Warren Buffett doubles down on solar

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Warren Buffett recently purchased a second solar facility for Berkshire Hathaway ( BRK-A , quote ). It couldn't come at a better time for solar, which is beginning the uneasy transition from public subsidy to private investment.

Berkshire Hathaway owns the MidAmerican Energy utility, and it is a measure of how serious Buffett is that MidAmerican has set up a new renewables business to "oversee wind, geothermal, solar and hydro projects that produce energy to be sold in the renewables market."

As part of this new business, "MidAmerican Renewables" has acquired the Topaz Solar Farm. The farm is still under construction, but when it is up and running in early 2015 it will power 160,000 Californian homes.

Buffett isn't the only investor interested in solar. A bond sale for the Topaz Solar Farm on February 16 sold $850 million in bonds , $150 million more than initially allotted. Originally priced to yield 5.75%, the  bonds' price immediately rose and yield fell by 12.5 basis points in secondary market trading.

Solar power provides a very small percentage of U.S. energy needs.  But both of the solar facilities bought by Buffett have long term power purchase agreements with PG&E ( PCG , quote ), a California-based utility.  This fits Buffett's investing style as he is not a venture capitalist, but one who greatly favors cash flow.

Solar panel producers have been languishing due to oversupply in the last year. With private investors getting involved, that may be about to change. Investor seeking to profit from the suppliers to the solar industry should look at the Guggenheim Solar ETF ( TAN , quote ), which carries a broad spectrum of Chinese solar technology companies.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , International , Stocks

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