Billionaire and legendary investor Warren Buffett prepared a plan to prevent Texas from suffering another power crisis. He did so while making billions of dollars in profit. Buffett, CEO of Berkshire Hathaway, plans to create a new company. This one will be under the name the Texas Emergency Power Reserve, said a report by the Dallas Morning News.
Last month, Texans lost access to power in their homes amid the freezing conditions. The Uri winter storm left 4 millions of Texas residents with no electricity, food or water, causing over 100 deaths, and more than 11 deaths because of hypothermia.
Buffett’s Berkshire reserve announced it will be investing around $8.3 billion in new power generation. The company plans to build 10 power plants across Texas by Nov. 2023. As an exit plan, Berkshire’s reserve will provide a week’s worth of natural-gas powered storage in case of any disruptions.
The described plan would add over 10 gigawatts of generation to Texas’ electricity grid. This means it will be 50% of the supply cut off last month, said Chris Brown, the CEO of Berkshire’s energy-infrastructure unit in an interview with Dallas Morning News. Mr. Brown explained the proposal is like a “blackout insurance”. Berkshire is the owner of several insurance firms such as National Indemnity and Geico.
Berkshire to get a %9.3 annual return from the project
The conglomerate announced it will allocate $4 billion guarantee to the program. In other words, Texas would benefit from the sum if the plan fails to deliver what it promised. Nonetheless, Texas residents will be funding the energy project by paying higher energy bills the same way regulated utilities recoup their infrastructure expenses.
Buffett and his billions worth conglomerate will pocket 9.3% annual return from the total investment stated the same report by Dallas Morning News. According to the company, the proposed emergency backup would be less expensive than adapting the established electric cold to freezing conditions. Additionally, the project will be cheaper than doing any alterations to the state-energy market for building excess capacity.
Buffett’s Berkshire team of executives flied to Austin this week to negotiate with lawmakers and explain their plan. However, to make the project possible, the state legislature should organize a vote, the Dallas Morning News said.
Chris Bloomstrana, a Berkshire investor and the boss of Semper Augustus Investments said the project could become a favorite to Texas authorities in a tweet on Thursday. “Political but a $4 billion surety guarantee will be hard to beat,” he said.
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