Incentive Compensation Plan

Our Board of Directors adopted the Ormat Technologies, Inc. 2004 Incentive Compensation Plan (which we refer to as the plan) in October 2004, which plan was subsequently adopted by our stockholders. The plan provides for the grant of the following types of awards (each an award): incentive stock options, within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (which we refer to as the Code), non-qualified stock options, restricted stock, stock appreciation rights, stock units, performance awards, phantom stock, incentive bonuses and other possible related dividend equivalents to our employees, directors and independent contractors (whom we refer to as the eligible individuals). Incentive stock options may be granted to our employees only. A total of 1,250,000 shares of our common stock, which we registered by means of a Registration Statement on Form S-8 filing with the Securities and Exchange Commission on November 9, 2005, were reserved for issuance pursuant to the plan, all of which could be issued as options or as other forms of awards. We have granted options to purchase 200,000 shares of our common stock to our employees and options to purchase 47,500 shares of our common stock to our non-employee directors. If there is a merger, consolidation, stock or other non-cash dividend, extraordinary cash dividend, split-up, spin-off, combination or exchange of shares, reorganization or recapitalization or change in capitalization, or any other similar corporate event, the administrator may make certain adjustments in the aggregate number and kind of shares of common stock subject to the plan and dividend equivalents.

If any shares of common stock that have been made subject to an award cease to be subject to the award, such shares of common stock will again be available for an award and will not be considered as having been previously made subject to an award. Any shares of common stock delivered upon exercise of an option in payment of all or part of the option, or delivered or withheld in satisfaction of withholding taxes with respect to an award, will be additional shares of common stock available for an award under the plan. After an award of phantom stock has been paid out, the shares of common stock underlying the award will again be available for an award and will not be considered as having been previously made subject to an award. Certain awards may also be payable in cash.

Administration of the Plan. Our Board of Directors, or the compensation committee appointed by our Board, administer the plan. Awards intended to qualify as ‘‘performance based compensation’’ within the meaning of Section 162(m) of the Code to any of the Company’s five most highly compensated executives will be granted by a grant committee, a sub-committee of the compensation committee that will consist of two or more ‘‘outside directors’’ within the meaning of Section 162(m) of the Code. The administrator has the power to determine the terms of the awards, including the exercise price, the number of shares subject to each award, the exercisability of the awards and the form of consideration payable upon exercise. Under the plan, the administrator may delegate to our Chief Executive Officer, or his or her delegate, the right to designate other eligible individuals (other than our Chief Executive Officer or his or her delegate) to receive awards and to determine the amount of any awards granted to such eligible individuals and the terms of such awards, except that performance awards to any of the Company’s five most highly compensated officers will only be granted by the grant committee, in accordance with the requirements of Section 162(m) of the Code.

Options. A stock option is the right to purchase shares of our common stock at a fixed exercise price for a fixed period of time. The administrator will determine the exercise price of options granted under our plan, which will be at least equal to the fair market value of our common stock on the date of grant. The aggregate fair market value, determined as of the date the option is granted, of the shares of our common stock for which any employee may be granted incentive stock options which are exercisable for the first time in any calendar year may not exceed $100,000. Stock options generally may not be exercised after ten years from the date of the grant thereof. At the relevant time of exercise, the option price must be paid in full in cash or if permitted in the award agreement in shares of our common stock with a fair market value on the date of exercise equal to the option price or in a combination of cash and shares of common stock whose fair market value on the date of exercise thereof together with such cash will equal the option price. After termination of any of our employees, directors or independent contractors, unless the administrator determines otherwise, an unvested option typically will be subject to forfeiture, and a vested option will be exercisable for the period of time stated in the option agreement. If termination is due to death or retirement, the option generally will remain exercisable for one year following such

18

termination. In all other cases, the option generally will remain exercisable for three months. However, an option may never be exercised later than the expiration of its term.

Stock Appreciation Rights. A stock appreciation right is the right to receive the appreciation in the fair market value of our common stock between the exercise date and the date of grant, for that number of shares of our common stock with respect to which the stock appreciation right is exercised. A stock appreciation right may be granted in conjunction with an option or alone. We may pay the appreciation in either cash, in shares of our common stock with equivalent value, or in some combination, as determined by the administrator. The administrator determines the exercise price of stock appreciation rights, the vesting schedule and other terms and conditions of stock appreciation rights; however, stock appreciation rights expire under the same rules that apply to stock options.

Restricted Stock. Restricted stock awards are awards of shares of our common stock that vest in accordance with terms and conditions established by the administrator. The administrator may impose whatever conditions to vesting it determines to be appropriate. The administrator will determine the number of shares of restricted stock granted to any employee. Unless the administrator determines otherwise, shares that do not vest typically will be subject to forfeiture to the extent the vesting schedule and/or specified performance or other criteria have not be satisfied, or upon the termination of employee, director or independent contractor for any reason including death or retirement.

Stock Units. Stock units are rights to receive shares of our common stock at a future date. The administrator determines the terms and conditions of stock units.

Phantom Stock. Phantom stock are rights to receive an amount of cash equal to the fair market value of a share of our common stock at a specified date. The administrator determines the terms and conditions of phantom stock.

Incentive Bonuses. Incentive bonuses are rights to receive cash or shares of our common stock. The administrator determines the terms and conditions of such incentive bonuses. The Board has determined that up to 20% of the annual profits available for distribution by the Company may, at any time from time to time, be distributed to the employees of the Company by way of cash incentive bonuses to employees, pursuant and subject to the provisions of the plan and at the discretion of the Board. In determining whether there are annual profits available for distribution as cash incentive bonuses, our Board of Directors will take into account our business plan and current and expected obligations, and no such distribution will be made that in the judgment of our Board of Directors would prevent the Company from meeting such business plan or obligations.

