Why Warren Buffett wants to double his renewable energy investments
As a value investor, Buffett often invests in companies that have had poor price performance: that’s where great values come from. Known as a follower of the value investing school, Buffett has accumulated a fortune of over $60 billion dollars over the decades.
Describing the company’s increasing investment in renewable energy at the Edison Electric Institute’s annual convention in Las Vegas, Buffett had to rely on a deputy, Greg Abel, to remind him just how much they’d committed: $15 billion.Then he confirmed : “There’s another $15 billion ready to go, as far as I’m concerned.”
That decision, according to Bloomberg stems in part from the fact that, “a drop in equipment costs is making renewable energy more competitive with power from fossil fuels.”
His company MidAmerican Renewables quickly showed its financial heft in the solar marketplace, going from ‘a non-player to one of the largest solar investors in a very short time frame’, said Dan Bedell, an executive vice president of Principal Solar, a Texas company that also acquires large-scale solar.
The unit, now called Berkshire Hathaway Energy, operates electric grids in the U.K., natural gas pipelines that stretch from the Great Lakes to Texas and electric utilities in states including Oregon and Nevada. Its renewable investments include wind farms in Iowa and Wyoming, as well as solar farms in California and Arizona. Berkshire has been able to plow so much into renewable energy because it can use tax credits to offset profit at other businesses.
Unlike other utility-holding companies, Berkshire Hathaway Energy retains all of its earnings. According to Warren Buffet, that probably will continue, estimating that the unit could reinvest about $30 billion into its business in the next decade.
“We’re going to keep doing that as far as the eye can see,” he said to Bloomberg. “We’ll just keep moving.”