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Microsoft, Facebook, Google Oppose Buffett-Backed Wind Farm Project (msn.com) 137

It's Warren Buffett versus Google, Facebook and Microsoft, according to a recent article by Bloomberg. (Alternate URL here.) Google, Facebook and Microsoft Corp. — three of the world's biggest corporate buyers of clean power — are sounding the alarm that a nearly $4-billion, Warren Buffett-backed renewable-energy project proposed in Iowa isn't necessarily in the best interest of customers, including them.

If approved, it would be the largest complex of wind farms in the entire country when it comes online by the end of 2024, producing enough electricity for more than 700,000 homes. MidAmerican Energy, a utility owned by Buffett conglomerate Berkshire Hathaway Inc., has asked state regulators to approve terms including a guaranteed 11.25% rate of return before starting construction on a project it says will help in its efforts to trim carbon emissions by 75% compared to 2005 levels. But the big-name tech giants that operate data centers in the state warn the project, dubbed Wind Prime, could drive up electricity costs. MidAmerican, they say, should consider alternatives....

The fight is an important one to watch because it demonstrates the increasing influence technology giants have on the energy transition. Tech companies have pushed utilities in other parts of the U.S. to offer more clean energy options as they seek to clean up the sources of power for their energy-intensive operations. And since they buy so much power, the utilities often listen to them....

Facebook, which also buys large amounts of power to run data centers in Iowa, referred to the proposed project in a joint regulatory filing with Google as an "exceedingly costly, massive increase in generation that MidAmerican has not demonstrated is necessary." Last month, Microsoft filed its own petition with the Iowa Utilities Board saying it planned to join the tech-customer coalition.

Facebook and Google specifically complain that "Without a resource planning analysis, it is difficult if not impossible to assess all feasible alternatives to replace/expand existing generation capacity and which alternatives are a reasonable, cost-effective way to meet reliability requirements, forecasted customer need, a diversified fuel mix, and the like, or if it is simply being proposed to drive utility — or parent company — profitability....

"Wind Prime is an exceedingly costly, massive increase in generation that MidAmerican has not demonstrated is necessary or reasonable in light of other feasible alternatives. Before customers are forced to bear the increased costs that this project will result in, Wind Prime should be carefully considered by the Board through a complete record informed by a full and thorough discovery process."
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Microsoft, Facebook, Google Oppose Buffett-Backed Wind Farm Project

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  • by crunchygranola ( 1954152 ) on Sunday June 12, 2022 @02:52PM (#62613704)

    A single company asking for a a guaranteed 11.25% rate of return for a special project for itself is an easy deal to say no to. This is crony capitalism writ large.

    • It does seem odd to be expecting subsidy for on shore wind in 2022. In Europe it's been subsidy free for a while now. Even off shore is getting close.

      Still, it might be cheaper than the alternative.

      • by innocent_white_lamb ( 151825 ) on Sunday June 12, 2022 @03:03PM (#62613740)

        That's even better than a subsidy. It's possible to lose money on a subsidized enterprise if your costs exceed the revenue plus subsidy.

        This, on the other hand, is a guaranteed profit margin.

        • by jbengt ( 874751 )

          That's even better than a subsidy.

          For a government-regulated monopoly with government-regulated prices, it has been standard operating procedure in a lot of states to set electricity rates based on a government-set reasonable rate of return on capital investment. I'm not saying 11% is reasonable or not, but it's not a guaranteed profit, it's a guaranteed rate of return on capital investment.
          Although those sorts of government powers can lead to corruption, electricity was thought of as a natural monopol

    • by jmichaelg ( 148257 ) on Sunday June 12, 2022 @03:55PM (#62613854) Journal

      Warren isn't greedy enough. Our local sewer utility is privately owned and the California Public Utility Commission guarantees them a 22% return. As you might imagine, our sewer bills are north of $150/month as a result.

