Category: Berkshire Hathaway Energy

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Berkshire Hathaway’s 2014 $5.6 billion all-cash acquisition of Nevada electric utility NV Energy looked like a home run at the time. After all, who needs loads of electricity more than the neon-bright Las Vegas Casinos?

Well, the casinos need electricity but they are now pushing to get it elsewhere.

Wynn Las Vegas, MGM Resorts International and Las Vegas Sands Corp. are now planning to purchase their power from another “qualified energy provider,” using the exit provision passed by the Nevada Legislature in 2001.

Letters of intent to file applications to leave Nevada Power and its parent company, NV Energy, were submitted to Nevada state regulators in March.

Also looking to leave is Nevada-based Switch Communications, a developer and operator of data center facilities.

As they push for the change, Las Vegas Sands Corp., Wynn Resorts Ltd., Switch, and rooftop solar-energy providers Sunrun and SolarCity have collectively formed the Nevada Coalition to Protect Ratepayers.

Leaving Nevada Power can come with a hefty exit fee. The Public Utility Commission is proposing a $27.7 million exit fee for Switch to leave Nevada Power, and Switch is pushing for an exit fee more in the range of $18.5 million.

At the time of the NV Energy acquisition, MidAmerican (now Berkshire Hathaway Energy) looked at Nevada as a growth market, however, the defections could take a major bite out of NV Energy’s consumer demand.

The Battle Over Net Metering

NV Energy has also been in a battle with rooftop solar providers over Net Metering legislation, which currently caps the cumulative capacity of all net metering systems operating in Nevada at 3 percent of the total peak capacity of all electric utilities in the state. There are already over 3,300 residential systems that feed power in the electric grid, and solar providers are worried that the current cap would severely limit the market for rooftop solar panels.

Under legislation which just passed the Nevada State Senate, S.B. 374 “revises the amount of cumulative capacity for which utilities are required to offer net metering in accordance with existing law.”

The bill allows 235 megawatts of residential systems to qualify under net metering through the end of 2015. It also empowers the state’s public utilities commission to set a new rate structure for solar.

Nevada leads the nation in solar power, the big question is will it be coming from NV Energy.

Transmission Lines a Valuable Asset

No matter who produces the power that flows into the grid, NV Energy will continue to make money from its ownership of the transmission lines, and ownership of transmission lines has been a key area of acquisition for Berkshire Hathaway Energy. In 2014, BHE acquired AltaLink, L.P., a transmission lines company serving Alberta, Canada.

© 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.

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Edina, Minnesota-based Geronimo Energy, LLC, has announced the sale of a portfolio of Midwest renewable energy projects to Berkshire Hathaway Energy’s subsidiary BHE Renewables, LLC.

The projects include the soon to be developed Grande Prairie Wind Farm in Holt County, Nebraska; the soon to be developed Walnut Ridge Wind Farm in Bureau County, Illinois; and a portfolio of future Minnesota solar projects.

About Grand Prairie

Scheduled for completion in 2016, Grand Prairie Wind Farm will produce 400 megawatts of power, and will cover approximately 54,250 acres of land in portions of Willowdale, Antelope, Grattan, Iowa, Scott, and Steel Creek Townships. The wind farm will have up to 266 wind turbines with capacities ranging for 1.5 to 3 megawatts a piece. Grand Prairie will be the largest wind energy project in the state of Nebraska, and will up the state’s wind energy capacity by approximately 50 percent.

About Walnut Ridge

Other projects acquired from Geronimo Energy include the Walnut Ridge Wind Farm, a 123-turbine 225 megawatt wind farm development to be located in north central Illinois that was originally a joint venture between Geronimo Wind Energy and the Mesa Grande Band of Mission Indians of California. The Federal Government’s General Services Administration has already entered into a Power Purchase Agreement for 140 megawatts of Walnut Ridge’s capacity. The facility is scheduled to be constructed in 2016, pending the resolution of a lawsuit brought by area property owners over the visual impact of the wind farm.

Solar Portfolio

An additional Solar Portfolio made up of Minnesota solar projects was also acquired by BHE Renewables. The portfolio includes seven solar developments throughout the state of Minnesota, which are part of Xcel Energy’s Community Solar Garden Program.

