Buffett backs solar industry

12th Dec 2011

The solar industry received a boost from one of the world's most successful investors last week, with California's Topaz Solar Farm being sold to Warren Buffett's utility company.

MidAmerican Energy Holdings announced on December 8 that it had purchased the facility – one of the two largest under construction in the world – from First Solar in a deal estimated to be worth US$2 billion.

Already operating wind power facilities, the utility division of Buffet's Berkshire Hathaway holding company is set to expand its renewable resources capacity to now include solar power.

The move comes as the industry struggles to address growing concerns about the financing of large utility-scale projects – First Solar failed to win a US loan guarantee to finance the construction of the Topaz Solar Farm.

"The fact that Topaz was financed without a DOE loan guarantee is a major milestone in the industry's maturity and evolution," Frank DeRosa, First Solar's senior vice president of project and business development for the Americas, said in an interview.

"[The deal] demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees," chairman, president and CEO of MidAmerican Greg Abel said in a statement.

The 550 megawatt facility is expected to produce enough power for about 160,000 homes when it commences in 2015.

Speaking to business news website SmartCompany, chief executive of industry body Australian Solar Energy Society (AuSES) John Grimes said investment guru Buffett "clearly sees where solar is headed".

"Major players see the opportunity to control what will be the world's dominant energy generation technology in the coming decades," Grimes says.

Berkshire Hathaway has expressed an increasing interest in the solar power industry, highlighted in recent years by its investment in China's BYD Co Ltd.

Although renowned for its electric car developments, BYD also has an emerging solar panel business – production that prompted Buffett to take a stake of nearly 10 per cent in the company in late 2008.

The investment – made during the depths of the financial crisis – was largely supported by Buffett's long-time business partner Charlie Munger.

"All kinds of things are going to be possible once we really gear up to harness the sun," Munger once said in a CNNMoney interview.

Posted by Mike Peacock – Solar correspondent

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