[FoRK] suburban solar

Simon Wistow simon at thegestalt.org
Thu Jan 3 15:48:09 PST 2013


On Thu, Jan 03, 2013 at 09:52:08AM +0100, Dave Long said:
> solar; apparently my electricity company agrees

As does Warren Buffer apparently (note: this is not his first Solar 
investment by any means).

"Warren Buffett Buys World's Largest Solar Project from SunPower for 
$2.5 Billion"

http://www.treehugger.com/renewable-energy/warren-buffett-buys-worlds-largest-solar-project-sunpower-25-billion.html

Solar Too Good a Bargain to Pass Up?

Warren Buffett's MidAmerican utility, which is part of his holding 
company Berkshire Hathaway, has just announced that it's buying 
SunPower's Antelope Valley Solar Projects, located in California. The 
tag price is between 2 and 2.5 billion dollars! At a total of 579 
megawatts, the Antelope Valley projects are the world's largest 
photovoltaic solar development, and SunPower will retain the 3-year 
contract to build it.
That, in itself, is interesting. It's a huuuuge renewable energy deal - 
not Buffett's first, see the links on the left - and possibly a sign of 
things to come. But what I find even more interesting is to try to 
reverse-engineer Buffett's thinking based on his track record and 
investment philosophy.


Jeremy Levine Design/CC BY 2.0

Price is What You Pay, Value is What You Get

The first thing to know is that Buffett tries to never overpay for 
anything. He only buys when he's sure that an asset is undervalued and 
is likely to have bottomed in market price. So this could be a sign that 
after all the softening prices and bankruptcies, that the solar industry 
is on its way to better days (or at least, it won't get much worse). Or 
at least that at today's prices, you get more value than what you pay 
for when you invest in solar.
Another thing about Buffett is that he thinks long-term. He's not 
looking to flip assets, he wants to own them forever if possible. So 
that makes his very conservative about going into unpredictable 
industries (that's why he almost never invests in technology companies, 
he can't predict what the field will be like in 10-20 years). This tells 
us that Buffett feels that the long-term future of solar looks rosy, and 
that even though natural gas prices have been low recently, that in the 
long-term, solar is one of the the places to be. Of course, any 
TreeHugger ready could have told you that, but it's always nice to be on 
the same side as the greatest living investor (and one of the top 
philanthropists, along with Bill Gates, it must be noted).

P.S. For those who will say that this is MidAmerican's deal and not 
Buffett's, know that as CEO of Berkshire, Buffett is in charge of all 
large capital allocation decisions, even at subsidiaries. When 
MidAmerican makes a small investment it doesn't have to let Buffett 
know, but 2+ billion is definitely something that Buffett has personally 
approved, from what I know of the workings of Berkshire. If Buffett 
didn't think he could get a very good long-term return out of investing 
those billions in solar, he would have invested them somewhere else 
(capital is mostly fungible between Berkshire's subsidiaries).

Via SunPower
http://us.sunpowercorp.com/about/newsroom/press-releases/


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