Berkshire Hathaway Energy

[ValueMaven]

Texas grid operator urges electricity conservation as many power generators are unexpectedly offline and temperatures rise

https://www.texastribune.org/2021/06/14/texas-power-grid-conserve-ercot/

[ValueMaven]

Anyone know why BHE operates this?  Given that D owns 50% and BAM which owns 25% claims to be master operators.  Interesting: 

 

https://finance.yahoo.com/news/maryland-cove-point-lng-export-161500751.html

[longterminvestor]

CovePoint was part of the Dominion purchase.  I see Pipelines as "Axes, Picks, and Shovels" of the oil/nat gas biz - great way to get exposure to the sector without taking on the commodity risk.  The shut down is probably Greg Abel investing some capital into the pipeline to make it run better - my guess.  

[bizaro86]

1 minute ago, longterminvestor said:

CovePoint was part of the Dominion purchase.  I see Pipelines as "Axes, Picks, and Shovels" of the oil/nat gas biz - great way to get exposure to the sector without taking on the commodity risk.  The shut down is probably Greg Abel investing some capital into the pipeline to make it run better - my guess.  

 

I don't have any insight to why the operator is who it is, but the shutdown here is probably not capex related. Large energy facilities take turnarounds for maintenance often, usually either annually or biannually. 

 

You need to shut it down to inspect the pressure vessels, do the major service on compressor engines, etc.

[longterminvestor]

thanks for reminding to stay within my circle of competence.  

[ValueMaven]

I get all of that.  I just find it really interesting that BHE is the operator, given that D owns 50%/majority, and BIP claims to be master operators.  BHE's operational expertise is second to none imho.  I'd like to see headquarters expand more into the regulated utility space smartly...who knows a possible distressed utility deal may come-up over the next few years.  

[ValueMaven]

https://finance.yahoo.com/news/three-more-u-k-power-142516770.html

[woodstove]

Does someone know the status of BHE's offer to provide Texas with a standby generation capability?  As of last May, it sounded like the offer was still on the table, but maybe others were underbidding.  Likely it is now clarified?  I haven't heard but surely some of you who follow energy topics more carefully will know.  My question: Do Texans have some actual (tangible, physical, not just financial or other compensating payments) energy security going into next winter, to offset risk of another loss of supply?

[ValueMaven]

No.  I havent heard anything regarding BHE's plan.  The way it is structured is brilliant.  I'd reminder everyone of the 9.9% regulated return.  You also have BHE WILLING to be fined if they cannot deliver on their commitments.  I really wish BHE was more aggressive with ONCOR several years ago.  That would have been a material transaction and benefited both customers and Berkshire overall.  Even still the D pipeline deal was done at a very attractive level still...

[ValueMaven]

Call this crazy - but Sempra Energy has really underperformed this year.  I'd love to see BHE acquire Sempra and roll it up into BHE.  Huge asset base, fairly efficient utility with a strong electrical and natural gas infrastructure business as well.  Also the Oncur asset in TX that BHE missed out on.  I realize this wont happen - but would be a great transaction all around.  Management has a great track-record as well.   

[Blugolds]

https://amp.usatoday.com/amp/8634699002

 

Billionaires Warren Buffett and Bill Gates have chosen a remote town in Wyoming to build a new small nuclear power plant intended to help replace the coal-fired plants dotting the state.

 

CLIFF NOTES:

 

-Pending federal and local approval, TerraPower will build the $4 billion, 345-megawatt facility at the Naughton Power Plant in Kemmerer, Wyoming, about 130 miles northeast of Salt Lake City, the company announced Tuesday.

 

-The relatively small "Natrium" reactor is similar to those used in some U.S. Navy submarines, and is designed to be faster and cheaper to build, and safer to run, than traditional large-scale reactors. The project has broad support from Wyoming's conservative political leaders and from the Biden administration.

 

-Federal matching funding for the reactor was included in the $1.2 trillion Infrastructure Investment and Jobs Act signed by President Joe Biden on Monday.

 

-Although similar reactor systems have been built before, the Natrium project is considered to be a test by the federal government, which is footing up to half of the price tag. Because the Natrium plant is smaller and uses modern technology, its backers say it could be built faster and cheaper than a traditional large-scale nuclear power plant, primarily because it uses less expensive concrete to contain the reactor. Gates and Buffet said that once successfully demonstrated, the plant could be quickly expanded or replicated elsewhere.

[nwoodman]

1 hour ago, Blugolds11 said:

CLIFF NOTES:

Excellent summary.  More than a little interested to see how this goes.  Have followed Terrapower from a distance and always thought the concept of small scale NE was a good way to go.  

[Blugolds]

1 hour ago, nwoodman said:

Excellent summary.  More than a little interested to see how this goes.  Have followed Terrapower from a distance and always thought the concept of small scale NE was a good way to go.  

 

NE is the obvious answer to many questions. Do some research on NE and it becomes very very clear that the cost per kW is so much cheaper than even the second place source, that it is essentially a no-brainer and has you asking yourself why this isnt our primary source of energy. (I know, I know...Enter the NIMBY crew) I have no doubt that Buffett et al are capable of pulling this off and I like that the Feds have skin in the game. Frankly, if they cant do it, nobody can.

