Renewables get a Buffett boost

A couple of big solar moves by famed investor Warren Buffett have led a flurry of end-of-year renewable power project deals, and provided a lift for the sector in a difficult last quarter.

A difficult last quarter of 2011 for the renewable power sector worldwide, with sector share prices under strong pressure and banks becoming wary about extending long-term finance in some countries, drew towards a close last week with some encouraging project transactions.

Highest-profile among them was a big solar commitment by famed investor Warren Buffett. His MidAmerican Energy Holdings agreed to buy a 49 per cent stake in NRG Energy’s $US1.8 billion Agua Caliente solar project in Arizona.

The 290MW plant is being built by First Solar, which expects to complete the installation of the panels by 2014. It will be more than three times the size of the world’s largest PV project currently operating, in Italy.

Greg Abel, chairman of MidAmerican, said that his company is “aggressively pursuing opportunities to expand its presence in the renewable energy sector”.

The Arizona deal was not Buffett’s only renewable power gambit this month. MidAmerican on December 7 agreed to buy outright from First Solar the $US2 billion Topaz PV project in California. At 550MW, Topaz is nearly twice as big as Agua Caliente.

On that occasion, Abel said that Topaz “also demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees and reflects the type of solar and other renewable generation that MidAmerican will continue to seek to add to its unregulated portfolio.”

Construction on Topaz began in November this year, and is due to be completed in early 2015. MidAmerican expects the project to create 400 jobs during the building phase, and 15 in the operating phase.

If Buffett’s project moves have been the most eye-catching in renewable energy this month, they have been far from the only large ones. Last Thursday, German developer Solarhybrid said that it is in talks to raise some €280 million to build a 150MW PV park at the Neuhardenberg private airport in Brandenberg.

Meanwhile giant German utility Eon said that it plans to invest €7 billion in renewable energy projects over the next five years, including at least three large offshore wind projects off the coasts of its home country, Sweden and the UK.

The same day, Indian wind developer Myrtah Energy said it had secured $US198 million in loans and mezzanine finance to help fund its expansion plans. The money came partly from the Infrastructure Development Finance Corporation, partly from a syndication of senior debt, and partly from a four-year mezzanine loan from PTC India Financial Services.

Myrtah aims to increase its wind capacity from 500MW in 2012, to 5GW by 2017. The projects scheduled to start operating next year are in Maharashtra, Andhra Pradesh and Rajasthan.

Over in the UK, last week brought one of the largest biomass-to-energy project deals of the year, as BNP Paribas Clean Energy Partners bought a straw-burning project in northeast England from developer Eco2 for £170 million.

The transaction also saw the provision of debt finance for the 40MW project, at Sleaford, from Royal Bank of Scotland, Unicredit, Siemens Bank and NIBC Bank. Construction is due to start immediately, BNP Paribas said, and be completed by June 2014. The estimate is that Sleaford will create 200 building jobs in the construction phase and 30 posts in the operating phase, plus a number of others in handling and transporting biomass for the plant.