Buffett's Solar Deal Appears Opportunistic, Not Bullish On The Industry
Before anybody gets carried away, remember that when Warren Buffett buys something it's because the deal is too good to pass up. Or the seller might just be that desperate. In this case, it doesn't appear that First Solar (FSLR) was overly desperate to unload the project, but rather Buffett's MidAmerican Energy saw an opportunity to buy at an attractive price with locked in high power rates.
Contrary to initial Reuters reports about the deal, this isn't likely a Buffett endorsement of the solar industry and if anything could be a signal that he and the executives at MidAmerica expect the solar model going forward to be not as appealing and possibly negative enough to limit supply.
Would he really buy into a market where rates are going to crater due to oversupply? Well, maybe with a 25 year iron clad contract; though I'd be worried about the contract being voided if pricing deteriorated too far.
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