New Hampshire, USA — The “Oracle of Omaha,” who made his fortune by betting on technologies that appear underpriced, is now putting his money into solar.
The solar industry got a turbo-boost of both name recognition and mainstream credibility on Wednesday as a subsidiary of billionaire Warren Buffett’s investment company MidAmerican Energy Holdings announced plans to purchase the Topaz Solar power development from thin-film PV module maker First Solar. Terms of the deal were not disclosed.
The 550-megawatt Topaz project in San Luis Obispo County, Calif., is among the world’s biggest solar farms under development, and many times larger than any project currently in operation. The First Solar project was not able to close its conditional loan guarantee with the Department of Energy prior to the Sept. 30 deadline, but it has gone ahead anyway. Construction on the project began in November and is expected to run through 2015. According to First Solar, it will create about 400 construction jobs.
The $2 billion project will include First Solar’s thin-film panels, and the company will build, operate and maintain the project for MidAmerican. Pacific Gas and Electric will buy the electricity under a 25-year power purchase agreement.
Based in Iowa, MidAmerican, a subsidiary of Buffett’s Berkshire Hathaway, is already a big player in wind energy. Some analysts are saying that the company’s move into solar power could be linked to the expiring Production Tax Credit for wind power, which is set to go away at the end of 2012. The solar industry, which is hoping for an extension of the Treasury Department grant that expires at the end of this year, still has an Investment Tax Credit that runs through 2016. That could make solar a safer bet.
Regardless of the reason, MidAmerican clearly sees the Topaz project as a financial opportunity even without federal backing. SolarCity recently took a similar route when it announced that Bank of America Merrill Lynch was helping it move ahead with its $1 billion Solar Strong project, which also failed to close on a loan guarantee from the DOE.
The project “demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees and reflects the type of solar and other renewable generation that MidAmerican will continue to seek to add to its unregulated portfolio,” said Greg Abel, chairman, president and CEO of MidAmerican Energy Holdings Company in a press release.