The Energy Cloud and Berkshire Hathaway Energy’s Future

(BRK.A), (BRK.B)




Will Berkshire Hathaway Energy be left out in the cold due to disruptive changes in the energy market?

It’s a question that BHE and other utilities are starting to both ask and answer, and is particularly relevant to BHE, which has become in less than a decade one of the major players in solar and wind power generation.

With rooftop solar power changing the relationship between consumers and traditional energy producers and distributors, electric utilities are starting to think seriously about the changing landscape that the energy industry will encounter over the next few decades.

The Energy Cloud

The industry has started to refer to this changing marketplace as the “Energy Cloud,” mirroring the cloud computing world, and emphasizing the dynamic nature of the relationship between all parties.

A white paper by market research and consulting team Navigant Research called the Energy Cloud “…a concept that borrows from cloud computing, represents a range of technical, commercial, environmental, and regulatory changes that challenge the traditional hub-and-spoke grid architecture.”

An anticipated transformation in the energy grid that decentralizes many pieces of the energy production has utilities looking at additional revenue sources from unregulated business units. For example, Georgia Power rather than fighting rooftop solar companies is joining them in the installation business through a new subsidiary.

Unregulated Businesses

Meanwhile, Berkshire Hathaway Energy continues to aggressively expand its unregulated businesses, which includes its energy service solutions company Intelligent Energy Systems, and residential real estate sales company Berkshire Hathaway Home Services. It also owns 225 million shares (10%) of Chinese battery and automaker BYD Company Limited.

In the end, it’s all about transformation in an industry that traditionally talked to customers more than listened to them.

Navigant notes that “the end result of this transformation is a reimagining of how we generate, store, and consume energy in the next 20 years.”

© 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.