 

These are newer, smaller reactors, built cheaper and faster, different design, location, scale, and most importantly better management but there is a small part of me that is gun shy after watching the whole Westinghouse/Toshiba/Shaw/CBI debacle. What a huge embarrassing failure. Nuclear projects are in my book synonymous with delays, labor challenges, regulation nightmares, cost over runs and a plethora of other challenges etc...

 

Refresher:

 

https://www.reuters.com/article/us-toshiba-accounting-westinghouse-nucle/how-two-cutting-edge-u-s-nuclear-projects-bankrupted-westinghouse-idUSKBN17Y0CQ

 

https://www.forbes.com/sites/jamesconca/2017/03/31/westinghouse-bankruptcy-shakes-the-nuclear-world/?sh=6e0b1c6a2688

 

I hope that this goes smoothly and BHE has not given reason to expect otherwise, they are industry leaders and will continue to be I suspect once this proof of concept is operational. If these are expanded/replicated in the future it represents tremendous, tremendous opportunity.  

[CassiusKing1]

Will BRK underwrite the insurance coverage for these as well?

[ValueMaven]

really, really interesting.  thanks for sharing!

[MCR]

Has anyone heard any reference by BHE about risk of potential climate change-related write-downs or stranded assets? 

 

https://www.wsj.com/articles/trillions-in-assets-may-be-left-stranded-as-companies-address-climate-change-11637416980?

[MMM20]

On 11/20/2021 at 2:34 PM, MCR said:

Has anyone heard any reference by BHE about risk of potential climate change-related write-downs or stranded assets? 

 

https://www.wsj.com/articles/trillions-in-assets-may-be-left-stranded-as-companies-address-climate-change-11637416980?

 

Out ahead of that, no? "Berkshire Hathaway Energy is growing its renewable energy portfolio and continues to de-risk its balance sheet related to carbon-based generation assets. As of December 31, 2020, only 6% of our overall net investment in property, plant and equipment was invested in coal generation assets and 6% was invested in natural gas generation assets" https://www.brkenergy.com/assets/pdf/eei-presentations/2021-eei-presentation.pdf

 

 

[MCR]

On 11/23/2021 at 7:42 PM, MMM20 said:

 

Out ahead of that, no? "Berkshire Hathaway Energy is growing its renewable energy portfolio and continues to de-risk its balance sheet related to carbon-based generation assets. As of December 31, 2020, only 6% of our overall net investment in property, plant and equipment was invested in coal generation assets and 6% was invested in natural gas generation assets" https://www.brkenergy.com/assets/pdf/eei-presentations/2021-eei-presentation.pdf

 

 

Thanks, MMM20. Reassuring and not entirely unexpected.

[scorpioncapital]

Does BHE give investors in BRK any significant exposure to rising oil or natural gas prices?

[ValueMaven]

no - not really.  depends on how you define significant.  much more of a utility infrastructure type of company.  

 

BHE's annual fixed income presentation is a decent place to start .. then dive into the Q's -- https://www.berkshirehathaway.com/BHE2021InvestPresent.pdf

Edited November 27, 2021 by ValueMaven

[Xerxes]

Why Berkshire Hathaway's Utility Business Is a Crown Jewel | Barron's (barrons.com)

[ValueMaven]

Good article - but nothing new here to long-time shareholders and students of the company.  Actually this is an awesome asset for Berkshire.  I really wish BHE monetize the BYD stake --- but that is just me 

[Xerxes]

Cheers.

For me, those 'reminder' are always good, I think, so that one sticks (& continues to stick) to the good stuff (me anyways).

A counterbalance, if you will, to my daily noisy consumption of Bloomberg and CNBC.

 

 

Edited February 7, 2022 by Xerxes

[woodstove]

Seeing the Bloomberg article was, for me, a reminder of the excellent info provided by this discussion forum.  We learned of this BHE presentation over two months ago, courtesy of MMM20's post of lst 23-Nov, and then it was posted on the main BRK website -- appropriate, since it is material to understanding the company's business. Re BYD, I don't see any rationale for monetizing yet -- we are in early days of the fossil-->EV transition it seems.  Re another monetization suggestion sometimes made, Apple, I used to be in favour of a partial monetization, reasoning solely from an overall share of the total market cap represented by AAPL and BRK.  But now I'm not so sure.  I had to consider an assist to a friend wiho has failing eyesight and loves to read serious and diverse material (old newspapers for instance, for historical research), and realized that Apple products would be the base I would trust for providing a trustworthy personal assistant for my friend.  And I'm not an Apple fanboy, not even an Apple user at present.  But I would not be willing to expose my friend to certain other software app offerings which are, in my opinion, too likely to abuse the trust one would have to place in a personal digital assistant.   A bit of an eye-opener for me.  So maybe Apple has further to run, as a business.  Anyway, back to the point -- good stuff here at this discussion group, it is one of my most valued resources.

[yesman182]

Can someone educate me the economics of European electric utilities?  Are they regulated similar to the US. Is seems like Berkshire should be offering a plan to the EU nations similar to the plan they offered to Texas a few years ago. I know the Texas plan was for Nat Gas, but I think a similar plan for additional solar and wind could be offered to EU nations. Is this possible or probable?

 

Hopefully he can make similar investments in the US ( like they have been), but hopefully larger and at a faster pace.