(BRK.A), (BRK.B)
Berkshire Hathaway’s Nevada Energy is in a battle for the energy consumer that could be the bellwether for utility industry. With consumers pushing legislators to expand the percentage of “net metering” that Nevada Energy must purchase, Berkshire Hathaway Energy is stuck on the side of trying to hold down consumer demand for rooftop solar so its non-solar consumers don’t see their rates rise as the utility passes on legacy costs from closing outdated coal-fired plants.
Rooftop Solar an Unstoppable Force
In Nevada, 108 companies installed 339 megawatts of solar power in 2014. Even in markets without Las Vegas’s 294 sunny days per year, the cost of rooftop solar is dropping so quickly that Bloomberg News is predicting that there will be “a 17-fold increase in installations.” They note that “By 2040, rooftop solar will be cheaper than electricity from the grid in every major economy.”
While the cost of utility scale solar is also dropping as witnessed by Berkshire’s 1,271 megawatts of solar capacity and growing. (It’s Topaz Solar Farm, a photovoltaic power station in San Luis Obispo County, California, alone is already generating 579 megawatts of power.) The question is whether Berkshire should stand on the sidelines while more and more consumers put solar panels on their roofs.
If You Can’t Beat ‘Em, Join ‘Em
Nevada’s the perfect opportunity for BHE to test adding rooftop solar installation and leasing to its portfolio. The company’s got deeper pockets than the numerous but small players in the market. Other utilities are already testing rooftop solar. Georgia Power rather than fighting rooftop solar companies is joining them in the installation business through a new subsidiary.
Another Key Advantage
Berkshire Hathaway Energy already has a number of unregulated businesses, including its Berkshire Hathaway Home Services real estate empire. Rooftop solar offers another unregulated business opportunity.
So, as the saying goes, “If you can’t beat ‘em, join em.”
© 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.