Berkshire Hathaway 2017 Annual Meeting Audience Question # 45

Berkshire has a huge appetite for wind or solar energy projects

Warren Buffett:

OK. Gregg.

Gregg Warren:

Warren, during the past five years, Berkshire Energy’s investments in solar and wind generation have been about equal, with around 4.7 billion dedicated to capital projects in each segment.

Based on the company’s end-of-year capital spending forecast for 2017 through 2019, investments in wind generation were expected to be more than seven times greater than investments in solar generation the next three years, with just over $4.5 billion going into wind generation.

Just wondering how much of that future spending is tied to PacifiCorp’s recently announced $3.5 billion expansion plan, which is heavily weighted towards improving and expanding the subsidiary’s existing wind fleet, and whether the economics for wind are that much better than solar given that MidAmerican has also been spending heavily on wind investments?

Or is this disparity between the two segments being driven more by genuine capacity needs, which would imply that you have much more solar capacity than you need?

Warren Buffett:

Yeah. It is… we don’t look at it as having more solar capacity than we need or anything like…

It’s really a question of what comes along. I mean, and these… the projects, they’re internally generated, they’re externally offered to us, and we’ve got a big appetite for wind or solar. We have seen… you know… just based on those figures, we’ve seen more wind lately.

But we have no bias toward either one. I mean, if we saw five billion of attractive solar projects we could do and didn’t happen to see any wind during that period, it wouldn’t slow us down from doing the five billion or vice versa.

So we are… we have an appetite, a huge appetite, for projects in either area. We’re particularly well situated, as I think I’ve explained or talked about in the past, because we pay lots of taxes.

And therefore, solar and wind projects all involve a tax aspect to them. And we can handle those much better than many other… certainly, electric utilities.

Most electric utilities really, A, don’t have that much money left over after dividends and these
…frequently, the taxes aren’t that significant.

At Berkshire, we pay lots of taxes, and we’ve got lots of money. So it’s really just a question of doing the math on the deals as they come along.

We’ve been very fortunate in Iowa, in finding lots of projects that made sense. And as a result, we’ve had a… we’ve got a much lower price for electricity than our main competitor in the state.

We’ve got a lower price than in any states that touch us.

We’ve told the people of Iowa we won’t… they won’t have a price increase for many, many, many years… guaranteed that. So this worked out extremely well.

But if somebody walks in with a solar project tomorrow and it takes a billion dollars or it takes three billion dollars, we’re ready to do it. There’s no specific…

And the more, the better. There’s no specific preference between the two. Obviously, it depends where you are in the country.

I mean, Iowa’s terrific for wind. And, obviously, California’s terrific for sun. And there are geographical advantages to one or the other. But from our standpoint, we can do them anyplace. And we will do them anyplace.

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