Green Power is the future

Solar power, wind power, geothermal energy, hydro generation, bio-fuel, and tidal power are all examples of Green Power, the future of energy for everyone on Earth. Whether you're interested in renewable energy for your home or business, or want to keep up on the latest trends of sustainability throughout the world, here's a resource you want to visit regularly.

Solar 15% Returns Beat Treasuries From Buffett to Google

The low interest rate environment is creating lots of opportunities.  It had been my hope that we (the global "we") would use the recession as a time for investing in alternative energy, so when demand picked up (with the economy), we would be better positioned to avoid the impact of higher fossil fuel costs.

From The San Francisco Gate:

U.S. solar developers are luring cash at record rates from investors ranging from Warren Buffett to Google Inc. and KKR & Co. by offering returns on projects four times those available for Treasury securities.
Buffett's Berkshire Hathaway Inc. together with the biggest Internet search company, the private equity company and insurers MetLife Inc. and John Hancock Life Insurance Co. poured more than $500 million into renewable energy in the last year. That's the most ever for companies outside the club of banks and specialist lenders that traditionally back solar energy, according to Bloomberg New Energy Finance data.
Once so risky that only government backing could draw private capital, solar projects now are making returns of about 15 percent, according to Stanford University's center for energy policy and finance. That has attracted a wider community of investors eager to cash in on earnings stronger than those for infrastructure projects from toll roads to pipelines.
"A solar power project with a long-term sales agreement could be viewed as a machine that generates revenue," said Marty Klepper, an attorney at Skadden Arps Slate Meagher & Flom LLP, which helped arrange a solar deal for Buffett. "It's an attractive investment for any firm, not just those in energy."
Jim Barry, the chief investment officer on Blackrock Inc.'s renewable energy team, joins Pensiondanmark A/S Managing Director Torben Moger Pedersen in assessing infrastructure finance in a panel discussion hosted by New Energy Finance in New York today.

Predictable Cash

With 30-year Treasuries yielding about 3.4 percent, investors are seeking safe places to park their money for years at a higher return. Solar energy fits the bill, with predictable cash flows guaranteed by contract for two decades or more. Those deals may be even more lucrative because many were signed before the cost of solar panels plunged 50 percent last year.
Buffett's MidAmerican Energy Holdings Co. agreed to buy the Topaz Solar Farm in California from First Solar Inc. on Dec. 7. The project's development budget is estimated at $2.4 billion and it may generate a 16.3 percent return on investment by selling power to PG&E Corp. at about $150 a megawatt-hour, through a 25-year contract, according to New Energy Finance calculations. It will have 550 megawatts of capacity and is expected to go into operation in 2015, making it one of the world's biggest photovoltaic plants.

'Free Fuel'

"After tax, you're looking at returns in the 10 percent to 15 percent range" for solar projects, said Dan Reicher, executive director of Stanford University's center for energy policy and finance in California. "The beauty of solar is once you make the capital investment, you've got free fuel and very low operating costs."
The long-term nature of solar power-purchase deals make them similar to some bonds. And because a solar farm is a tangible asset, these investments also function much like those for infrastructure projects, with cash flows comparable to toll roads, bridges or pipelines, said Stefan Heck, a director at McKinsey & Co. in New York who leads their clean-tech work.
Once a project starts producing power, investors can earn a return that's "higher than most bonds," he said. "There are a lot of pension funds with long-term horizons that are very interested in this space."
Governments remain the biggest backers of the solar industry, and President Barack Obama's administration suffered criticism for investing in Solyndra LLC, a solar manufacturer that went bankrupt last year.

No comments:

Post a Comment

Note: Only a member of this blog may post a comment.