The news comes just a week after work finally got underway on the mammoth photovoltaic project, located in San Luis Obispo County, California, and three months after it was announced that it had failed to secure a Department of Energy loan guarantee.
"From the First Solar point of view its absolutely excellent," Jefferies market analyst Gerard Reid told pv magazine on the announcement of the sale, "what this is showing is that youve got a big investor, with a big name globally, giving a stamp of approval to the solar industry."
Berkshire Hathaway owns the Topaz projects buyer MidAmerican Energy Holdings. Berkshire Hathaway is well known for being controlled by celebrity investor Warren Buffett. "This is very, very important for the whole industry, especially given the whole negative press that the whole solar industry has been getting in the US."
The sale also marks MidAmerican Energy Holdings entry into the solar industry. The company is said to be the number one owner of wind-powered energy generation among U.S. rate-regulated utilities. "Adding solar energy to our generation portfolio is a strategic move to invest in yet another renewable energy source," commented Greg Abel, chairman, president and CEO. He continued, "This project also demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees."
Analyst Reid added that a wind developer moving into photovoltaics is also of significance. "I think this is going to happen more and more. The reason being is that the tax credit situation in the US [favors this move]. If youre a wind investor the tax credit system comes to an end at the end of this year. That means its just a very difficult business to be in going forward. So you have to expand to being a solar developer."
The closing of the acquisition is contingent on the satisfaction of certain closing conditions specified in the acquisition agreement, including certain required actions with respect to the project's permits and electrical interconnection arrangements. The project sale is not contingent on MidAmerican obtaining debt financing.
First Solar will construct, operate and maintain the solar project. It is scheduled for completion in 2015. Overall, 400 construction jobs and 15 ongoing operations and maintenance jobs are expected to be created. Meanwhile, Pacific Gas and Electric Company will purchase the generated electricity under a 25-year power purchase agreement.
Responding to suggestions that the $3 per-watt-peak (/Wp) price is too high, for a project of this size, and therefore will distort the market, Reid reacted dismissively. "You have to think that were in a free market here. The job of a panel producer is to try and sell his panels for a high as price as possible. Why sell a system at $2 /Wp when he can for $3 /Wp somewhere else? I think more power to First Solar, theyve done a good job and theyve got a development pipeline in the US before anyone else did. That, to me, is good management!"
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