Buffett Buys Into Another Solar Project - Expect More To Follow
Warren Buffett-controlled MidAmerican Energy Holdings on Friday acquired an interest in a second solar project. In the latest deal, the company has acquired 49% of NRG Energy´s $1.8bn Agua Caliente project.This follows the company´s acquisition of 100% of First Solar´s $2bn Topaz Solar Farm less than two weeks ago.
As was the case with the first Topaz deal, we know little of the arithmetic faced by MidAmerican holdings in this latest agreement. However, what we do know is the following -
- Agua Caliente is a $1.8bn project owned by NRG Energy (NRG) in Yuma County, Arizona.
- The project is supported by a $967m DoE Loan Guarantee.
- First Solar (FSLR) is responsible for the construction of the project, which is scheduled to be finished in 2014.
- The project also has a 25 year power purchase agreement (PPA) in place with Pacific Gas and Electric for all of the power generated
- As was the case with the Topaz deal, Mr Buffett is effectively buying into the future income stream which will accrue from the PPA with PG&E.
- The project should displace 5.5 million metric tons of CO2 over the 25 years of the power purchase agreement.
MidAmerican is already the number one owner of wind-powered projects among rate regulated utilities and the company has said that 28% of its total generation capacity will come from renewable and non-carbon sources at the end of 2011.
It sounds like we should expect more deals from MidAmerican in the solar sector.
Disclosure: I have no positions in the stocks discussed.
About the Author: Clean Energy Intel is a free investment advisory service (available at www.cleanenergyintel.com), produced by a retired hedge fund strategist who also manages his own money inside a clean energy investment fund.