Buffett Buys 49% Stake in $1.8 Billion NRG Solar Power Plant

December 20, 2011, 4:02 PM EST

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By Christopher Martin

(Updates with closing share prices in last paragraph.)

Dec. 16 (Bloomberg) -- Warren Buffett’s MidAmerican Energy Holdings agreed to buy a 49 percent stake in NRG Energy Inc.’s $1.8 billion Agua Caliente solar project, the billionaire’s second investment in solar this month.

The 290-megawatt power plant is being built in Arizona by First Solar Inc., which expects to complete the installation of its panels by 2014, Princeton, New Jersey-based NRG said today in a statement. Terms of MidAmerican’s purchase weren’t disclosed.

Buffett’s foray into solar shows that utility-scale power plants offer good returns with little downside risk, said Paul Clegg, an analyst at Mizuho Securities USA in New York. Power from the plant, which won a $967 million loan guarantee from the U.S. Energy Department this year, will be sold to a PG&E Corp. utility under a 25-year contract at undisclosed prices.

“The utility contracts are favorable and solid,” Clegg said today in an interview. “Plus, they offer tax credits that may be useful to large, profitable companies.”

Increasing competition from China’s solar industry has cut panel prices by as much as 50 percent this year, leading First Solar to shift its focus to building larger scale power plants from selling panels to rooftop developers.

MidAmerican on Dec. 7 agreed to buy the entire $2 billion Topaz power plant in California from Tempe, Arizona-based First Solar. MidAmerican is a subsidiary of Omaha, Nebraska-based Berkshire Hathaway Inc.

NRG rose 0.6 percent to $18.31 and First Solar rose 1.5 percent to $31.91 at the close of trading in New York. Berkshire fell $75 to $112,325.

--Editors: Jessica Resnick-Ault, Tina Davis

To contact the reporter on this story: Christopher Martin in New York at cmartin11@bloomberg.net