Any such distribution will only be made when, as and if approved by our Board of Directors out of funds legally available therefor. The actual amount and timing of any such distribution will depend upon our financial condition, results of operations, business prospects and such other matters as the Board may deem relevant from time to time. Even if profits are available for such distribution, the Board could determine that such profits should be retained for an extended period of time, used for working capital purposes, expansion or acquisition of businesses or any other appropriate purpose.

Performance Awards. Performance awards are awards of options, stock appreciation rights, restricted stock, stock units, phantom stock, and incentive bonus awards that will result in a payment to a key employee only if performance goals established by the administrator are achieved, or if the awards otherwise vest. The administrator or its delegates or the grant committee will establish performance goals in its discretion, which, depending on the extent to which they are met, will determine the number and/or the value of performance units and performance shares to be paid out to key employees. The performance goals may be based upon the achievement of company-wide, divisional or individual goals (including continued service), applicable securities laws or other basis determined by the administrator. Under the plan, no person will receive, in any one fiscal year, grants of performance awards for more than 400,000 shares of our common stock for performance awards of options, stock appreciation rights, restricted stock, stock units and phantom stock. The maximum dollar amount of any performance award of incentive bonuses that may be paid to any key employee in any fiscal year may not exceed $10 million. Performance goals or awards to any of the Company’s five most highly compensated executives will only be set or granted by the grant committee.

19

---

Dividend Equivalents. Any award (other than options, stock appreciation rights and bonuses) under the plan may, in the discretion of the administrator, earn dividend equivalents.

Transferability of Awards. Unless the administrator determines otherwise, no award or portion of an award will be transferable other than by will or by the laws of descent and distribution, except that an option and tandem stock appreciation right may be transferred pursuant to a domestic relations order or by gift to a family member of the holder to the extent permitted in the applicable award. A tandem stock appreciation right may never be transferred except to the transferee of the related option. Only the participant may exercise an award during his or her lifetime.

Amendment and Termination of the Plan. The plan will automatically terminate in 2014, unless we terminate it earlier. In addition, our Board of Directors has the authority to amend, suspend or terminate our plan, provided that such amendment does not adversely affect any award previously granted under our plan, unless the Board of Directors determines that an amendment is desired or appropriate to comply with the requirements of Section 409A of the Code enacted in October 2004.

Section 409A of the Internal Revenue Code. Section 409 of the Code enacted in October 2004 affects the timing for recognition of income attributable to certain types of non-qualified deferred compensation. Our Board of Directors intends to amend the plan, to the extent such amendment is desirable or appropriate, to comply with the requirements of Section 409A of the Code, once they become applicable. The Internal Revenue Service recently suspended such requirements for 2005 and has not yet provided related compliance guidance.

Equity Compensation Plan Information

The following table summarizes share and exercise price information about the Company’s equity compensation plans as of December 31, 2005.

Equity Compensation Plan Information

(a) Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights

(b)                Weighted Average Exercise Price of Outstanding Options, Warrants and Rights

(c)      Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Equity Compensation plans approved by security holders

210,800* 25,000*

$15 $20.10

1,014,200

Equity Compensation plans not approved by security holders

N/A

N/A

N/A

Total

210,800 25,000

$15 $20.10

1,014,200

*	Such shares to be issued as per registration of 1,250,000 shares by means of a Form S-8 filing with the Securities and Exchange Commission on November 9, 2005.

20

---

EXECUTIVE COMPENSATION

The following table sets forth summary information concerning compensation earned during the years ended December 31, 2005, 2004 and 2003 by our Chief Executive Officer and our four most highly compensated executive officers (our Named Executive Officers) for services they rendered to the Company in all capacities during the period. The compensation described in this table includes but does not itemize benefits which are available generally to all of our salaried employees.

Summary Compensation Table

Name and Principal Position(s)				Year				Salary ($)(1)				Bonus ($)(2)				Other Annual Compensation ($)(3) (4)				Securities Underlying Options (#)(5)				All Other Compensation ($)(6)
Yehudit Bronicki					2005				150,000				98,828				19,978				—				36,544
Chief Executive Officer					2004				94,155				118,433				20,244				—				11,888
					2003				45,518				—								—				—
Lucien Bronicki					2005				124,000				98,828				23,327				—				17,080
Chairman and Chief					2004				62,922				118,433				9,104				—				9,190
Technology Officer					2003				—				—				—				—				—
Nadav Amir					2005				176,404				81,378				13,047				—				33,264
Executive Vice President					2004				86,386				22,502				11,065				11,000				13,859
—Engineering					2003				—				—				—				—				—
Hezy Ram					2005				175,000				266,865				9,300				—				12,123
Executive Vice President					2004				175,000				467,600				—				30,000				15,298
—Business Development, North America					2003				—				300,000				—				—				—
Joseph Shiloah					2005				138,047				81,378				11,964				—				27,244
Executive Vice President					2004				65,353				28,128				9,883				9,250				10,833
—Marketing and Sales, Rest of the World					2003				—				—				—				—				—

Note: Footnotes below include information regarding compensation, if any, from companies other than Ormat Technologies, Inc. for the years 2005, 2004 and 2003.

(1)

In 2004 and 2003 , in addition to these amounts, Mrs. Bronicki received $28,991 and $58,438, respectively, as salary compensation from Ormat Industries; in 2004 and 2003, Mr. Bronicki received $62,006 and $124,051, respectively, as salary compensation from Ormat Industries; in 2004 and 2003, Mr. Amir received $84,887 and $169,820, respectively; Mr. Ram received $0 and $145,495, respectively; and Mr. Shiloah received $68,613 and $123,853, respectively, as salary compensation from Ormat Industries.

(2)

In 2005, Mrs. Bronicki earned $59,250 as bonus compensation from Ormat Industries. In 2005, Mr. Bronicki earned $59,250 as bonus compensation from Ormat Industries. In 2004 and 2003, Mr. Amir earned $22,109 and $0, as bonus compensation from Ormat Industries; in 2003, Mr. Ram earned $333,242; and in 2004 and 2003, Mr. Shiloah earned $27, 637 and $11,081, respectively, as bonus compensation from Ormat Industries.

