Warren Buffett's MidAmerican Energy Holdings made its second foray into solar energy in as many weeks, saying on Friday it will buy a 49 percent stake in an Arizona power plant from NRG Energy Inc.
Terms of the deal were not disclosed.
MidAmerican, the utility affiliate of Buffett's holding company Berkshire Hathaway Inc, said it will take a stake in the 290-megawatt Agua Caliente project in Yuma County, Arizona. The plant is being built by solar power company First Solar Inc and is supported by a $967 million loan guarantee from the U.S. Department of Energy.
The $1.8 billion project is expected to be completed in 2014. California utility Pacific Gas & Electric will buy the project's electricity output.
The announcement comes a little over a week after MidAmerican said it would buy First Solar's 550 MW Topaz Solar Farm power plant in California.
We are aggressively pursuing opportunities to expand our presence in the renewable energy sector, and the Agua Caliente project is another important step toward that goal, MidAmerican Chief Executive Greg Abel said in a statement.
NRG had said in May that it planned to bring partners into the project. The company first said a year ago that it would invest up to $800 million in the Agua Caliente power plant.
The partnership enhances the strength and credibility of what was already one of the world's leading solar projects, NRG CEO David Crane said.
The acquisition dovetails with Berkshire's increasing interest in solar and other alternative energy technologies in recent years, the most notable example being its investment in China's BYD Co Ltd.
Though BYD is best known for its electric cars, it is also one of the world's largest battery makers and has a nascent solar panel business as well.
Solar power is still more expensive than electricity generated from fossil fuels, but the Agua Caliente project may qualify for a cash grant totaling 30 percent of its construction costs under a federal program to stimulate development of renewable energy.
Solar projects on a market basis are far from economic, but when you consider the fact that utilities have to buy solar power right now, MidAmerican, NRG and other solar project owners can make a good return, said Morningstar analyst Travis Miller. First Solar and SunPower are developers and if they have new projects we would expect that MidAmerican and NRG would at least consider investing in their projects.