Warren Buffett's Mid American Holdings has announced an investment in First Solar's (FSLR, Financial) Topaz Solar Farm power plant in California. The solar power plant is one of the two largest under construction in the world.
Shares of FSLR rose over 10% on the news.
First Solar previously failed to get a U.S. loan guarantee to help finance its construction for the plant. Since Solyndra filed for bankruptcy, the solar industry has struggled with financing problems.
Short-sellers like Jim Chanos have been short FSLR for many months as a way to profit from overly indebted European governments that would have a tough time subsidizing the solar industry.
In addition, Chanos was critical of the high cost of solar energy production.
"It still costs almost three times a kilowatt hour for solar power than regular natural gas or coal fired power. That’s number one. You can’t use it for base load. Solar stocks all rallied on the Japanese nuclear problem. Wind and solar may one day be there but they cannot do base load and you need still core power plants."
Buffet's current investment is about $1.6 billion and the plant will generate enough power for about 160,000 homes.
Greg Abel president and chief executive officer of MidAmerican obviously does not agree with Chanos that solar is an inefficient technology. Abel said the deal “demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees,”
Nonetheless, FSLR shares have been battered over the last year from $160 to $50 per share.
Shares of FSLR rose over 10% on the news.
First Solar previously failed to get a U.S. loan guarantee to help finance its construction for the plant. Since Solyndra filed for bankruptcy, the solar industry has struggled with financing problems.
Short-sellers like Jim Chanos have been short FSLR for many months as a way to profit from overly indebted European governments that would have a tough time subsidizing the solar industry.
In addition, Chanos was critical of the high cost of solar energy production.
"It still costs almost three times a kilowatt hour for solar power than regular natural gas or coal fired power. That’s number one. You can’t use it for base load. Solar stocks all rallied on the Japanese nuclear problem. Wind and solar may one day be there but they cannot do base load and you need still core power plants."
Buffet's current investment is about $1.6 billion and the plant will generate enough power for about 160,000 homes.
Greg Abel president and chief executive officer of MidAmerican obviously does not agree with Chanos that solar is an inefficient technology. Abel said the deal “demonstrates that solar energy is a commercially viable technology without the support of governmental loan guarantees,”
Nonetheless, FSLR shares have been battered over the last year from $160 to $50 per share.