(3)

In 2004 and 2003, Mrs. Bronicki received $14,068 and $15,634 as other compensation from Ormat Industries. In 2004 and 2003, Mr. Bronicki received $12,788 and $14,598 as other compensation from Ormat Industries. In 2004 and 2003, Mr. Amir received $11,513 and $19,498 as other compensation from Ormat Industries. In 2004, 2003 and 2002, Mr. Ram received $0, $16,713, and $13,595 as other compensation from Ormat Industries. In 2004 and 2003, Mr. Shiloah received $7,697 and $16,520 as other compensation from Ormat Industries.

21

---

(4)

In 2004, Mrs. Bronicki received $4,064, Mr. Bronicki received $2,342, Mr. Amir received $3,132, Mr. Ram received $0, and Mr. Shiloah received $2,120 respectively from the Company, reflecting the private use of Company-leased cars. In 2004 and 2003, Mr. Bronicki received $3,993 and $7,872, respectively, Mr. Bronicki received $1,963 and $3,996, respectively, Mr. Amir received $3,078 and $6,017 respectively, Mr. Ram received $0 and $3,996 respectively, and Mr. Shiloah received $1,963 and $3,996 respectively from Ormat Industries, reflecting the use of Company-leased cars.

(5)	In 2005, 2004 and 2003, Mr. Amir received options to purchase 0, 25,000 and 33,000 shares of Ormat Industries’ common stock, respectively; Mr. Ram received options to purchase 0, 25,000 and 33,000 shares of Ormat Industries’ common stock, respectively; and Mr. Shiloah received options to purchase 0, 25,000 and 33,000 shares of Ormat Industries’ common stock, respectively.

(6)

All Other Compensation includes payment of pension benefits in the amounts shown: In 2005, 2004 and 2003, Mrs. Bronicki received $0, $8,950 and $18,109, respectively from Ormat Industries. In 2005, 2004 and 2003, Mr. Lucien Bronicki received $0, $8,975 and $18,230, respectively from Ormat Industries. In 2005, 2004 and 2003, Mr. Amir received $0, $13,455 and $26,456, respectively from Ormat Industries. In 2005, 2004 and 2003, Mr. Ram received $0, $0 and $23,239, respectively from Ormat Industries. In 2005, 2004 and 2003, Mr. Shiloah received $0, $10,437 and $21,142 respectively from Ormat Industries.

Option Grants During Fiscal Year 2005

There were no option grants during fiscal year 2005 to the Company’s Named Executive Officers.

Option Exercises in Fiscal Year 2005 and Fiscal Year-End Option Values

The following table contains information regarding our Named Executive Officers’ unexercised options to acquire shares of the Company’s common stock for the fiscal year ended December 31, 2005:

Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

Name

Shares acquired on exercise (#)

Value realized ($)

Number of securities underlying unexercised options at Fiscal Year-End (#) Exercisable/ Unexercisable

Value of unexercised in-the-money options at Fiscal Year-End ($) Exercisable/ Unexercisable

Yehudit Bronicki

—

—

—

—

Lucien Bronicki

—

—

—

—

Nadav Amir

—

—

0/11,000

0/$10,560

Hezy Ram

—

—

0/30,000

0/$28,800

Joseph Shiloah

—

—

0/9,250

0/$8,880

22

---

Compensation Committee Report on Executive Compensation

The following Compensation Committee Report on Executive Compensation and compensation-related disclosures set forth in the proxy statement shall not be deemed incorporated by reference by any general statement incorporating this proxy statement into any filing under the Securities Act or under the Exchange Act except to the extent the Company specifically incorporates this information by reference, and shall not otherwise be deemed filed under such Acts.

The Compensation Committee consists of three directors, who are appointed by the Board. The Compensation Committee operates pursuant to a written charter adopted by the Board of Directors, which includes evaluation of the performance of the Chief Executive Officer, review and approval of the compensation of the Chief Executive Officer and all other executive officers of the Company, and recommendations to the Board of Directors regarding non-CEO compensation, incentive-compensation plans and equity-based plans.

Compensation Philosophy

The general philosophy of the Compensation Committee is to provide executive compensation designed to motivate and retain executive officers in the Company for the continued success of the Company and the enhancement of shareholder value, including annual compensation, consisting of salary and bonus awards, and long-term compensation, consisting of stock options and possibly other equity-based compensation.

In making decisions affecting executive compensation, the Compensation Committee reviews the nature and scope of the executive officer’s responsibilities, as well as his or her effectiveness in supporting the Company’s long-term goals. The Committee also considers the compensation practices of other major corporations in areas where the Company operates that compete with the Company.

Compensation component

There are three primary types of compensation provided to the Company’s executive officers:

	–	Annual compensation, which includes base salary intended to provide a stable annual salary at a level consistent with individual contributions.

	–	Annual performance target bonuses intended to link executive officers’ compensation to the Company’s performance.

	–	Long-term compensation, which includes stock options and may include other equity-based compensation and long-term incentive awards. Under their current employment agreements, the Chief Executive Officer, the Chairman of the Board and the Chief Operating Officer of the Company do not participate in this third component of the compensation.

Annual Compensation

Base salary

Consistent with its stated philosophy, the Compensation Committee aims to position base salaries for the Company’s executive officers annually at levels that are consistent with the Compensation Committee’s interpretation of competitive compensation averages for individuals with similar responsibilities at companies with similar financial, operating and industry characteristics, in similar locations, with consideration of the performance of the Company, individual performance of each executive and the executive’s scope of responsibility in relation to other officers and key executives within the Company. In selected cases, other factors may also be considered.

