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First Solar continues to shed ownership stakes in its thin-film solar PV mega-projects as tough economic and industry conditions prompt a more defensive posture. Warren Buffet and Berkshire Hathaway have been known to swoop in and invest in businesses and industries experiencing difficult times, looking to realize greater value from them over the longer term.

Clean Power

Buffett’s Mid-American Buys First Solar’s 550 MW Topaz Solar Power Project

First Solar continues to shed ownership stakes in its thin-film solar PV mega-projects as tough economic and industry conditions prompt a more defensive posture. Warren Buffet and Berkshire Hathaway have been known to swoop in and invest in businesses and industries experiencing difficult times, looking to realize greater value from them over the longer term.

Photo courtesy First Solar

Warren Buffett and Berkshire Hathaway have been known to come swooping in and making big investments in companies and sectors where values have been driven down. News broke yesterday that Berkshire’s MidAmerican Energy Holdings has agreed to buy First Solar’s 550 megawatt (MW) Topaz Solar Farm. Having been valued at $2 billion, it’s likely that MidAmerican is acquiring Topaz at a discount given tough conditions prevailing in the US solar power market. Financial terms of the transaction weren’t disclosed, according to CNN’s report.

First Solar broke ground last month on the Topaz project in California’s San Luis Obispo county. At a planned capacity of 550 MW, it’s one of the largest solar photovoltaic (PV) power projects in the world. Upon completion, slated for 2015, Topaz will supply clean, renewable electricity to some 160,000 homes.

First Solar’s Mega-projects

With legislation requiring that 33% of the state’s electricity come from renewable sources by 2020 California continues to lead the nation in renewable energy investment and project development.

The Topaz project is supported by a 25-year power purchase agreement (PPA) with Pacific Gas & Electric (PG&E). Community benefits include the creation of as many as 400 jobs over the three-year construction period, additional tax revenue for San Luis Obispo County, and indirect benefits to dozens of area businesses.

First Solar has several solar power mega-projects in development. Difficult economic and solar market conditions have prompted management to sell its ownership stakes in them recently, however. Doing so provides cash that can be reinvested in new project development, though recurring, long-term cash flow streams associated with owning the solar power farms are given up. First Solar typically continues to earn income from these asset sales, however, as the builder and operator, as well as by providing maintenance.

In addition to Topaz, First Solar’s in the early stages of building the 550 MW Desert Sunlight Solar Farm in Riverside County’s Chuckawalla Valley. Desert Sunlight was sold to NextEra Energy Resources LLC and GE Energy Financial Services at the end of September. The solar power farm will generate enough clean, renewable electricity to supply some 160,000 California homes and displace some 300,000 metric tons of greenhouse gas emissions per year. As many as 630 people are to be employed in building Desert Sunlight, and the project will generate nearly $200 million in wages over its minimum 25-year operating life.

Economic benefits to Riverside County are estimated to be $336 million over the 25-year life of the two supporting PPAs, one with Southern California Edison and another with PG&E. Some of the thin-film solar PV modules for the project are being manufactured at First Solar’s plant in Mesa, Arizona, where the company employs some 600 people.

First Solar’s also in the midst of building the 230 MW Antelope Valley Solar Ranch One solar power farm on 2100 acres of former farmland in Los Angeles County. Chicago-based Exelon, one of the largest power utilities in the US, acquired ownership of Antelope Valley Solar Ranch One at the end of September. Exelon expects to invest up to $1.36 billion in the project, which it anticipates will be “accretive to earnings” and free cash flow starting in 2013, when the project is due to come on-line.

 
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I've been reporting and writing on a wide range of topics at the nexus of economics, technology, ecology/environment and society for some five years now. Whether in Asia-Pacific, Europe, the Americas, Africa or the Middle East, issues related to these broad topical areas pose tremendous opportunities, as well as challenges, and define the quality of our lives, as well as our relationship to the natural environment.

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