Crony Capitalism, Episode #…What Are We Up To Now?

Is it “time to take solar power seriously?” That is what many are saying in the wake of Warren Buffett’s $2 billion purchase of a solar farm under construction in California:

Warren Buffett’s MidAmerican Energy Holdings company has agreed to buy a giant, 550-megawatt photovoltaic farm currently under construction in San Luis Obispo County for $2 billion, giving a huge boost to the solar industry that could spur investment by other major players.

Some think the deal represents a turning point for solar energy:

“In a lot of ways, this is classic Warren Buffett,” said Bruce Bullock, executive director of the Maguire Energy Institute at Southern Methodist University. “He comes in to an industry that is starving for capital investment. At the same time, this is something that also tells people it’s time to take solar power seriously.” …

“Solar is a sound investment,” Kinman said, “a fact bolstered by MidAmerican’s announcement today.”

A sound investment? Well, maybe. But you have to look at the fine print:

Warren Buffett’s Berkshire Hathaway Inc., which agreed to buy a $2 billion solar farm in California may have picked the right time to invest in the industry.

The 550-megawatt Topaz project will qualify for a federal incentive because it began construction last month, and will sell power under a long-term contract that was completed before prices for solar panels fell 44 percent in the last year. …

Topaz, which will use First Solar panels, may be the last large solar farm to qualify for the U.S. Treasury Department incentive program, which is set to end this year. It will likely sell power at a higher price than projects that are seeking utility contracts now….

Will the federal incentive program actually end this year? We fervently hope so. It is long past time to get the government out of the business of subsidizing inefficient energy. Meanwhile, I am warming up to the idea that Warren Buffett should pay more in taxes. I would settle for just getting his federal subsidies back.

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