Annual Incentive Bonuses

The Company’s annual incentive bonus plan provides for the payment of cash bonuses based on the Company’s performance measured against specific criteria, such as revenue growth, profitability and attainment of strategic business goals, in relation to individual executive performance. Based on these

23

---

criteria, for the year 2005, bonuses were paid under the annual incentive bonus plan in the amount of $528,449 to the four highest paid executive officers after the Chief Executive Officer.

Long-Term Compensation

The Compensation Committee is committed to long-term incentive programs for executives that promote the long-term growth of the Company, and to align the interests of employees with those of our stockholders.

Equity-Based Compensation

Our executive compensation programs are, among other things, intended to inspire executives to achieve our business objectives and reward them for their achievement. On March 7, 2006, upon the evaluation of the Company’s 2005 performance and future growth targets, the Committee approved the granting of a basket of 300,000 Company stock options to executive officers (other than Lucien, Yehudit and Yoram Bronicki) and to other employees in management and key positions.

Compensation of Chief Executive Officer

The Chief Executive Officer and the Chairman of the Company each have a four-year employment agreement with the Company with a monthly base salary of $12,500 and $10,333, respectively fixed for the term of the agreement, which expires on June 30, 2008, and a bonus measured as a percentage of net income. For 2005, the bonuses approved for each of the Chief Executive Officer and the Chairman of the Company, in accordance with the employment agreements, were $98,828. Under the terms of the Chief Executive Officer's employment agreement, the Chief Executive Officer is entitled to an annual bonus equal to 0.75% of the Company's annual consolidated profits (after tax) above $2 million to be paid by the Company. As the CEO is entitled to such annual bonus, no particular factors were taken into account in determining the bonus.

Internal Revenue Code Section 162(m)

The Compensation Committee also considers the potential impact of Section 162(m) of the Internal Revenue Code of 1986, as amended (‘‘Section 162(m)’’). Section 162(m) disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1 million in any taxable year for the Chief Executive Officer and the five most highly paid senior executive officers, other than compensation that is performance-based under a plan that is approved by the stockholders of the corporation and that meets certain other technical requirements. Based on these requirements, the Compensation Committee has determined that Section 162(m) will not prevent the Company from receiving a tax deduction for any of the compensation paid to executive officers.

The Committee believes that the currently established compensation programs, plans and compensation philosophy effectively support Company goals.

Submitted on March 7, 2006 by the members of the Compensation Committee of Ormat Technologies Inc.’s Board of Directors.

Yehudit Bronicki, Chair Dan Falk Jacob Worenklein

24

---

EMPLOYMENT AGREEMENTS

We have entered into an executive employment agreement with Mrs. Yehudit Bronicki, as our Chief Executive Officer, effective as of July 1, 2004. Such employment agreement is for a four-year term expiring on June 30, 2008, unless terminated earlier pursuant to the terms of the agreement. Such employment agreement, when expired, will be automatically extended for an additional successive four-year term, unless terminated earlier by either us or Mrs. Bronicki pursuant to the terms of the agreement.

The employment agreement provides for a monthly base salary of $12,500. Mrs. Bronicki is also entitled to a bonus and other benefits set forth in the agreement and a company automobile. Pursuant to the terms of the agreement, if we or Mrs. Bronicki terminate the agreement, by providing the other party with 180 days’ written notice prior to the end of the respective term, Mrs. Bronicki will be entitled to her salary, bonus and other benefits for such 180-day period. In the event of such termination, Mrs. Bronicki is entitled to an assignment of her ‘‘executive manager’s insurance policy’’ and monies accumulated under such policy, and a payment of the difference, if any, between the sums accumulated under such policy on account of her severance pay, and the amount of severance pay she is entitled to based on her last base salary multiplied by the number of years she has been employed by us or Ormat Industries.

Mrs. Bronicki is also entitled to change in control payments. If, within three years following the occurrence of a change in control, we terminate Mrs. Bronicki’s employment or Mrs. Bronicki terminates her own employment for good reason, other than for disability or if, within 180 days following a change in control, Mrs. Bronicki terminates her employment agreement with 90 days’ prior written notice, then we are required to pay her a lump sum equal to (1) her full unpaid and accrued base salary through the date of termination; plus (2) her monthly base salary at the time of the change of control including any increases therein multiplied by 24; plus (3) the average of the annual bonus paid to Mrs. Bronicki for the two years immediately preceding the change in control multiplied by two; plus (4) a portion of the annual bonus for the year in which the termination of employment occurs with the amount thereof multiplied by a fraction, the numerator of which is the number of days in the relevant year through the date of termination and the denominator of which is 365, and any unpaid annual bonus for any completed year. In addition, Mrs. Bronicki is also entitled to all employee health, accident, life insurance, disability and other employee welfare benefits for a two-year period following her last day worked, or until she obtains new employment, whichever is earlier.

We have entered into an executive employment agreement with Mr. Lucien Bronicki, as our Chief Technology Officer, effective as of July 1, 2004. Such employment agreement is for a four-year term expiring on June 30, 2008, unless terminated earlier pursuant to the terms of the agreement. Such employment agreement, when expired, will be automatically extended for an additional successive four-year term, unless terminated earlier by either us or Mr. Lucien Bronicki pursuant to the terms of the agreement.

The employment agreement provides for a monthly base salary of $10,333. Mr. Lucien Bronicki is also entitled to a bonus and other benefits set forth in the agreement and a company automobile. Pursuant to the terms of the agreement, if we or Mr. Lucien Bronicki terminate the agreement, by providing the other party with 180 days’ written notice prior to the end of the respective term, Mr. Lucien Bronicki will be entitled to his salary, bonus and other benefits for such 180-day period. In the event of such termination, Mr. Lucien Bronicki is entitled to an assignment of his ‘‘executive manager’s insurance policy’’ and monies accumulated under such policy, and payment of the difference, if any, between the sums accumulated under such policy on account of his severance pay, and the amount of severance pay he is entitled to based on his last base salary multiplied by the number of years he has been employed by us or Ormat Industries, as specified in the agreement.

