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He didn't invest in a solar cell manufacturer, he bought a couple of solar energy plants - mostly fixed cost, variable revenue. If energy prices come down, he
by klochner 14y ago
He didn't invest in a solar cell manufacturer, he bought a couple of solar energy plants - mostly fixed cost, variable revenue.
If energy prices come down, he will lose money.
- justincormack 14y agoI think all the production is pre-sold to the local power utility, possibly at fixed price. Its hard to get the details of these contracts though.
- fennecfoxen 14y agoThen you could look at this move as a hedge against rising energy prices, not entirely unlike his purchase of Burlington Northern Santa Fe. Energy prices are, of course, a hard game to predict, with above-average political risk, especially in the renewables arena...
- joeag 14y agoFixed revenue usually. Actually to be more precise, fixed price, but declining revenue because the production goes down as the panels (and inverters) degrade. Usually assumed to be .5% per year. The contracts with SCE are typically not based on market prices.
- klochner 14y agoThanks - that's helpful to know.