      California has gone from the land of opportunity to the land of graft. The middle class is the chump that suffers the cost.

      • Around here the sewer bill is directly tied to the water bill, which kinda makes sense. Is that not the case there?
        • by kenh ( 9056 )

          In many places, homes have well water,not city water, so no water meter to base sewage bills on.

          • I grew up in a home with well water. We also had a septic field and no sewer connection. Most places around here water and sewer connections kind of go together, kind of silly to install one and not the other, but I guess that is not true everywhere.
    • The big tech worry is that they won't be able to leverage lower prices for themselves.
      They only semi-understand buffet et al.
      Buffet is gonna eat them.

  • by Petersko ( 564140 ) on Sunday June 12, 2022 @02:53PM (#62613706)

    ...but in the end I think pleasing Microsoft would be a short term accommodation. Should Microsoft threaten to leave, the long term goal should be to accommodate the loss of revenue the company brings.

    Microsoft, on the other hand, should do what's best for them, potentially including pulling up stakes, if that's what it takes.

    These sorts of collisions are inevitable and will only get more complicated. It's a brave new world.

  • Always turn to the government to guarantee their profits. I'm smart enough to realize we can't stop them from doing that. I don't get these small government people. You can't have a small government when you have a big military and you can't have a nation without a big military because you're just going to get invaded.

    So if all that's inevitable why not have the government do things that help people who work for a living? It seems when it comes time to cut the government because it's too big we always cu
    • So if all that's inevitable why not have the government do things that help people who work for a living?

      Same reason empires have an average lifespan of 250 years: the biggest unsolved problem in all of Human history is corruption. People who desire power for whatever reason, usually bad, whether because of the initial motivation or because of having to follow some path to it which results in a contempt for groups and things which hindered the journey up that path. Good people don't tend to try to have any influence over the lives of others, at all, the extreme opposite of that is evil people, who do. The p

      • It's people's willingness to tolerate it when it comes from the top. That belief in social hierarchy and that some people are just better than you. So they should be allowed to do whatever they want because if they're not then we won't have their genius to rely on. It's the same kind of thing that makes people turn towards billionaires who made all their money off of government contracts and programs and expect them to invent something new when all they're really doing shuffling money around.
      • Starting with the age of empires crap - which is a crock of shit of its own.
        It is neither a correct number, [uvm.edu] nor of any relevance whatsoever.
        Unless anyone really gives any value to how long an incestuous line of bronze and iron age assholes can fuck their mothers and sisters before their kids start being born with extra rectums on their foreheads - OR to numbers gotten from averaging the age of Civilization also-rans like Yuen-Yuen empire (30 years baby) and the empire of Elam (1000 years).

        The rest of the co

    • by laird ( 2705 )

      That's how utilities are generally regulated - they're guaranteed a fixed profit if they're well run and provide reliable service. Because they are a local monopoly, if they're allowed a variable profit, or are not required to provide reliable service with good maintenance practices, etc., the for profit corporations tend to self-destruct to maximize short-term profit by slashing maintenance, such as in Texas. Utilities are only reliable because they're forced to by regulators, and where they're deregulated

      • I think its even less favorable than a "fixed profit" -- they're allowed to set rates against planned expenses which should result in a profit at the fixed rate. Which still leaves room for them to get to the end of the year with less than the fixed profit if they screw up. Now if some kind of serious externality occurs that costs them large unplanned expenses they can go back to the utility commission hat in hand and explain why they need to tack on some kind of temporary rate increase to make up for it,

  • Why would they be forced to buy Wind Prime's wind energy? This is in addition to other energy sources. Maybe there is more to the story