Mr. Lucien Bronicki is also entitled to change in control payments. If, within three years following the occurrence of a change in control, we terminate Mr. Lucien Bronicki’s employment or Mr. Lucien Bronicki terminates his own employment for good reason, other than for disability or if, within 180 days following a change in control, he terminates his employment agreement with 90 days’ prior written notice, then we are required to pay him a lump sum equal to (1) his full unpaid and accrued base salary through the date of termination; plus (2) his monthly base salary at the time of the change of control including any increases therein multiplied by 24; plus (3) the average of the annual bonus paid to

25

---

Mr. Lucien Bronicki for the two years immediately preceding the change in control multiplied by two; plus (4) a portion of the annual bonus for the year in which the termination of employment occurs with the amount thereof multiplied by a fraction, the numerator of which is the number of days in the relevant year through the date of termination and the denominator of which is 365, and any unpaid annual bonus for any completed year. In addition, Mr. Lucien Bronicki is also entitled to all employee health, accident, life insurance, disability and other employee welfare benefits for a two-year period following his last day worked, or until he obtains new employment, whichever is earlier.

We have also entered into an executive employment agreement with Mr. Yoram Bronicki, as our Chief Operating Officer, effective as of July 1, 2004. Such employment agreement is for a two-year term expiring on June 30, 2006, unless terminated earlier pursuant to the terms of the agreement. Such employment agreement, when terminated, will be automatically extended for additional successive two-year terms subject to conditions set forth in the agreement.

The employment agreement with Mr. Yoram Bronicki provides for a monthly base salary of $14,000. Mr. Yoram Bronicki is also entitled to a bonus and other benefits set forth in the agreement. Pursuant to the terms of the agreement, if we terminate Mr. Yoram Bronicki’s employment without cause, by providing him with a 120 days’ written notice prior to the end of the respective term, Mr. Yoram Bronicki will be entitled to his salary, bonus and other benefits for the unexpired portion of the remaining term of his employment agreement, except that if such prior notice is given for a period less than 120 days prior to the termination of his employment agreement, such salary, bonus and other benefits will be paid for a period of 120 days after such notice is given. If Mr. Yoram Bronicki is terminated for cause, he will not be entitled to any salary, bonus or other benefits except for accrued but unpaid salary through the last day worked prior to such termination.

Mr. Yoram Bronicki is also entitled to change in control payments. If, within three years following the occurrence of a change in control, as defined in the agreement, we terminate Mr. Yoram Bronicki’s employment or Mr. Yoram Bronicki terminates his own employment for good reason, other than for disability or if, within 180 days following a change in control, he terminates his employment agreement with 90 days’ prior written notice then we are required to pay him a lump sum equal to (1) his full unpaid and accrued base salary through the date of termination; plus (2) his monthly base salary at the time of the change of control including any increases therein multiplied by 24; plus (3) the average of the annual bonus paid to Mr. Yoram Bronicki for the two years immediately preceding the change in control multiplied by two; plus (4) the amount of the annual contribution that would be made by us to his 401(k) plan assuming his maximum contribution under the plan, multiplied by two; plus (4) a portion of the annual bonus for the year in which the termination of employment occurs with the amount thereof multiplied by a fraction, the numerator of which is the number of days in the relevant year through the date of termination and the denominator of which is 365, and any unpaid annual bonus for any completed year. In addition, Mr. Yoram Bronicki is also entitled to all employee health, accident, life insurance, disability and other employee welfare benefits for a two-year period following his last day worked, or until he obtains new employment, whichever is earlier.

Hezy Ram is currently employed by Ormat Nevada and serves as our Executive Vice President of Business Development, North America, pursuant to an employment agreement dated January 1, 2004, which expires on December 31, 2007. Mr. Ram’s employment agreement provides for an annual base salary of $175,000. Pursuant to the terms of Mr. Ram’s employment agreement, in addition to his annual salary, Mr. Ram is entitled to certain other benefits paid for by us, including, among other things, annual bonuses and medical and hospitalization insurance. Pursuant to the terms of Mr. Ram’s employment agreement, if we terminate his employment without cause, Mr. Ram is entitled to receive his monthly salary for the following 90-day period. If Mr. Ram terminates his employment voluntarily, he is not entitled to receive any subsequent payments. Mr. Ram’s employment agreement also contains a one-year non-competition and non-solicitation provision.

Nadav Amir is employed by Ormat Systems and serves as our Executive Vice President of Engineering, and Joseph Shiloah is employed by Ormat Systems and serves as our Executive Vice President of Marketing and Sales, Rest of the World. Each of Messrs. Amir and Shiloah is party to an employment agreement with Ormat Systems that sets forth their respective terms of employment that are

26

---

generally applicable to all of Ormat Systems’ staff, covering matters such as vacation, health and other benefits. Under such employment agreements, any Ormat Systems employee may be terminated for any reason subject to 30 days’ prior notice. However, termination for cause does not require any prior notice. An employee that is terminated for cause is not entitled to any subsequent payments.

The actual salary and other compensation arrangements of Messrs. Amir and Shiloah are agreed separately with each employee. Each of these individuals is also covered by Ormat Systems’ management insurance plan, to which Ormat Systems contributes a percentage of such individual’s salary, and which covers any compensation that such individual may be entitled to receive upon termination. In addition, each of the individuals has the benefit of the use of a company-leased car.

