As the largest consumer of imported energy in the world with catastrophic environmental problems, the People’s Republic of China has quite naturally targeted solar energy as a major power source to develop. But due to market difficulties, Beijing is now engineering a major consolidation of the solar power sector. As China is pulling back from solar power, however, legendary investor Warren Buffett is doubling down, funneling billions more in the industry’s assets.
Over the last month, MidAmerican Energy Holdings, a power company controlled by Buffett’s Berkshire Hathaway Inc. (NYSE:BRK.A), reached an agreement to pay $2 billion to $2.5 billion to SunPower Corporation (NASDAQ:SPWR) for two California solar projects. That increases Buffett’s solar power holdings in California, as earlier a solar farm in San Luis Obispo was purchased by Berkshire Hathaway for $2 billion. MidAmerican Energy Holdings also owns 49% of an Arizona solar point in a venture with NRG Energy Inc (NYSE:NRG) and First Solar, Inc. (NASDAQ:FSLR).
Like everything in life, investing and trading is a matter of timing. While it is true that you cannot time the market, you can certainly wait for someone else to make most of the mistakes and profit from their experience. That is why Buffett is expanding in solar power now as Beijing is being compelled by the forces of the market to contract.
Buffett is bullish on solar power. So is the People’s Republic of China. But each has fundamentally contrasting investing objectives. Buffett wants to profit from solar power. Beijing wants to dominate the market for energy derived from the sun.