This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Buffett Buys Into GE-Powered Wind Project (Update 1)

Updated to include GE chief financial officer comments starting in fifth paragraph and added data

NEW YORK ( TheStreet) -- Warren Buffett's utility company MidAmerican Energy is continuing its big alternative energy push by buying an 81-megawatt wind energy project from Invenergy Wind.

After buying into two big solar projects being built by First Solar (FSLR - Get Report) in December, Berkshire Hathaway's (BRK.B) MidAmerican Energy is increasing its wind energy portfolio -- an area in which it is already a U.S. leader -- taking advantage of multi-decade power purchase agreements (PPAs) from regulated utilities.

Buffett's investment in Bishop Hill II and previous deals for solar plants comes at a time when the alternative energy industry faces significant headwinds, including falling power prices, lower government subsidies and a European slowdown. Wind energy investment fell 17% in the U.S. to $21.6 billion in the fourth quarter, while wind generation fell for the first time in a decade in 2011, according to Bloomberg data. Previously, the industry had seen greater than double-digit annual growth.
Warren Buffett

Economics in the wind energy market have favored investors rather than wind turbine manufacturers in the past few years. GE (GE - Get Report), one of the world's largest wind power companies, released earnings on Friday that showed margins in the wind turbine business remain challenging and it expects them to be a headwind for its energy infrastructure division through 2012.

"One drag that was just on the whole company all year long was wind," said GE Chief Financial Officer Keith Sherin on a Friday earnings call with analysts. Sherin noted that while the wind business dragged overall operating profit by $700 million in 2011, he expects a 2012 improvement.

The Invenergy Wind project features 50 General Electric wind turbines.

MidAmerican Energy, which is already the top wind generation producer for regulated utilities in the U.S., will add the Illinois-based Bishop Hill II to the $6 billion in U.S. wind-power generation investments that it's made in Iowa, Wyoming, Washington and Oregon since entering the sector in 2004. Currently, MidAmerican has built or acquired 3,300 megawatts of wind energy capacity. Iowa has the highest percentage of wind energy, relative to the state's total energy generation capacity, in the U.S.

The power purchase agreements on the solar projects and the Bishop Hill II wind project fit the stable investment model of an insurance investor like Buffett -- companies and projects with stable long-term returns, much like an annuity.

The Bishop Hill II project has a 20-year purchase agreement with Ameren's (AEE) Illinois-based utility and will be ready for commercial use in 2012, according to a press statement.

"Wind energy is a renewable generation source that meets current and future energy needs in an environmentally efficient and cost-effective manner," said MidAmerican CEO Greg Abel in a statement. "The Bishop Hill II wind project fits our model of investing in the renewable energy sector," he added.

An acquisition price wasn't disclosed for Buffett's latest alternative energy buy, but it follows MidAmerican Energy's December purchases of the Agua Caliente and Topaz solar projects.

See the 5 stocks JPMorgan warns to absolutely avoid and Al Gore generation investment management for more on the U.S. solar industry.
1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
BRK.A $202,285.00 -0.53%
FSLR $56.40 0.41%
GE $30.36 -0.98%
AAPL $118.03 -0.71%
FB $105.41 -0.31%


Chart of I:DJI
DOW 17,813.39 +1.20 0.01%
S&P 500 2,088.87 -0.27 -0.01%
NASDAQ 5,116.1430 +13.3350 0.26%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs