BUFFET BUYS BIG SUN

Buffett Gets High Rates, U.S. Incentive in $2 Billion Solar Bet
Christopher Martin (w/Marc Roca, Noah Buhayar, Will Wade and Dan Kraut), December 7, 2011 (Bloomberg BusinessWeek)

"Warren Buffett’s Berkshire Hathaway Inc., which agreed to buy [the $2 billion 550-megawatt Topaz solar farm from First Solar Inc.] in California may have picked the right time to invest in the industry.

"The 550-megawatt Topaz project will qualify for a federal incentive because it began construction last month, and will sell power under a long-term [power purchase agreement with Pacific Gas & Electric] that was completed before prices for solar panels fell 44 percent in the last year…"



"Topaz, which will use First Solar panels, may be the last large solar farm to qualify for the U.S. Treasury Department incentive program, which is set to end this year. It will likely sell power at a higher price than projects that are seeking utility contracts now…First Solar projects that are currently being built will sell power for 14 cents to 16 cents a kilowatt-hour…By 2014…its solar farms [will likely] sell power at 10 cents to 12 cents a kilowatt-hour…

"Prices for power sold under these long-term contracts are coming down, and the expected expiration Decenber 31 of the Treasury Department 1603 program, which offers cash grants equal to about 30 percent of renewable energy projects’ development costs] may further erode profit margins for large projects…First Solar received $3.1 billion in federal loan guarantees for three other solar projects that it later sold…The billionaire’s endorsement may also help First Solar sell other solar farms, even if they have power-purchase deals with lower rates…"