Berkshire Hathaway’s NV Energy, which powers customers in the state of Nevada, has contracted to buy electricity from First Solar’s soon to be built Playa Solar 2 at the astoundingly low rate of only 3.87 cents a kilowatt-hour.
The rate, a 20-year fixed-rate contract, was submitted to Nevada’s Public Utilities Commission on July 1, 2015.
First Solar is a leader in photovoltaic power with over 10 gigawatts (GW) installed worldwide, and has been aggressively building solar farms, some of which have been purchased by Berkshire Hathaway Energy.
First Solar built the 550 megawatt Topaz Solar Farm, which is now powering 160,000 average California homes, and is owned by BHE Renewables.
Berkshire Leads in Renewables
Berkshire Hathaway Energy’s BHE Renewables has over 1,884 megawatts of power generation derived from solar, wind, hydro and geothermal sources. 1,271 megawatts of that capacity come from solar.
Plunging Solar and Wind Prices
In just the last four years, solar and wind power have gone from promising but expensive power sources to power sources that meet or beat fossil fuel power generation prices that come from coal and oil.
The drop in solar electricity generation costs has been so dramatic that it has outpaced even the experts’ estimates. The U.S. Department of Energy (DOE) noted that “2020 price projections are approximately one-half of what same analysts projected 5-10 years ago.”
The DOE is projecting a decline in solar PV system module prices for utility scale installations from its $4 in 2010 to less than $2 by 2016. Utility-scale PV is defined as ground-mounted systems that are greater than ≥5 megawatts.
Buffett Believes in Renewables
Speaking at the Edison Electric Institute’s annual convention in Las Vegas in 2014, Warren Buffett trumpeted Berkshire’s commitment to renewable energy.
“We’ve poured billions and billions and billions of dollars in retained earnings, and several billion of additional equity, Buffett said. “And we’re going to keep doing that as far as the eye can see.”
© 2015 David Mazor
Disclosure: David Mazor is a freelance writer focusing on Berkshire Hathaway. The author is long in Berkshire Hathaway, and this article is not a recommendation on whether to buy or sell the stock. The information contained in this article should not be construed as personalized or individualized investment advice. Past performance is no guarantee of future results.