Buffet Plans Second Bond Offering for Topaz Solar Farm

In a good sign that solar plant developers will be able to use bonds to finance projects, a bond offering for Topaz Solar Farm has been oversubscribed. 

After its successful bond offering of $850 million, Warren Buffet’s utility arm is planning a second one to finance its $2.4 billion Topaz Solar Farm in California.

The bond offering was the first for a US solar PV project that’s not backed by a Dept of Energy loan guarantee.

Originally, MidAmerican Energy planned to offer a bond for $700 million, but there was so much interest it upped it to $850 million. That too was oversubscribed by over $400 million even though the bond was rated BBB-, the lowest investment grade rating.

It was the first renewable energy project to be rated by the big three rating agencies. The second offering is expected to be for about $450 million.

It’s not clear why the project didn’t get a higher rating, given the high likelihood that the project will be completed and a power purchase agreement is already signed.

In a time when income investments are scarce, institutional investors are becoming more interested in renewable energy projects because of their reliable income from long term power purchase contracts.

Investors will receive 5.75% interest and reach maturity in September 2039. They begin paying this month.

In January, the utility created a separate renewables arm, MidAmerican Renewables.  Among investor-owned utilities, MidAmerican has the most installed wind power in the US, totaling 2,284 megawatts when current projects are completed. Besides the two solar plants it recently bought, it plans to invest geothermal and hydro.

In December, 2011, MidAmerican bought one of the world’s largest solar PV plants – the 550 MW Topaz project under development in southern California. Immediately after that, it bought a 49% stake in the 290 MW Agua Caliente project in Arizona, which is expected to come online in 2014. First Solar is building both projects.

"We can make this sort of investment because MidAmerican retains all of its earnings, unlike other utilities that generally pay out most of what they earn," says Buffett in his annual shareholder letter. "Many more wind and solar projects will almost certainly follow."

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Comments on “Buffet Plans Second Bond Offering for Topaz Solar Farm”

  1. anonymous

    Wind and Solar will not get us off foreign oil. What about algae? It’s one solution to help the US get off of foreign oil, become energy independent and create new jobs here in the US.

  2. Rona Fried

    Wind and solar along with vast increases in energy efficiency and other renewables such as geothermal, can get us off foreign oil and fossil fuels in general. It would help if people stopped driving gas guzzling SUVs, retrofited their homes etc. The US, from the Dakotas down, has been called the Saudi Arabia of wind – if we had the will, we could power the country just on that alone. Add solar to every home and business and we would be energy independent from our local utility as well.

  3. Joe

    Amen to that. We put a human on the moon over 40 years ago. Before that Republican President Dwight Eisenhower said in his last speach as President: …we yet realize that America’s leadership and prestige depend, not merely upon our unmatched material progress, riches and military strength, but on how we use our power in the interests of world peace and human betterment.
    …throughout America’s adventure in a free government, our basic purposes have been to keep the peace, to foster progress in human achievement, and to to enhance liberty, dignity and integrity among people and among nations. To strive for less would be unworthy of a free and religious people. Any failure traceable to arrogance, or our lack of comprehension or readiness to sacrifice would inflict upon us grievous hurt both at home and abroad.
    …In the councils of government, we must guard against the acquisition of unwarrented influence, whether sought or unsought, by the militaryindustrial complex. The potential for the disastrous rise of misplaced power exists and will persist.
    We must never let the weight of this combination endager our liberties or democratic processes. We should take nothing for granted Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

    …In this revolution research has become central; it also becomes more formalized, complex, and costly. A steadily increasing share is conducted for, by, or at the direction of, the Federal government.

    Today, the solitary inventor, tinkering in his shop, has been overshadowed by task forces of scientists in laboratories and testing fields. In the same fashion, the free university, historically the fountainhead of free ideas and scientific discovery, has experienced a revolution in the curiosity. For every old blackboard there are now hundreds of new electronic computers.

    The prospect of domination of the nation’s scholars by Federal employment, [smell lobbyists) project allocations, and the power of money is ever present
    + and is gravely to be regarded

    …Another factor in maintaining balance involves the element of time. As we peer into society’s future, we –you and I, and our government–must avoid the impulse to live only for today, plundering, for our own ease and convenience, the precious resources of tomorrow. We cannot mortgage the material assets of our grandchildren without risking the loss also of their political and spiritual heritage. We want democracy to survive for all generations to come, not to become the insolvent phantom of tomorrow.

    Down the long lane of history yet to be written America knows that this world of ours, ever growing smaller, must avoid becoming a community of dreadful fear and hate, and be instead, a proud confederation of mutual trust and respect.

    Such a confederation must be one of equals. the weakest must come to the conference table with the same confidence as do we, protected as we are by our moral, economic, and military strength. That table, though scarred by many past frustrations, cannot be abandoned for the certain agony of the battlefield.

    Disarmament, with mutual honor and confidence (say what!!) is a continuing imperative. Together we must learn how to compose differences, not with arms, but with intellect and decent purpose. Because this need is so sharp and apparent I confess that I lay down my official responsibilites in this field with a definite sense of disappointment. As one who has witnessed the horror and lingering sadness of war–as one who knows that another war could utterly destroy this civilation which has been so slowly and painfully built over thousands of years–I wish I could say tonight that a lasting peace is in sight.
    Happily, I can say that war has been avoided. Steady progress toward our ultimate goal has been made. But, so much remains to be done. As a private citizen, I shall never cease to do what little I can to help the world advance along that road.
    So–in this my last good night to you as your President…You and I –my fellow citizens–need to be strong in our faith that all nations under God, will reach the goal of peace with justice. May we be ever unswerving in devotion to principle, confident but humble with power, diligent in pursuit of the Nation’s great goals.

    To all peoples of the world, I once more give expression to America’s prayerful and continuing aspiration: We pray that peoples of all faiths, all races, all nations may have their great human needs satisfied; that those now denied opportunity shall come to enjoy it to the full; that all who yearn for freedom may experience its spirtiual blessings; that those who have freedom will understand, also, its heavy responsibilities; that all who are insensitive to the needs of others will learn charity; that the scourges of poverty, disiease and ignorance will be made to disapear from the earh, and that, in the goodness of time, all peoples will come to live together in a peace guaranteed by the binding force of mutual respect and love.


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