27

---

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Ormat believes, based upon a review of the forms filed and written confirmation provided by its officers and directors, that during 2005 all of its officers and directors filed on a timely basis the reports required by Section 16(a) of the Securities Exchange Act of 1934, with the exception of a Form 3 filed on September 21, 2005 for Joseph Tenne, the Chief Financial Officer of the Company, who did not own any securities of the Company at the time of his appointment on March 9, 2005.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Loan Agreement between Us and Ormat Industries

In 2003, we entered into a loan agreement with Ormat Industries, which was further amended on September 20, 2004. Pursuant to this loan agreement, Ormat Industries agreed to make a loan to us in one or more advances not exceeding a total aggregate amount of $150.0 million. The proceeds of the loan are to be used to fund our general corporate activities and investments. We are required to repay the loan and accrued interest in full and in accordance with an agreed-upon repayment schedule and in any event on or prior to June 5, 2010.

Interest on the loan is calculated on the balance from the date of the receipt of each advance until the date of payment thereof at a rate per annum equal to Ormat Industries’ average effective cost of funds plus 0.3% percent in U.S. dollars, which represented a rate of 7.5% for the advances made during year 2003. All computations of interest shall be made by Ormat Industries on the basis of a year consisting of 360 days. As of December 31, 2004, the outstanding balance of the loan was approximately $148.4 million. As of December 31, 2005, the outstanding balance on the loan was $121.1 million.

The loan agreement contains customary representations and warranties to Ormat Industries and also contains customary events of default and notice provisions.

The loan agreement is governed by, and interpreted and construed under, the laws of Israel.

We believe that the terms of the loan agreement are as beneficial to us as could be obtained from unaffiliated third parties.

Capital Note Issued to Ormat Industries

Pursuant to the terms of a capital note, as further amended on September 20, 2004, Ormat Industries converted outstanding balances owed by us to Ormat Industries into a subordinated non-interest bearing loan in an amount equal to NIS 240.0 million. We can repay the loan in full or, upon demand by Ormat Industries, we will be required to repay the loan in full at any time after November 30, 2007. The final maturity of the loan is December 30, 2009. In accordance with the terms of such note, we will not be required to repay any amount in excess of $50.7 million (using the exchange rate existing on the date of such note).

We believe that the terms of the capital note are as beneficial to us as could be obtained from unaffiliated third parties.

Guarantee Fee Agreement between Us and Ormat Industries

In 1999, we entered into a guarantee fee agreement with Ormat Industries, pursuant to which Ormat Industries agreed to issue certain standby letters of credit and guarantees on our behalf to certain of our customers, as well as guarantees with respect to our bank credit lines.

Such agreement establishes a fee, calculated quarterly, equal to 1% per annum of all amounts guaranteed or subject to an outstanding letter of credit during the relevant quarter, plus out of pocket expenses. Such payment is due quarterly in arrears and is payable against the receipt of an invoice from Ormat Industries.

We believe that the terms of the guarantee fee agreement are as beneficial to us as could be obtained from unaffiliated third parties.

28

---

Reimbursement Agreement between Us and Ormat Industries

On July 15, 2004, we entered into a reimbursement agreement pursuant to which we agreed to reimburse Ormat Industries for any draws made on any standby letter of credit subject to the guarantee fee agreement, dated as of January 1, 1999, between us and Ormat Industries, and for any payments made under any guarantee provided by Ormat Industries subject to such guarantee fee agreement. Interest on any amounts owing pursuant to the reimbursement agreement is paid at a rate per annum equal to Ormat Industries’ average effective cost of funds plus 0.3% in U.S. dollars. There are no amounts currently owing to Ormat Industries pursuant to the reimbursement agreement.

Asset Purchase Agreement between Us and Ormat Industries

Pursuant to an asset purchase agreement, effective as of July 1, 2004, Ormat Industries sold and assigned to our subsidiary, Ormat Systems, certain assets and liabilities related to Ormat Industries’ geothermal power plants and power units business, which is described in our Annual Report on Form 10-K for the year ended December 31, 2005 as our products business. The parties agreed to use their best efforts to assign the contracts and liabilities related to this business to Ormat Systems within 12 months from July 15, 2004, and until then, their unassigned assets are to be held in trust by Ormat Industries for Ormat Systems. As part of this transaction, Ormat Industries agreed, for so long as it holds more than 50% of the voting interest in us, not to compete or engage in any business which is in the same field of the business acquired by Ormat Systems.

As total consideration for the purchase, Ormat Systems agreed to pay Ormat Industries the amount of $11.0 million, which consists of a cash payment and the assumption of an outstanding loan to Bank Continental and certain employment liabilities.

As part of this transaction, Ormat Systems also agreed to pay to Ormat Industries certain commissions ranging between 2.5% and 5.0% on revenues from sale orders entered into prior to July 1, 2004. The aggregate amount of such commissions is subject to receipt of payment from customers and is approximately $2.2 million.

The asset purchase agreement and the following sublease agreement, license agreement, service agreement and reimbursement agreement are agreements that set forth the terms and conditions of the sale and assignment by Ormat Industries’ products business to Ormat Systems. We believe that, taken as a whole, the terms of these agreements, collectively, are reasonable and appropriately benefit the company.

Sublease between Us and Ormat Industries

Our subsidiary, Ormat Systems, has entered into a sublease with Ormat Industries for real estate leased by Ormat Industries from the Israeli Land Administration on which our production and manufacturing facilities are located. Such sublease is effective as of July 1, 2004 and the term of such sublease is four years and eleven months, which term has been extended by a consent of the Israeli Land Administration for a period the shorter of (1) 25 years (including the initial term) or (2) the remaining period of the underlying lease agreements with the Israel Land Administration (which terminate between 2018 and 2047).

Pursuant to the sublease, Ormat Systems agreed to pay rent, in advance, on a monthly basis, equal to $52,250.00 (plus VAT) per month. Payment will be adjusted every year to reflect increases in the Israeli Consumer Price Index, but will in no event be lower than the rent paid during the previous year. Pursuant to the sublease, Ormat Systems has also agreed to pay taxes and other compulsory charges, to make other required payments, and to indemnify Ormat Industries for taxes (other than income taxes) imposed in connection with the subleased real estate.

