Maybe Warren Buffett’s purchase of a California solar farm will finally force a recognition of the potential of solar energy from an economic standpoint. Since the dissolution of Solyndra, oil-besotted conservative lawmakers have dismissed this potential, saying that the industry was simply unprofitable. When Buffett makes an investment, that becomes a harder sell:
Buffett’s MidAmerican Energy Holdings will take over Topaz Solar Farm, which is expected to produce enough power to run 160,000 homes when it is up and running in 2015. The farm, halfway between Los Angeles and San Francisco, is the world’s second-largest photovoltaic plant under construction and is expected to generate 550-megawatts of electricity or about half the power of a nuclear reactor.
The deal comes hot on the heels of a string of green energy investments by the famous investor. MidAmerican, which is part of Buffett’s Berkshire Hathaway empire, is the largest wind energy provider in the US where it operates more than a dozen wind farms.
I know there’s a theory out there on the fringe right that Warren Buffett is some kind of communist, but in reality he’s a straight-up capitalist. And he sees solar energy – and wind energy, for that matter – becoming cheaper to produce, approaching the cheapness of coal. He also sees that coal-fired power plants cannot survive, because of a combination of polluters finally having to pay for their externalities, competition from other energy sources and just basic economics.
The North American Electric Reliability Corp. says in its most recent report that the main new sources of power added to the grid in the immediate future will be natural gas, solar and wind power projects.
For example, in late November, SolarCity and Bank of America-Merrill Lynch announced financing for a five-year plan to build $1 billion in solar power plants near military housing across the country, providing 300 megawatts of power.
This comes as about 48 gigawatts of coal retirements at 231 plants will have retired from 2010 to 2022, according to the Edison Electric Institute. That’s 14.1 percent of the total 339,000 megawatts of coal-fired power generation in 2010, or about 5 percent of overall power. M.J. Bradley & Associates — a firm representing many power plants in favor of the rules — keeps a list that currently includes 228 power plants set to retire in the next several years. All except six are more than 30 years old; the majority are older than 50 years.
You can consider this a socialist plot, but actually market forces have spoken. Yes, politics plays a role with tax credits and EPA rules. But those too are a response to a market that will increasingly no longer favor coal.