Tag: Berkshire Hathaway Energy

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Berkshire Hathaway Energy

Berkshire Makes Big Energy Bet

(BRK.A), (BRK.B)

Warren Buffet is making big bets that the world’s future energy needs will mean big profits for Berkshire Hathaway.

Buffet Ready to Spend Billions

Speaking at the Edison Electric Institute’s annual convention in Las Vegas, Warren Buffett enthusiastically 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.”

Berkshire has already poured $15 billion into acquiring energy companies and Buffet declared “There’s another $15 billion ready to go, as far as I’m concerned.”

Berkshire Hathaway’s Berkshire Hathaway Energy has been aggressively acquiring assets, including last year’s $5.6 billion purchase of NV Energy, and this April’s $2.9 billion purchase of Canadian company AltaLink from SNC-Lavalin Group Inc. (TSX:SNC).

A Growing Energy Portfolio

Berkshire Hathaway Energy currently has $70 billion in assets, including one of the largest portfolios of renewable energy in the world.

Total revenues in 2013 were $12.6 billion, with the total generation capacity owned and contracted exceeding 34,000 MW. 25% of this energy was produced from renewable or noncarbon sources.

Berkshire Hathaway Energy’s combined subsidiaries provide energy to 8.4 million customers and end-users.

© 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.

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Berkshire Hathaway Energy

Berkshire Hathaway’s Solar Star Project Reaches One Million Photovoltaic Modules Milestone

(BRK.A), (BRK.B)

Berkshire Hathaway’s MidAmerican Solar has reaches the million photovoltaic modules milestone on its Solar Star I and 2 projects in Rosamond, California.

Another 700,000 modules will be installed in bringing the 3,200 acre solar project to completion in 2015.

Generating Capacity

When completed Solar Star I and 2 will be the world’s largest photovoltaic power plant. The 579 megawatts of electricity it will produce at peak capacity will be enough to power approximately 255,000 homes.

Designed and constructed by SunPower Corporation (SPWR), Solar Star 1 and 2 use the company’s Oasis® Power Plant technology. The solar panels will track the sun during the day, increasing energy capture by up to 25 percent over fixed panels.

Positive Environmental Impact

The environmental benefits of the Solar Star I and 2 projects will be significant. When completed, it will replace 570,000 tons of carbon dioxide emissions each year that would have been produced by burning fossil fuels– the equivalent to taking over 2 million cars off the road over 20 years.

Committed Power Purchaser

Solar Star I and 2 have a guaranteed customer for its power production. Two long-term power purchase agreements have been signed with Southern California Edison.

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

One of the advantageous of photovoltaic power production is its low cost of operation. Despite the enormous 3,200 acre size of the Solar Star I and 2 projects, only 15 full-time site positions will be needed to run the facility.

Other Berkshire Photovoltaic Projects

The Solar Star I and 2 projects are not the only photovoltaic plants Berkshire has under construction. In 2015, it will also complete the Topaz Solar Farms—a 550-megawatt solar photovoltaic project in San Luis Obispo County, California. And, MidAmerican Solar has a 49 percent interest in the Agua Caliente solar farm in Yuma County, Arizona, in partnership with NRG Energy. The 290-megawatt solar photovoltaic power plant came online in 2013.

Berkshire Hathaway and Renewable Energy

Berkshire Hathaway’s Berkshire Hathaway Energy has one of the largest portfolios of renewable energy in the world. It currently has 2,593 megawatts of contract capacity owned and under construction. Its MidAmerican Solar unit is a subsidiary of MidAmerican Renewables, which is owned by Berkshire Hathaway Energy.

MidAmerican Renewables includes MidAmerican Solar, MidAmerican Wind, MidAmerican Geothermal and MidAmerican Hydro. MidAmerican Renewables manages unregulated solar, wind, hydro and geothermal projects.

© 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.

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Acquisitions Berkshire Hathaway Energy

Berkshire Hathaway Makes Aggressive Move into Canadian Energy Market

(BRK.A), (BRK.B)

With the recently announced acquisition of AltaLink, Berkshire Hathaway’s newly christened Berkshire Hathaway Energy has made an aggressive move into the Canadian energy market.

New Canadian Beachhead Strategy

Under the moniker MidAmerican Energy, the company’s previous Canadian energy plays consisted of joint ventures where the other partners took the lead. Now, as Berkshire Hathaway Energy, the company is going out on its own to become a leader in the growing markets of Calgary and Edmonton, Alberta. It’s a move that will have BHE serving 85% of the population.

In acquiring AltaLink from SNC-Lavalin Group Inc. (TSX:SNC), BHE will take possession of 12,000 kilometers of transmission lines and 280 substations that bring electricity to 3 million Albertans. The total cost of the acquisition is C$3.2 billion, approximately US$2.9 billion.

Warren Buffett has long been known for a buy-and-hold acquisition strategy that places an emphasis on finding companies with top-flight management that is kept in place. Similarly, Berkshire Hathaway Energy, under the direction of chairman, president, and CEO Greg Abel, has the same philosophy. AltaLink’s management will remain headquartered in Calgary, and it will continue to operate as a local, independent company.

Employing the Berkshire Strategy

Also in keeping with another of Buffett’s strategies, Abel’s goal is to buy assets that will be owned forever.

It’s a sizeable acquisition as AltaLink had assets of C$5.9 billion as of December 31, 2013, and generated revenues of C$534.1 million in 2013.

Is this just another acquisition in BHE’s portfolio, or does it represent additional focus on the Canadian energy market?

Apparently, both.

On one hand, it’s a natural move for BHE’s combination of regulated utilities and infrastructure companies that span the U.S. and reach as far as the U.K. and the Philippines. But there’s reason to expect more. Greg Abel hails from Edmonton,  he knows Alberta’s power demands are only going to grow, and he sees AltaLink as a beachhead acquisition.

Alberta’s Growing Power Needs

Industry leaders are already calling for more than 9,400 MW of new thermal power and more than 3,000 MW of new renewable power to fuel future development in Alberta.

Under Abel’s direction, BHE has been growing dramatically, including last year’s purchase of NV Energy that brought 1.3 million customers in Nevada under its wing. In total, BHE has amassed a $70 billion portfolio of energy companies that produced $12.6 billion in revenues in 2013.

A Future Berkshire Leader?

At the youthful age of 51, Greg Abel is often mentioned on the short-list of Buffett successors. He also sits on the board of directors of H.J. Heinz Company board of directors–Berkshire Hathaway’s biggest acquisition since BNSF Railway was acquired in 2010. It’s no surprise his name is on people’s lips, considering BHE’s high-powered growth strategy that has no end in sight. And the Canadian energy market may just be where that strategy leads.

© 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.