Pursuant to the sublease, Ormat Systems agreed to certain other customary undertakings, including indemnification and insurance undertakings.

The sublease was executed in connection with the asset purchase agreement between Ormat Systems and Ormat Industries.

29

---

License Agreement between Us and Ormat Industries

On July 15, 2004, our subsidiary, Ormat Systems, entered into a patents and trademarks license agreement, effective as of July 1, 2004, pursuant to which Ormat Industries granted a world-wide royalty-free license to Ormat Systems (which is exclusive with respect to the patents and certain of the trademarks) to internally copy, use, and create derivatives of certain patents and trademarks. The license survives sales and/or transfers of the patents and trademarks and Ormat Systems owns the derivatives created from the licensed patents. The term of the license agreement continues until the patents or trademarks expire or are assigned to Ormat Systems (which are intended to be assigned, subject to tax and other considerations) and the agreement may be terminated if either party becomes insolvent.

The license agreement was executed in connection with the asset purchase agreement between Ormat Systems and Ormat Industries.

Service Agreement between Us and Ormat Industries

On July 15, 2004, our subsidiary, Ormat Systems, entered into a service agreement, effective as of July 1, 2004, pursuant to which Ormat Systems agreed to provide, as an independent contractor, certain corporate, financial, secretarial and administrative services to Ormat Industries. At the request of Ormat Industries, Ormat Systems may also provide certain engineering services.

Ormat Industries is required to pay $10,000 per month for all services (other than engineering services) rendered pursuant to such service agreement plus all out-of-pocket expenses of Ormat Systems. For engineering services, Ormat Industries is required to pay a fee equal to the cost of such services plus 10.0% and all out-of-pocket expenses of Ormat Systems. On each anniversary of such services agreement, such monthly fees are adjusted in accordance with the Israeli Consumer Price Index during the previous twelve-month period.

The service agreement was executed in connection with the asset purchase agreement between Ormat Systems and Ormat Industries.

Registration Rights Agreement between Us and Ormat Industries

The Company has entered into a registration rights agreement with Ormat Industries. Under this agreement, Ormat Industries may require us on one occasion to register our common stock for sale on Form S-1 under the Securities Act if we are not eligible to use Form S-3 under that Act. Ormat Industries may require us on unlimited occasions to register our common stock for sale on this form. In addition, we will be required to file a registration statement on Form S-3 to register for sale shares of our common stock that are or have been acquired by directors, officers and employees of Ormat Industries upon the exercise of options granted to them by Ormat Industries. Ormat Industries will also have an unlimited number of piggyback registration rights. This means that any time we register our common stock for sale, Ormat Industries may require us to include shares of our common stock held by it or its directors, officers and employees in that offering and sale, subject to certain allocation procedures set forth in the registration rights agreement.

We have agreed to pay all expenses that result from the registration of our common stock under the registration rights agreement, other than underwriting commissions for such shares and taxes. We have also agreed to indemnify Ormat Industries, its directors, officers and employees against liabilities that may result from their sale of our common stock, including liabilities under the Securities Act.

Employment Agreements

For a description of the employment agreements of Lucien Bronicki and Yoram Bronicki, see ‘‘Employment Agreements.’’

Agreement with Tersus Software and Consulting Agreements

Effective April 15, 2005, the Company entered into an agreement with Tersus Software (‘‘Tersus’’), for the licensing of software that will be used in the development of several applications, including an

30

---

Enterprise Resource Planning ( ERP) solution and the monitoring of performance of the power plants. The price paid to Tersus under the agreement is $100,000. One of Tersus’ founders and shareholders (with a 20% share ownership on a fully diluted basis) is Yuval Bronicki, son of Yehudit Bronicki, CEO and President of our Company, and Lucien Bronicki, Chairman of the Board and Chief Technology Officer of our Company.

Yuval Bronicki was also retained as a consultant to the Company, to assist with the development of the ERP solution. Pursuant to the agreement, Yuval Bronicki is compensated at an hourly rate for services performed. Yuval Bronicki’s total compensation for 2005 was $62,000.

The Company’s Board and Audit Committee have reviewed the principal terms of the agreement with Tersus and the consulting agreement and received updates on performance results. The Audit Committee’s review included a discussion of any potential conflict of interest issues related to such transaction and the subsequent performance as agreed upon by the parties.

31

---

STOCK PERFORMANCE GRAPH

The following performance graph represents the cumulative total shareholder return for the period November 11, 2004 (the date upon which trading of the Company’s common stock commenced) through December 31, 2005 for our common stock, as compared to the Standard and Poor’s Composite 500 Index, and a peer group.

				11/11/2004				12/31/2004				[12/31/2005
Ormat Technologies Inc.				$	100			$	109			$	174
Standard & Poor’s Composite 500 Index				$	100			$	108			$	111
IPP Peers*				$	100			$	113			$	144
Renewable Peers*				$	100			$	117			$	236

*Independent Power Producer (IPP) Peers are The AES Corporation, NRG Energy Inc. and International Power PLC. Renewable energy (Renewable) Peers are Acciona S.A., Evergreen Solar Inc. and Energy Conversion Devices Inc.

The above Compensation Committee Report on Executive Compensation and the Stock Performance Graph shall not be deemed to be soliciting material or to be filed with the SEC under the Securities Act and the Exchange Act except to the extent that the Company specifically requests that such information be treated as soliciting material or specifically incorporates it by reference into a filing under the Securities Act or the Exchange Act.

OTHER MATTERS

We know of no other business that will be presented at the meeting. If any other matter properly comes before the stockholders for a vote at the meeting, however, the proxy holders will vote your shares in accordance with their best judgment. This discretionary authority is granted by the execution of the enclosed form of proxy.

