Posted by: Dr Churchill | October 6, 2012

Wind Power in America is good enough for Warren Buffet….

 

 
The Chief of Berkshire Hathaway, legendary investor Warren Buffett announced this week that he
will be buying up the two biggest wind turbine power plants – yet to be completed – in California.
 
 He is playing big on his investment in renewable energy by betting high both on the current administrations’ renewable energy tax credit policies, and on the project builders’ confidence for new renewable energy in a state where the vision is bold and the current legislation enhances action and development. And it’s no surprise that upwards of 67% all renewable energy projects in America happen here in beautiful California…
 
This s a great Leadership example, because where Cali goes the rest of the nation follows. After all California leads the country in all technological innovation and the rest of the United States will certainly follow. Whether this is soon enough… or not — it’s another matter.
 
Now Buffet is also a financial innovator because he is using Green Bonds in order to acquire the two massive wind farm projects in California’s  Tehachapi region. All in all he confirms my vision of a giant Beta available for investors in the renewable energy industry, especially when using this new form of finance. When we started Green Bonds, we never felt that so soon Warren will be using them. Yet times are clearly showing us why he is  the leadership of all Financial Institutions in America and beyond.
 
His wisdom n financing trascends the conventional naysayers and masters of “prudent” thinking or as he aptly put it in regards to the academic community and its attitude towards value investing: “Well, it may be all right in practice, but it will never work in theory.”
 
To that end, he is both an intelligent man and a smart operator – always acting on huge Beta — because the two recently purchased wind farms are very close to completion and should be operational by the end of the year. And similar to his giant solar plant investments last year he is shifting the fortunes of the industry for the better. Because where Warren goes all other investors soon follow.

 And by the way, this is another validation of a smart national Renewable Energy Policy because both wind power “farms” qualify for the expiring federal tax breaks, and both wind power plants are locked into multi-year power purchase agreements, lasting until the end of 2035 and with double extensions thereof. And the certainty this federal finance option [tax breaks] gives Warren and other investors in renewables, is evident here. And in my humble opinion, that is why they need to be continued….

It is also a very smart deal for Buffett,  because of the low risk profile. Warren when structuring this deal, takes none of the development risk — yet will reap all the rewards of more than 20 years’ worth of power fully committed [sold outright] and being sent to the grid of a California utility that needs every watt of renewable power it can get.

And this is the result of another smart energy policy initiative from California this time. Because for the electrical utilities to meet the state’s very aggressive renewable energy portfolio goal of 33% by 2020, they have to purchase all available renewable and sustainable energy and this gives an uplift to everybody’s boat.

And he will be using some Green Bonds in the financial structure mix, used to finance this transaction…

And this is good news for us since we are the innovators of this great form of renewable energy finance. The Green Bonds is an integral part of our solutions at Green Capital and a tremendous lever to augment our resources and lift the renewable energy industry from the slump.

Yours,

Pano

PS:

And at a time when most new wind power news is not so great, this investment certainly provided the wind power industry with a brief respite from the weight of the entire industry being sidetracked once the wind energy production tax credit expires at the end of the year…

 

 


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