GREEN DEALS: Why Buffett chose solar

Buffett picks the right time to buy big solar; Carnegie advances 5MW Canadian wave power project; and Dart's glasshouse plans for CSG.

Warren Buffett’s sudden push into large-scale solar appears to be perfectly timed, with the $2 billion, 550MW Topaz solar PV project likely to be one of the last to qualify for federal incentives; and enjoying a power off-take agreement vastly superior to the one currently being negotiated because the cost of solar panel has fallen by nearly half in the last year. “The smart guys are getting into these early projects because they have very attractive power-purchase agreements,” Paul Clegg, an analyst with Mizuho Securities in New York, told Bloomberg in an interview. “Financing (for future projects) won’t be as easy at the rates being signed for the latest ones.”

The details of the Buffett purchase have not been revealed, but it is presumed he paid less than the $2 billion notional value of the Californian solar farm. The PPA is not disclosed, although First Solar says its projects will sell power for around 14-16c/kWh, and this is expected to fall to around 10c-12c/kWh by 2014. Lazard Capital Markets analyst Sanjay Shrestha told Bloomberg that the Buffett investment shows that solar “has come of age.” Even though a Department of Energy loan guarantee program is ending (Topaz missed out on this), Shrestha said there will still be viable large-scale solar plants, and Buffett’s investment may encourage other buyers of First Solar PV farms. Buyers so far have included GE, NextEra Energy, Exelon Corp and NRG Energy.

Making waves in Canada

Australian marine power developer Carnegie Wave Energy has applied for more funding to go towards the development of its Ucluelet Wave Energy Project – a 5MW CETO demonstration project off British Columbia, Canada. Carnegie, through its BC-based subsidiary Pacific Coastal Wave Energy Corporation (PCWE), has been developing the Ucluelet Wave Energy Project for over two years, with the support of British Columbia government through a $C2 million grant from the Innovative Clean Energy (ICE) Fund. Carnegie's subsidiary, PCWE, has now submitted a formal proposal to the Canadian government for project grant funding under the ecoENERGY Innovation Initiative (ecoEII), with a decision expected in early 2012.

Carnegie says that, to date, it has completed site and wave resource assessment, environmental scoping, conceptual design, fatal flaw analysis and securing of an offshore investigative licence. It has also signed a MoU with independent local firm Hatch Ltd, for the provision of engineering, environmental and project management services towards the project. "Canada has an enormous, untapped wave energy resource which, combined with its technology development capabilities and attractive fiscal, policy and regulatory environments, provide an appealing location for commercial development of Carnegie's CETO technology," said Carnegie's CEO and managing director, Dr Michael Ottaviano. "The Ucluelet Project is well advanced and, subject to securing the necessary funding and approvals, will provide the opportunity to demonstrate CETO on a commercial scale and help to grow Canada's marine renewable energy sector."

Dart in a glasshouse

ASX listed coal-seam gas miner Dart Energy has signed a MoU for its first Gas Sales Agreement in New South Wales that includes provisions for an associated downstream equity investment in a horticultural glasshouse project. The project, being undertaken by Maria’s Farm Veggies in the state's Fullerton Cove area, involves a state of the art $65 million glasshouse development that will initially grow high quality tomatoes, capsicums and cucumbers for sale to Australian markets. The initial glasshouse will be a 16 hectare, 4,000m2 affair, with water storage and treatment facilities and CO2 sequestration. According to Dart Energy, it uses Dutch glasshouse technology, which has been used with great success in multiple countries, employing efficient growing conditions to achieve up to 10x better yields than open field methods. The project is expected to be completed by early 2013 and to generate between 125 and 200 jobs in the Newcastle area.

Dart Energy will supply CSG for the project's heating and power, which it will source from a small number of wells in its Fullerton Cove licence area near Newcastle – although the company says the proposal is still subject to various conditions, including final local planning approvals and establishing commercial gas flow from the area. Dart expects to drill two wells at Fullerton Cove in the first half of 2012 as part of its appraisal program. Australian CEO, Robbert de Weijer, says the project is consistent with Dart Energy's belief that CSG development can co-exist with alternative productive land uses in an environmentally sustainable way. "Today’s announcement shows how our coal seam gas project can not only co-exist with but can indeed facilitate sustainable food production and associated job creation in NSW," de Weijer said. “(It) also highlights Dart’s key point of difference in coal seam gas in NSW, that is the development of small -scale, energy efficient power projects."

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