Construction of the Solar Portfolio is scheduled for 2016. It is being marketed towards Xcel Energy’s Solar Rewards Community Program. Current subscribers to the Solar Portfolio include, but are not limited to, St. Paul Public Housing Agency, St. Olaf College and District Cooling St. Paul (an affiliate of District Energy St. Paul).

© 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.

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Warren Buffett has always been tech averse, proclaiming that he doesn’t understand technology companies, so he has no basis to make an investment. But, that doesn’t mean that Berkshire Hathaway avoids tech companies. In addition to its ownership of 79,565,115 shares of IBM, Berkshire through its subsidiaries takes stakes in tech companies that relate to its various businesses.

IES Holding, a subsidiary of Berkshire Hathaway Energy, has taken a stake in eVolution Networks, an innovator in energy savings solutions for Mobile Network Operators (MNOs).

Based in Israel, the company bills itself as the first company to provide operators with a purely software-based solution that slashes energy consumption on the base station level.

IES Holding’s $22.5 million investment was done jointly with GE Ventures.

According to eVolution Networks, the company plans to expand its worldwide presence and promote its solutions to new industries, such as data center energy management.

“Energy costs are a huge problem for mobile operators,” said Roy Morad, CEO of eVolution Networks. “Operators are constantly forced to expand their network to support the growing data demand from subscribers and the Internet of Things (IOT). However, the way networks are designed today doesn’t allow operators to wisely “right size” their energy use according to live traffic demand. eVolution Networks’ Smart Energy Solution eliminates this problem.”

eVolution Networks’ Smart Energy Solution is a software-based solution that analyzes the mobile network’s traffic needs and adjusts the use of the network’s resources based on real-time demand from subscribers. This adaptive and unique approach to managing the network’s resources has been deployed by Tier-1 operators such as Telefonica Group and has proven to save millions of dollars annually on energy bills.

“This team’s management experience and strong technical background have helped establish eVolution Networks as a leader in the telecommunications energy efficiency market. eVolution Networks is poised for tremendous growth as more customers and business partners realize the benefits provided by the technology,” said Bill Fehrman, president of Berkshire Hathaway Energy subsidiary IES Holding. “This funding will be used to capitalize on this potential, boost the company’s growth worldwide and establish eVolution Networks products and technology as an industry standard.”

eVolution Networks notes that worldwide figures show the telecommunications industry is responsible for 3 percent of the global energy consumption. This translates to an estimated $20 billion spent yearly by mobile network operators. Smart Energy Solution offers an answer by making the networks as efficient as possible through data analysis and advanced load management.

According to the company, eVolution Networks’ Smart Energy Solution reduces up to 35% of the annual energy consumption of mobile operators by analyzing the network’s needs in real time and managing the network resources accordingly from the base station to the data center.

Already in Action

The company’s Smart Energy Solution has already been successfully deployed by tier-1 operators such as Telefonica group.

“Given that energy costs are the largest portion of operating expenses for telecom operators, a 35 percent reduction in energy usage with Smart Energy Solution will have a significant impact on profitability,” said Jonathan Pulitzer, Senior Director at GE Ventures. “GE Ventures is investing in eVolution Networks because of this potential for savings and the positive impact on global energy consumption.”

About IES

Berkshire Hathaway Energy’s IES Holding is an operating subsidiary that integrates, aggregates and manages residential and commercial load, generation and storage assets and related technologies in concert with economic or market based constructs to reduce overall energy system costs and improve grid reliability.

© 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.

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BHE Renewables, a subsidiary of Berkshire Hathaway Energy, will add to its wind generating capacity with the acquisition of the Grande Prairie project from Geronimo Energy.

The 400-megawatt wind farm will be located about 12 miles northeast of O’Neill, Nebraska, and will begin construction this summer. The completion date will be in 2016. The new wind farm will be the largest in the state and will increase Nebraska’s wind energy capacity by nearly 50 percent.

BHE Renewables currently owns and operates a number of wind farm projects, including the 300-megawatt Jumbo Road project near Hereford, Texas; 168-megawatt Pinyon Pines I and 132-megawatt Pinyon Pines II projects, located near Tehachapi, California; and the 81-megawatt Bishop Hill II project in Henry County, Illinois.

“We are excited to be constructing this wind farm in Holt County, our first project in the state,” said Bill Fehrman, president and CEO of BHE Renewables. “The Grande Prairie project will have a major impact on Nebraska’s economy and energy future while helping our customer, Omaha Public Power District, meet its long-term renewable goals.”

