017,~~2015 ~~after which the U.S. Geothermal Inc. will receive 95% of the allocation of profits and losses and Goldman Sachs will receive 5%.~~

~~The~~For ~~Company’s~~the ~~interests~~year inended ~~RREI~~December as31, ~~defined~~2016, the Neal Hot Springs plant reported subsidiary net plant income of $10,221,842, which was an increase of $220,833 (2.2% increase) from the net income of $10,001,009 reported in the year ~~partnership~~ended December 31, 2015. Overall, energy sales for the year ended 2016 ~~agreements~~increased ~~are~~$737,919 ~~summarized~~(3.9% asincrease) ~~follows:~~from the year ended 2015. The contracted rates effectively increased 2.4% during the year. During the current year the plant produced 179,558 megawatts of power which was an increase of 2,687 megawatts (1.5% increase) from the prior year. Production hours lost due to both planned and unplanned outages decreased 9.2% from the prior year. In January and May of 2015, approximately 218 hours were lost due to plugged vaporizers in Units 2 and 3.

		Years (2016-2017)	Years (After 2017)
Cash Flow	RECs	95% (1)	95%
	Lease Payments, O&M Services & Royalties	100%
	Distributions	95%	95%
Tax Benefits		1%	95%
GAAP Income		1%	95%

Plant operating costs, excluding depreciation, increased $588,143, which was a 15.2% increase from the prior year. The largest increases were related to taxes and field maintenance costs. For the current year, the plant incurred County Property taxes of $352,110. These taxes were abated during the initial years of plant operations. The abatement period ended in 2015. Increases in field maintenance expenses were partially offset by decreases in chemical and lubricant costs. Field and maintenance costs for the current year increased $98,374 (13.9% increase) from 2015.

~~(1) The Company allocates 95% of income and receives 95% of available cash from RECs sold to third~~-80- ~~parties. After year 10, REC income is shared with Idaho Power Co. For additional details, see the second amended and restated operating agreements as amended.~~

~~-73-~~In the current year, the Company incurred costs that exceeded $233,000 for production pump repairs.

~~Power~~Summarized ~~Purchase~~statements ~~Agreements~~of operations for the Neal Hot Springs, Oregon plant are as follows:

Prior to the construction of a geothermal project, we typically enter into a Power Purchase Agreement (“PPA”) with a utility, which fixes the price of energy produced at a project for a 20 to 30 year period. Such PPAs are typically negotiated with a utility company and approved by a state utility commission or similar regulating body, or other major retail electric service provider, or with aa large industrial consumer.

	Year Ended December 31,
	2016				2015				Variance
	$		%*		$		%*		$		%**
Plant revenues:
Energy sales	19,561,718		100.0		18,823,799		100.0		737,919		3.9

Plant expenses:
Operations	4,466,905		22.8		3,878,762		20.6		(588,143	)	(15.2	)
Depreciation and amortization	3,281,787		16.8		3,278,114		17.4		(3,673	)	(0.1	)
	7,748,692		39.6		7,156,876		38.0		(591,816	)	(8.3	)

Operating income	11,813,026		60.4		11,666,923		62.0		146,103		1.3

Other income (expense):
Interest expense	(1,597,980	)	(8.1	)	(1,674,411	)	(8.9	)	76,431		4.6
Interest income/other	6,796		0.0		8,497		0.0		(1,701	)	(20.0	)
	(1,591,184	)	(8.1	)	(1,665,914	)	(8.9	)	74,730		4.5

Filing Compare · US GEOTHERMAL INC