Despite falling natural gas prices, the amount of renewable energy coming to the grid continues to increase. Despite the ability of coal to produce grid energy for less than the cost of solar panels and windmills, the number of solar panels and windmills attached to the grid continues going up.
Despite all the political agitation for ending both federal and state subsidies to renewable supplies, this is a trend that will continue through grid parity.
Thank Warren Buffett.
Berkshire Hathaway's (NYSE:BRK.A) MidAmerican Energy has started making money by trading "green energy credits." They're something NRG Energy (NYSE:NRG) has been building on to sell solar and wind installations.
Here's an example. Did you know this year's Super Bowl in Indianapolis will claim to be carbon-neutral? It's a trend that has been around for several years now.
It's done through "green energy credits," calls on wind or solar power sold by NRG unit Green Mountain Energy. The credits offset the additional production cost, the event (or a company such as Kohl's or Starbucks) gets to claim it's carbon-neutral, and the money lets NRG build more solar and wind systems - some of which get sold directly to MidAmerican.
In this case it's the "solar halo" rather than the government that provides the subsidy needed to equalize the price of coal and solar. With MidAmerican now buying more calls on energy from NRG, look for this to increase. The trick is to sell the credits as part of a larger publicity program, or sell it to management as part of "being responsible" on the environment.
With MidAmerican buying into wind projects and solar projects that are built by NRG and sometimes created using American technology from firms like First Solar (NASDAQ:FSLR), you get all the benefits of a government subsidy without the government. You get a growing business for everyone concerned. You help the renewables business grow so that it can eventually compete directly, on price, with fossil fuels - despite their enormous subsidies.
Maybe, combined with rising production of natural gas and oil, you actually get to anger Canada.
It's a win-win-wind.