BHE Renewables also acquired the 225-megawatt Walnut Ridge Project in Illinois, and plans to begin construction in 2016.

Founded in 2011, BHE Renewables owns and operates more than 3,400 megawatts of wind, solar, geothermal and hydro resources that produce energy for customers under long-term power purchase agreements. The company has invested more than $10 billion in renewable energy resources and will have more than 1,300 megawatts of wind generation capacity in operation when recent acquisitions are complete.

In addition to its investments in wind generation, BHE Renewables owns 1,271 megawatts of solar-powered generation in Arizona and California, 10 geothermal facilities in California’s Imperial Valley, and two hydroelectric facilities, one in Hawaii and one in the Philippines.

© 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.

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Berkshire Hathaway Energy’s Topaz Solar Farm in San Luis Obispo County, California, is now one of the largest photovoltaic solar farms in the world.

The plant went substantially on line in 2014, providing power to Pacific Gas and Electric Company’s customers in California under a long term power purchase agreement.

The 550 megawatt solar plant was built by First Solar for Berkshire subsidiary BHE Renewables, and produces enough power to supply the needs of 181,000 average-sized California homes. BHE Renewables completed the acquisition of Topaz Solar Farms from First Solar in January 2012.

Worldwide, First Solar has built over 10 gigawatts of installed solar power to date.

Topaz Solar Farm uses 8.4 million First Solar advanced thin-film photovoltaic modules that generate electricity without emissions, waste or water use. First Solar claims the technology has the smallest carbon footprint of any photovoltaic technology.

A host of Environmental Benefits

The solar plant was built on previously disturbed agricultural land, and provides additional environmental benefits as well as clean power.

“Topaz functions as a productive grassland habitat for native plants and animals — some of which are endangered and protected — while being used for passive farming of the sun’s energy,” said Bill Fehrman, president of BHE Renewables.

According to the company, “BHE Renewables provided wildlife mitigation corridors throughout the project and protected more than 17,000 acres of surrounding land as native species habitat.”

California, Land of Renewable Energy

Solar power is playing a big part in California’s ambitious renewable energy plans.

On November 17, 2008, Governor Arnold Schwarzenegger signed Executive Order S-14-08 requiring that “retail sellers of electricity shall serve 33 percent of their load with renewable energy by 2020.”

Decreasing Cost of Construction

The cost of producing solar power is declining rapidly. According to PV Magazine, the cost of producing solar power fell 60% in just an 18 month period, and the overall cost of producing solar power in 2013 was 60% cheaper than in 2011.

Low Cost of Operation

According to First Solar, its Cadmium Telluride (CdTe) thin film technology has the lowest energy pricing on a total cost basis.

“Total cost of electricity pricing includes the levelized cost of electricity (LCOE) and economic externalities such as environmental impacts. With the smallest carbon footprint, fastest energy payback time, and lowest life cycle water use, CdTe PV has the lowest externalities of all solar and conventional energy technologies, resulting in the lowest energy price on a total cost basis.”

Another of the advantages of photovoltaic power production is its low cost of ongoing operation. BHE Renewables’s comparably sized Solar Star I and 2 projects, in Rosamond, California, only have 15 full-time site positions to run the entire facility.

About BHE Renewables

A subsidiary of Berkshire Hathaway Energy, BHE Renewables has 3,470 megawatts of renewable energy owned or under construction in 6 states, and runs BHE Solar, BHE Wind, BHE Geothermal, and BHE Hydro. The company also operates and maintains a power plant on the Philippine island of Luzon.

© 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.

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NV Energy, a unit of Berkshire Hathaway Energy, has issued a new RFP (Request for Proposals) seeking an additional 100 megawatts of renewable energy resources for its Southern Nevada customers.

NV Energy’s 2014 renewable energy RFP called for adding 100 megawatts of renewable energy, The new RFP combines the 2014 RFP with a new 2015 RFP to bring the total requested renewable energy to 200 megawatts.

The move comes after the Public Utilities Commission of Nevada pushed NV Energy to develop additional renewable energy resources before the expiration of federal energy tax credits and other public-interest benefits.

Fear of Tax Credit Reduction Accelerates Solar Plans

The current solar Investment Tax Credit will plunge from 30% to only 10% for utility-scale solar projects in 2017 unless Congress steps in.

