MidAmerican’s Topaz solar financing proves that bond investors have an appetite for green investments.
Scott M. Gawlicki is Fortnightly’s contributing editor based in Hartford, Conn.
When MidAmerican Energy Holdings issued $850 million in bonds in February 2012 to finance construction of the massive 550-MW Topaz Solar photovoltaic (PV) farm, it raised more than a few eyebrows in the financial and renewable energy communities.
Not because Topaz, located in San Luis Obispo, Calif., will be one of the world’s largest solar PV farms when construction is completed in 2015; or that MidAmerican, a key energy component in Warren Buffet’s Berkshire Hathaway holding company, is itself investing roughly $1.2 billion, or 50 percent of the project’s cost.
No, the bond issue—structured as a rule-144a private placement—generated headlines for three reasons. First, it will fund the largest solar project ever to tap the capital markets for project finance without the backing of a government loan guarantee. Second, it was the first solar bond issue to be rated investment grade by the three big ratings agencies, Moody’s, Fitch, and Standard and Poor’s. And third, it was so heavily oversubscribed that MidAmerican plans to announce a follow-up issue worth roughly $400 million.