    Assuming the energy is not competitive, they will be priced out by the market

    • by beernutz ( 16190 )
      I am fairly sure there are laws that prohibit anyone ELSE from selling power in Iowa. That seems like it would be a large part of the problem.
    • by N1AK ( 864906 )
      It's literally in the summary. If the project goes ahead on the proposed terms they are guaranteed an 11% return, that means they will receive sufficient payment and the utility board has to ensure it even if no one wants to use power generated by them. Short of building your own independent power infrastructure and being completely removed from the grid you can't avoid being at risk from this, and even if it was viable for all the big users to do that the board is still on the hook for payments so you can
  • by kbrannen ( 581293 ) on Sunday June 12, 2022 @03:07PM (#62613746)
    I strongly suspect that the reason they're giving isn't the real reason because I don't see these companies as caring about the average person/household. Therefore, there is something else going on and the usual reason is probably money related. Do they have their own wind farms and this would reduce profits from that? Or maybe they have long-term contracts for energy and can't switch, and this new farm would lower prices and they couldn't take advantage of that? Or what?
    • There's doesn't need to be a conspiracy. A project this size with a high guaranteed rate of return is absurd for a mature technology. One way or the other you're paying for it, directly or indirectly.

      I don't care if it's Microsoft, Facebook, or the devil himself calling them out on it, but this is one scenario where there needs to be a metric fuckton of due diligence and regulation if someone is going to come in and ask for a guaranteed profit.

  • They are always touting thier use of clean energy and that X percent of thier energy use is clean or renewable. This is an opportunity for them to get clean energy directly. So what are they? Opposed or for clean energy

    • They are opposed to the profit guarantee for the wind farm, and they're right: Does the government guarantee you a profit?

      • by PPH ( 736903 )

        They are opposed to the profit guarantee for the wind farm

        But that's how the big boys do it. As monopolies, in order to prevent their abuse of pricing power, utilities commissions allow them a defined rate of return on capital investments. And 11.25% isn't that far out of line, considering that not all capital expenses are allowed in the rate calculation.

        To date, most renewable energy projects have been small compared to the primary thermal and hydroelectric sources. Rates paid the renewable sources have just been calculated based on the prevailing rates of large

    • Re: (Score:3, Insightful)

      by wairapeti ( 9984318 )
      Not really. They're probably objecting to the guaranteed 11.25% rate of return. As with all big company deals with government, the companies always rort the govt for as much as possible. There is no incentive to build it cheaply or efficiently, infact the exact opposite - the more money they waste on it, the more money they get back. And where will that money come from? Chances are the electricity users - big users of which are Facebook, Microsoft and Google. I like green energy, but handing out blank check
  • by dmomo ( 256005 ) on Sunday June 12, 2022 @03:32PM (#62613790)

    Screw whether it's good for Google or Microsoft. But asking for a guaranteed rate of return of 11.5% on an investment, higher than the S&P average over a number of decades is a bit much. I guess risk-free investment is only for the rich, who can afford to past the risk itself onto the tax-payers.

    • Why is it Google or MS saying something and not the representatives of the people complaining?

      Who ultimately gets stuck with the bill if or when the power proves to be prohibitively expensive?

      • by N1AK ( 864906 )
        Google datacentres, Microsoft datacentres, and anyone else using power in that area. So MS and Google are the people complaining.
        • The implication here is that costs will ultimately be passed on to the public. At least if you follow the gist of dmomo's post.

  • That should tell you something.
  • by MeNeXT ( 200840 ) on Sunday June 12, 2022 @04:15PM (#62613900)

    MidAmerican Energy, a utility owned by Buffett conglomerate Berkshire Hathaway Inc., has asked state regulators to approve terms including a guaranteed 11.25%

    It's unbelievable how anyone can call the US capitalist. The only capitalism that exists in the states is for the poor and middle class. The higher up you go in the wealth ladder the more socialist it becomes until you reach the top when it's communist. Natural resources are there for your exploit provided you are rich enough. God forbid if any of that wealth be made available to the average American citizen.

    • So, how rich do you have to be before your capital is seized and your ability to earn a profit prohibited?

      Unless that is what you mean, you are using the wrong terms.