32

---

ADDITIONAL INFORMATION

Householding of Proxies

Under rules adopted by the SEC, we are permitted to deliver a single set of any proxy statement and annual report to any household at which two or more stockholders reside if we believe the stockholders are members of the same family. This process, called householding, allows us to reduce the number of copies of these materials we must print and mail. Even if householding is used, each shareholder will continue to receive a separate proxy card or voting instruction card.

The Company is not householding this year for those shareholders who own their shares directly in their own name. If you share the same last name and address with another Company shareholder who also holds his or her shares directly, and you would each like to start householding for the Company’s annual reports and proxy statements, please contact us at Ormat Technologies, Inc., 980 Greg Street, Sparks, Nevada 89431, attention: Corporate Secretary, telephone (775) 356-9029.

This year, some brokers and nominees who hold Company shares on behalf of shareholders may be participating in the practice of householding proxy statements and annual reports for those shareholders. If your household received a single proxy statement and annual report for this year, but you would like to receive your own copy this year, please contact us as stated above, and we will promptly send you a copy. If a broker or nominee holds Company shares on your behalf and you share the same last name and address with another shareholder for whom a broker or nominee holds Company shares, and together both of you would like to receive only a single set of the Company’s disclosure documents, please contact your broker or nominee as described in the voter instruction card or other information you received from your broker or nominee.

If you consent to householding, your election will remain in effect until you revoke it. Should you later revoke your consent, you will be sent separate copies of those documents that are mailed at least 30 days or more after receipt of your revocation.

Additional Filings

The Company’s Forms 10-K, 10-Q, 8-K and all amendments to those reports are available without charge through the Company’s website on the Internet, www.ormat.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. The content of our website, however, is not part of this proxy statement.

Proxy Solicitation

Ormat will bear the entire costs of this proxy solicitation. In addition to soliciting proxies by this mailing, we expect that our directors, officers and regularly engaged employees may solicit proxies personally or by mail, facsimile, telephone, or other electronic means, for which solicitation they will not receive any additional compensation. Ormat will reimburse brokerage firms, custodians, fiduciaries and other nominees for their out-of-pocket expenses in forwarding solicitation materials to beneficial owners upon our request.

33

---

Shareholder Proposals for 2007 Annual Meeting of Stockholders

From time to time, stockholders seek to nominate directors or to present proposals for inclusion in the proxy statement and form of proxy, or otherwise for consideration at the annual meeting. To be included in the proxy statement or considered at an annual meeting, a stockholder must timely submit nominations of directors or other proposals to the Company to Ormat Technologies, Inc.’s Corporate Secretary at 980 Greg Street, Sparks, Nevada 89431 in addition to complying with certain rules and regulations promulgated by the SEC. To be timely, a stockholder’s notice shall be delivered to the Secretary at the principal offices of the Company not later than the close of business on the 90th day nor earlier than the close of business on the 120th day prior to the first anniversary of the 2006 Annual Meeting of Stockholders, unless the date of the 2007 Annual Meeting of Stockholders is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 60 days from the anniversary of the 2005 Annual Meeting of Stockholders.

For the Company’s 2007 Annual Meeting of Stockholders, this means that any such proposal or nomination must be submitted no earlier than January 9, 2007 and no later than February 8, 2007. If the date of the 2007 Annual Meeting of Stockholders is advanced by more than 30 days or delayed (other than as a result of adjournment) by more than 60 days from the anniversary of the 2006 Annual Meeting of Stockholders, the stockholder must submit any such proposal or nomination no earlier than the close of business on the later of the 90th day prior to the 2007 Annual Meeting of Stockholders or the 10th day following the day on which the public announcement of the date of such meeting is first made.

By order of the Board of Directors,

/s/ YEHUDIT BRONICKI Yehudit Bronicki Chief Executive Officer and President

34

---

ANNUAL MEETING OF STOCKHOLDERS OF

ORMAT TECHNOLOGIES, INC.

May 9, 2006

    

Please date, sign and mail
your proxy card in the
envelope provided as soon
as possible.

•   Please detach along perforated line and mail in the envelope provided.   •

THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF DIRECTORS AND "FOR" PROPOSAL 2.
PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE

1.	Election of Directors.

   FOR ALL NOMINEES
   WITHHOLD AUTHORITY FOR ALL NOMINEES
   FOR ALL EXCEPT (See instructions below)

NOMINEES:
O Yehudit Bronicki
O Jacob Worenklein
O Elon Kohlberg

INSTRUCTION: To withhold authority to vote for any individual nominee(s), mark "FOR ALL EXCEPT" and fill in the circle next to each nominee you wish to withhold as shown here.   

2.	To ratify the selection of PricewaterhouseCoopers LLP as independent auditors of the Company for its fiscal year ending December 31, 2006.

	FOR				AGAINST				ABSTAIN

3.	In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.

This proxy is solicited on behalf of the Board of Directors of the Company. This proxy, when properly executed, will be voted in accordance with the instructions given above. If no instructions are given, this proxy will be voted "FOR" election of the Directors and "FOR" proposal 2.

To change the address in your account, please check the box at right and indicate your new address in the address space above. Please note that changes to the registered name(s) on the account may not be submitted via this method.    

Signature of Stockholder ______________________ Date ____________

Signature of Stockholder ______________________ Date ____________

Note:

Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person.

---

ORMAT TECHNOLOGIES, INC.

ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 9, 2006
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

The undersigned hereby appoints Yehudit Bronicki, CEO and President and Etty Rosner, Vice President and Corporate Secretary as proxies, each with full power of substitution, to represent and vote as designated on the reverse side, all the shares of Common Stock of Ormat Technologies, Inc. held of record by the undersigned on March 28, 2006, at the Annual Meeting of Stockholders to be held at the offices of Chadbourne & Parke LLP, 30 Rockefeller Plaza, New York, N.Y. 10112, on May 9, 2006, or any adjournment or postponement thereof.

(Continued and to be signed on the reverse side)

14475

---