Warren Buffett recently purchased a second solar facility for
Berkshire Hathaway (
). It couldn't come at a better time for solar, which is
beginning the uneasy transition from public subsidy to private
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
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 (
), 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 (
), which carries a broad spectrum of Chinese solar technology