Buffett company purchase gives solar industry big boost
Warren Buffett’s MidAmerican Energy Holdings company has agreed to buy a giant, 550-megawatt photovoltaic farm currently under construction in San Luis Obispo County for $2 billion, giving a huge boost to the solar industry that could spur investment by other major players.
The "utility-scale" facility MidAmerican is purchasing is being built by First Solar Inc. of Tempe, Ariz. A spokesman for First Solar, Alan Bernheimer, said the farm would produce enough power to provide for the energy needs of 160,000 California homes. But the investment had deeper meaning for an industry that still has only a small footprint in the nation's energy mix and has been battered by recent bankruptcies.
"In a lot of ways, this is classic Warren Buffett," said Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University. "He comes in to an industry that is starving for capital investment. At the same time, this is something that also tells people it's time to take solar power seriously."
Solar power currently provides just 1% of the nation's renewable power generation, according to the Energy Department. But it is also the nation's fastest-growing energy generation platform, said Michelle Kinman, a clean-energy advocate for Environment California.
"Solar is a sound investment," Kinman said, "a fact bolstered by MidAmerican's announcement today."
Others thought it was a little too early to get excited.
"It's one purchase of one very large system," said Paula Mints, a market research analyst and director in Navigant Consulting Inc.'s energy practice. "If he [Buffett] continues to invest in this sector, it will be significant."
Bernheimer of First Solar said the the project was being built on 3,500 acres of unproductive farmland and would average about 400 construction jobs over the course of its development. Construction is expected to be completed by 2015, but the facility is expected to begin producing power for Pacific Gas & Electric sometime next year.
Berkshire shares fell 1.1% after the announcement, while First Solar shares climbed 7.7% to $49.65.
— Ronald D. White
Photo: Investor Warren Buffett is moving into solar power in a big way. Berkshire Hathaway's MidAmerican Energy holdings company has agreed to buy First Solar Inc.'s 550-megawatt solar farm in San Luis Obispo County for $2 billion. Credit: Nati Harnik / Associated Press