  • why does the multi-billionaire in charge want this? "asked state regulators to approve terms including a guaranteed 11.25% rate of return" but then Buffett is a multi-billionaire, and they rarely take risks with "their" money.
    • There is a chance that most renewables today could be undercut by cheap fission or fusion products in the near future. Buffet isn't a complete moron. Whether he thinks the odds of that are good is debatable, but if it's a non-zero chance then you have to hedge your bets.

      • by butlerm ( 3112 )

        It is always convenient for thieves to establish a guaranteed theft option. It doesn't mean it is a good idea to go along with it.

        • Never said it was. Though in this case he's peddling a much-sought-after product, albeit on strict terms. Not exactly "thievery". For those who must have their renewables, he's offering to make it happen. For a price. Who wants to be left holding the bag if/when renewables prove to be undesirable? Not him.

          • by butlerm ( 3112 )

            Signing up for a sufficiently bad deal is basically like volunteering to be ripped off. If the project in question is not viable enough as an economic enterprise for someone to put their capital at risk, it is dangerously likely not to be viable at all. Berkshire Capital is in the habit of making these kind of proposals, i.e. we do something, you bear all the risk and we still make a guaranteed profit. That is worse than crony capitalism, it is more like crony socialism.

            Why would any sane utility sign up

  • Its very simple why they object. One, they think the demand is not there. If facilities are built with no demand, this will raise the price per MWh for the demand that there is.

    Two, more important, they think, very reasonably, that adding intermittent generation, especially a huge amount of it, to a conventionally powered grid, will raise costs per MWh.

    In this they are certainly correct. There are two problems with intermittent generation. One it requires a lot of very expensive storage to make its prod

    • by laird ( 2705 )

      Wind power isn't random, it turns out to be highly predictable to within a fraction of a percent, which allows power companies to provide reliable low-cost power, by using as much cheap renewable power as they can (solar, wind, hydro) and then vary the more expensive fossil fuel sources to level the output to match demand. And, of course, power companies are increasingly deploying grid-scale batteries to level power production to match demand, which turns out to have a fantastic ROI because it allows them t

  • This is the scam as old as East India Company.

    Most Indians still talk highly about the railways built by British and touted as the superiority of them over the native folks, by even many native folks!

    If you dig into the financing and building of the railways you see the extent of corruption and why India continues to be so damn corrupt. They learnt how to steal from people and the government from the true masters, the British civil service.

    East India Company would rail ways to move raw materials for the

  • An 11.25% ROI is pretty standard for a lot of companies. Costco, for example, doesn't sell anything unless they can get an 11% markup on it which is why they stop carrying certain items that appeared to be popular. But the real question is not just why the big tech companies think they should be getting a smokin' deal but why anyone would think that. There's no free lunch, folks. The marxist notion "from each according to his gifts to each according to his needs" is bullshit on every level you can think

    • 11% markup is not 11% ROI.

    • by laird ( 2705 )

      For utilities 10% guaranteed return is typical, 11.25% is quite high, particularly on the scale of a multi-$billion investment - that's the kind of return you might shoot for in return for taking a risk, not a guaranteed rate of return backed by the government (i.e. zero risk investment).

  • Regulated utility rates tend to be set based on ROI, return on investment. This is an incentive for boondoggle, but a sure thing for investors. Who else around here is getting 11% guaranteed return on their investments?

  • So, taxpayers, or electric utilities would raise rates, to meet that guarantee? Really?

    And here I thought they were True Believers in the Invisible Hand of the Market.

    • by laird ( 2705 )

      Right, the utility gets a guaranteed but capped ROI in return for being a guaranteed monopoly that's required to invest in maintenance and infrastructure, provide a guaranteed SLA or pay penalties, etc.

      For-profit unregulated utilities tend to boom-bust and fail.

  • ... are the ones I listen to so I can sleep at night. Pfft!

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