Three purchases by Buffett suggest photovoltaic has come of age

3 Jan 2013 by Jim Fickett.

The cost of electricity from solar cells has been steadily dropping and is in the neighborhood of the cost from fossil fuels. But it has not been entirely clear to me whether it was low enough that the business case for solar power was fully there. Given that Warren Buffett likes simple, profitable businesses, and dislikes investing in leading edge technology, his three purchases of photovoltaic power farms in the last year suggest that the business has come of age. From the Financial Times:

Warren Buffett’s MidAmerican Energy Holdings … said it would buy two solar projects with a combined generating capacity of 579 megawatts in California’s Antelope Valley from San Jose-based SunPower. Construction was due to be finished by the end of 2015. …

The latest MidAmerican deal comes almost exactly a year after Mr Buffett’s last foray into the solar industry.

MidAmerican bought the 550MW Topaz solar plant in California in December 2011, which was worth an estimated $2bn, from First Solar, the solar module maker. That came within weeks of its move to buy a 49 per cent stake in the $1.8bn Agua Caliente solar project in Arizona.

MidAmerican is one of the biggest renewable energy investors in the US, with interests in wind, geothermal and hydropower projects, as well as solar plants.

Combined with Berkshire's purchase of a railroad (which moves freight at much lower fuel cost than trucking), MidAmerican's direction also suggests that it is time to prepare for a future of higher fossil fuel costs.