Tag: Berkshire Hathaway Energy

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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.

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The state of Nevada’s Public Utility Commission (PUC) voted 2-1 to reject Switch Communication’s application to leave NV Energy, a subsidiary of Berkshire Hathaway Energy (BHE). Switch is a developer and operator of data center facilities.

Despite the rejection, it looks inevitable that Switch will move to another energy supplier, and it is all just a matter determining the appropriate exit fee.

The PUC had proposed a $27 million exit fee, and Switch asked to only pay $18.5 million.

Casinos Want to Leave Too

Switch Communications is not the only one pushing to leave the utility. Caesars, Wynn Las Vegas, MGM Resorts International, and Las Vegas Sands Corp. are all now planning to purchase their power from another “qualified energy provider,” using the exit provision passed by the Nevada Legislature in 2001.

Heated Accusations from Wynn Las Vegas

In testimony before the PUC, Matt Maddox, president of Wynn Resorts, accused NV Energy of reaping huge profits from Nevada customers and taking the profits back to parent company Berkshire Hathaway. The accusation is inaccurate, at least as to the ultimate destination of any profits, as Berkshire Hathaway lets BHE retain all of its earnings.

A big part of the conflict is related to who will bear the cost of closing the Reid Gardner coal-fired units in Moapa, Nevada. NV Energy has announced it will end its use of coal for electricity generation by 2019. The move is in accordance with Nevada’s Senate Bill 123 of the 2013 session that required NV Energy to close its lower-cost coal-fired generation facility.

The estimated $100 million in plant closing costs will be borne by ratepayers, and the casinos and Switch are hoping to leave before those costs are passed on to consumers.

© 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 performance.

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Berkshire Hathaway Energy, which is already a leader in solar energy generation in California and Arizona, is looking to the central U.S. to locate a new solar farm development. The company filed its land acquisition plans with the Midcontinent Independent System Operator (MISO), a Regional Transmission Organization that covers the transfer of energy along the interconnected transmission system in 15 states and the Canadian province of Manitoba.

According to the filing, BHE has acquired a site for solar generation development in MISO’s central region, consisting of 74 individual locations not to exceed 1 megwatt each.

The precise location of the land has not been released.

Currently Berkshire Hathaway Energy, through its subsidiary BHE Renewables, has 1,271 megawatts of owned solar generation.

© 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 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.