Warren Buffett's MidAmerican Energy Holdings utility agreed to buy the $2 billion Topaz project in California, branching into solar power after the industry was battered by stock markets around the world.
The Topaz Solar Farm will be one of the world's largest photovoltaic power plants and is being developed by the seller, First Solar Inc. of Tempe, Ariz. Terms weren't disclosed. The project's 550- megawatt capacity is equal to about half a new nuclear reactor.
Buffett's Iowa-based utility, which entered clean energy buying U.S. wind farms and a stake in Chinese electric-car producer BYD Co., struck the deal Wednesday after First Solar failed to get a U.S. government loan guarantee for the project that will use First Solar's thin-film solar panels.
Topaz "demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees," said Greg Abel, chief executive of the MidAmerican business at Buffett's Berkshire Hathaway Inc., in a statement. The utility will seek to add more assets of this type to its portfolio, he said.
Tax benefits may have helped attract the billionaire, according to Jefferies International Ltd.
"The reason for the move from wind to solar is very simple," said Gerard Reid, a London-based analyst at Jefferies. "Tax credits for wind in the U.S. expire at the end of next year, while solar ones run till 2015."
First Solar has agreed to build and operate the plant in San Luis Obispo County for MidAmerican. Construction began in November and is set to finish by early 2015, the companies said.