* First move into solar for Buffett's MidAmerican
* 550-MW plant can power 160,000 average California homes
* First Solar shares jump as much as 12.5 pct
(Adds First Solar executive comments, details on First Solar's
DOE loan guarantee projects, updates stock prices)
By Matt Daily
Dec 7 (Reuters) - Warren Buffett's MidAmerican Energy
Holdings said on Wednesday it would make its first
move into solar energy with the purchase of First Solar's
Topaz Solar Farm power plant in California,
one of the two largest under construction in the world.
MidAmerican Energy, the utility arm of Berkshire Hathaway
, already operates wind power facilities, and
its move into solar comes amid growing worries about the solar
industry's ability to finance large utility-scale projects.
Financial details of the transaction were not available.
Shares of First Solar rose as much as 12.5 percent on the Nasdaq
on Wednesday.
The deal for the plant, which at 550 megawatts would equal
the capacity of another First Solar California project called
Desert Sunlight, comes after the company failed to win a U.S.
loan guarantee to help finance its construction.
"The fact that Topaz was financed without a DOE loan
guarantee is a major milestone in the industry's maturity and
evolution," Frank DeRosa, First Solar's senior vice president of
project and business development for the Americas, said in an
interview.
The Topaz plant, being built in San Luis Obispo County, will
have the capacity to generate enough energy to power about
160,000 average California homes, MidAmerican Energy said in a
statement.
The deal "demonstrates that solar energy is a commercially
viable technology without the support of governmental loan
guarantees," Greg Abel, chairman, president and CEO of
MidAmerican, said in a statement.
Earlier in the day, Reuters had reported about the deal
quoting a source familiar with the transaction.
Analysts speculated that the plant's sale price was likely
inside the range that First Solar had sold previous projects on
a per-watt basis, putting it between $1.65 billion to $1.95
billion.
"If nothing else, what this does is it tells you that First
Solar will be able to sell what it makes, and that certainly is
better than any other solar company can say at this point," said
Jeff Bencik, analyst at Kaufman Bros.
The acquisition dovetails with Berkshire's increasing
interest in solar technologies in recent years, the most notable
example being its investment in China's BYD Co Ltd
.
Though BYD is best known for its electric cars, it is also
one of the world's largest battery makers and has a nascent
solar panel business as well.
Even though financial details were not disclosed, First
Solar's struggles financing the plant suggest that Berkshire
likely got a good deal, which fits in with Buffett's value
investing strategy.
He famously said earlier this year he had a loaded elephant
gun with which he was searching for big deals, and he has made a
number of them, including the $9 billion takeover of chemical
maker Lubrizol and an $11 billion investment in IBM Corp
.
SOLAR SUPPORTER
Ever since Buffett took a stake of nearly 10 percent in BYD
during the depths of the financial crisis in late 2008 -- via
MidAmerican rather than Berkshire proper -- Buffett-watchers
have speculated the company had an interest in using BYD's
battery technology at renewable energy plants.
Buffett's long-time business partner Charlie Munger has also
been a cheerleader for the potential of solar.
"All kinds of things are going to be possible once we really
gear up to harness the sun," Munger once said in a CNNMoney
interview. "That has always required cheaper solar and better
batteries and they're both coming."
The Topaz plant may qualify for a cash grant totaling 30
percent of its construction costs under a program that expires
at the end of 2011. That cash grant program will turn into a tax
incentive at the beginning of next year.
Pacific Gas and Electric Co will buy
the electricity from Topaz under a 25-year agreement, Des
Moines, Iowa-based MidAmerican Energy said.
First Solar had hoped to secure a loan guarantee from the
U.S. government to help finance construction of the plant as it
had for three other large solar projects this year.
Political pressure on the Department of Energy following the
collapse of start-up solar manufacturer Solyndra prompted fresh
scrutiny of the loan guarantee application process, and First
Solar's Topaz project was not able to meet the September program
deadline.
Solyndra, which had received more than $500 million of
government funding, collapsed into bankruptcy at the beginning
of September.
First Solar's three DOE loan guarantee projects were sold to
NextEra Energy Inc, NRG Energy Inc
and Exelon Corp, respectively.
MidAmerican's addition to that list shows that investors are
becoming more comfortable with solar, DeRosa said.
"As each deal gets done and the number of investors
increases, people see that these projects are working well, they
get constructed on time, they are on budget and they operate
well," he said.
First Solar is the largest U.S. photovoltaic solar company
and the world's lowest-cost solar manufacturer.
But along with others in the sector, it has been hard hit by
a glut of solar panels on the market that has driven prices down
by 40 percent so far this year, narrowing its cost advantage
over its rivals in China and Europe.
Shares of First Solar, which had fallen nearly 65 percent
through Monday's close, were up 4.6 percent at $48.25 on
Wednesday afternoon, off an earlier high of $51.89.
(Reporting by Matt Daily and Ben Berkowitz in New York, Nichola
Groom in Los Angeles and Krishna N Das in Bangalore; Editing by
Hans-Juergen Peters, Dave Zimmerman and Matthew Lewis)