Large scale solar projects have gone mainstream in recent years due in part to favorable tax credits, and Berkshire Hathaway has been a major player.

Among its acquisitions, MidAmerican Energy Holdings Company purchased two large-scale solar photovoltaic power plants from SunPower in 2013.

According to the company, bidders responding to the original 2014 RFP will be provided an opportunity to refresh their original proposals.

NV Energy, Inc., brings energy services to 1.3 million Nevada customers, and its renewable energy sources include 20 geothermal energy plants, nine solar energy projects, six hydro facilities, a large windfarm and a variety of biomass, methane and waste-heat recovery projects.

© 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.

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Will Berkshire Hathaway Energy enter the bidding for Energy Future Holdings’ electricity transmission business, Oncor?

Oncor is a regulated electric transmission and distribution service provider that serves 10 million customers across Texas. The sixth largest in the U.S., the company is the largest distribution and transmission system in Texas, with approximately 119,000 miles of lines and more than 3 million meters across the state.

Oncor is currently owned by a limited number of investors, including majority owner, Energy Future Holdings Corp., which landed in bankruptcy after amassing $40 billion in debt from a leveraged buy-out engineered by private equity firms KKR & Co. and TPG.

Oncor was originally scheduled to be auctioned in November 2014, but Judge Christopher Sontchi halted the process in order to give creditors more time to negotiate. Judge Sontchi recently okayed the restart of the bidding process, which is now on track for March 2015.

A strong fit for Berkshire?

Berkshire’s interest is no secret. In September 2014, Berkshire Hathaway Energy and several other energy companies, including NextEra Energy, signed confidentiality agreements for the purpose of exploring the acquisition of Oncor.

The acquisition of transmission lines have been high on Berkshire Hathaway Energy’s list of late. In April 2014, the company made a $2.9 billion purchase of Canadian company AltaLink from SNC-Lavalin Group Inc.

Oncor’s price will be substantially larger than AltaLink, with an estimated value in the range of $17.5 billion. This puts it in line with Warren Buffett’s goals to acquire more “elephants” in the $20 billion range.

In June 2014, Buffett noted that Berkshire had already poured $15 billion into acquiring energy companies and he declared “There’s another $15 billion ready to go, as far as I’m concerned.”

Could Oncor fit that bill?

© 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.

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Berkshire Hathaway’s MidAmerican Energy Company, a subsidiary of Berkshire Hathaway Energy, will develop a new wind farm site in Adams County, Iowa, and expand a second site in O’Brien County, Iowa, in 2015.

The $280 million project will include the installation of up to 67 wind turbines and will add up to 162 megawatts of additional wind generation capacity in Iowa.

The new project comes just 16 months after MidAmerican Energy launched a $1.9 billion investment to add up to 1,050 megawatts of wind generation in Iowa by year-end 2015.

A Leader in Wind-Generated Power

MidAmerican Energy first began installing wind turbines in 2004, and is first among U.S. rate-regulated utility in wind-powered generation capacity.

The aggressive strategy has MidAmerican Energy on track to reach 3,500 megawatts of wind generation capability in Iowa by the end of 2015.

William J. Fehrman, president and CEO of MidAmerican Energy, stated that “With this proposed expansion, beginning in 2016, MidAmerican Energy’s wind resources are expected to produce an amount of energy equivalent to approximately 50 percent of the retail energy customers are expected to need.”

MidAmerican Energy’s goal is to provide renewable energy for the equivalent of approximately 1.05 million average Iowa households.

Wind’s Growing Role in Meeting Energy Needs

Wind energy is playing an increasing role in the US’s energy needs with a total installed wind capacity in the U.S. of 61,327 megawatts through first quarter of 2014. Total wind generated energy is enough to power 15.5 million homes.

On the commercial side, wind energy has found demand from companies such as Google, which in April 2014, signed an agreement with MidAmerican Energy to supply Google’s data center in Council Bluffs, Iowa, with up to 407 megawatts of wind-sourced energy.

As the cost of wind energy continues to drop, consideration also needs to be given to “hidden costs” inherent in other forms of energy production. The National Research Council identified these costs and noted that “pollutants from the burning of fossil fuels have effects on human health, grain crops, timber yields, building materials, recreation, and outdoor vistas.”

These hidden cost costs are often overlooked when calculating the cost of power generation, and make wind power all the more attractive.

© 2014 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.