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Berkshire Hathaway Energy: Economies of scale

UNITED STATES: The US's biggest wind-owning utility, Berkshire Hathaway, has rapidly built up a portfolio of well over 2GW, all in Iowa, and is investing $1.9 billion to add another gigawatt next year.

BIg hitter… Berkshire Hathaway owner Warren Buffett with US President Barack Obama
BIg hitter… Berkshire Hathaway owner Warren Buffett with US President Barack Obama

Berkshire Hathaway Energy, part of billionaire Warren Buffet's empire, is one of America's largest developer and owner of wind energy. It has already committed about $15 billion to renewables, dwarfing most rivals' investments, and recently said it will invest $280 million more in Iowa wind farms.

The company, bought by Buffett in 2000, has four subsidiaries that either own or develop wind power. Of those, it is the Iowa-based utility MidAmerican Energy that most clearly shows the holding company's commitment to wind energy.

With 719,000 customers in Iowa, Illinois, Nebraska and South Dakota, MidAmerican owns more wind capacity than any other rate-regulated utility in the US and has been instrumental in making Iowa the state with the highest proportion of wind on its grid.

The utility develops its own wind projects or buys them from third-party developers. "There is not a formula for determining which path to pursue, but (the decision) is based on the general conditions surrounding any potential new development opportunities — the resources, timing constraints, economics," says Adam Wright, the company's vice president of wind development.

When developing or buying a project, MidAmerican evaluates the available wind resource, proximity and access to transmission lines, the potential environmental impact, and the likely support of land owners and communities. Wright says. "We weigh all these along with economic considerations to determine whether or not a project will be in the best interest of our customers and our company, regardless of size."

The company's Wind VIII and Wind IX projects in Iowa are being completed as purchases of development rights from third parties. Wind VIII will add 1.05GW by the end of 2015. An investment of up to $1.9 billion, it will be Iowa's largest economic development project. RPM Access, EDF and Invenergy develop the projects.

When Wind VIII is complete, 3.35GW or about 39% of MidAmerican Energy's total owned generation capacity will come from the company's 1,715 wind turbines. In April, Wind VIII made headlines when Google agreed to buy electricity from 407MW in wind power for its planned Iowa data centre.

The utility operates Siemens and GE turbines in its fleet, as well as Mitsubishi and Vestas. In December 2013, MidAmerican and Siemens announced a deal for 1.05GW of 2.3MW turbines, at the time the world's largest single order for onshore wind turbines. The company started in wind in 2004, and by 2013 had added 2.28GW of wind generation capacity, all in Iowa.

Where does the utility intend to be, with regard to its wind portfolio, in five years' time? "We continue to evaluate opportunities to determine if they are economically viable for customers," says Wright. "At this time, we have not announced additional projects."

The other subsidiaries of Berkshire Hathaway Energy, formerly MidAmerican Energy Holdings, include PacificCorp, America's second-largest rate-regulated owner of wind-powered generation, with more than 1.8GW of owned and purchased wind capability. NV Energy buys wind power from Nevada's first major wind energy project, and MidAmerican Wind, part of MidAmerican Renewables, owns or has developed 381MW projects in Illinois and California.

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