Berkshire Hathaway’s Annual Meeting Q&A: ‘We’ve got a big appetite for wind or solar,’ Buffett says

Source: By Cole Eppley, Omaha World Herald • Posted: Monday, May 8, 2017

Berkshire Hathaway Chairman and Chief Executive Warren Buffett and Vice Chairman Charlie Munger took questions from journalists, shareholders and professional investors as part of Saturday’s annual meeting in Omaha:

Shareholders should be prepared for Berkshire Hathaway Energy subsidiaries to continue closing on more renewable energy deals in the capital-intensive utilities business.

Berkshire-owned energy subsidiaries like Des Moines-based MidAmerican Energy and Las Vegas-based NV Energy stand out from their investor-owned counterparts in that Berkshire elects not to pay out dividends and instead plows those earnings back into building new projects and maintaining infrastructure like transmission lines.

Investor-owned utilities, meanwhile, generally pay 60-70 percent of their earnings to shareholders via dividends.

And it also helps that wind and solar projects are subsidized by federal tax credits. Just like the companywide earnings that are repatriated into capital projects, so do tax credits get reinvested back into the energy businesses.

Because renewable generation harnesses the wind or sunshine to create electricity, utilities don’t have to pay for fuel like they do at natural gas- or coal-fired power plants. That has helped keep electricity rates especially low for MidAmerican ratepayers in Iowa, where rates will remain unchanged at least until 2029.

Simply put, Buffett said: “We’ve got a big appetite for wind or solar (projects). … If someone walks in with a solar project tomorrow and it takes $1 billion or $3 billion, we’re ready to do it.”

Some earnings context: All told, Berkshire energy businesses comprised more than $17.8 billion in revenues in 2016, down slightly from $18.2 billion in 2015.