Warren Buffett’s Berkshire Hathaway Energy (BHE) has proposed a US$8.3 billion plan to construct a backup power generation grid in Texas. Buffett’s plan calls for 10 strategically located natural gas-fired power plants (and associated storage and transmission infrastructure) with a capacity of 1 GW a piece that could be operational as soon as November 2023. The proposal would require Texas legislators to approve the formation of the Texas Emergency Power Reserve, a new regulated subsidiary of BHE.
According to the Dallas Morning News, Buffett aims to earn a 9.3% annual return on his investment by adding fees to Texas residents and businesses. S&P Global Market Intelligence reports that the proposal would result in a US$1.42 average monthly increase for residential customers, US$9.63 for commercial customers, and US$58.94 for industrial customers. If Buffett’s infrastructure failed, then the Texas Emergency Power Reserve would be liable for $4 billion under its “performance guarantee.”
Buffett’s plan is an alternative solution to weatherproofing existing Texas power generation, transmission, and storage infrastructure. Insufficiently rated equipment, whether it was wind systems or fossil fuels, failed at staggering rates during the Texas freeze. Dan Woodfin, a senior ERCOT director, noted that at one point around 45 GW of power went offline. Buffett’s 10 GW backup plan seems to fall short in this regard. It also would only operate when needed, making the added infrastructure underutilized barring a catastrophe.