From 2 billion to 90 billion dollars, Buffett has cast an energy empire.

Buffett seems to have abandoned "consumption," which he once loved, and is now weaving a big net called "energy" globally.

On July 10th, just 12 days after investing $120 million in Western Petroleum at the end of June, Buffett's Berkshire Hathaway Energy (BHE) made another move.

It purchased a 50% limited partnership interest in Dominion Energy's Cove Point liquefied natural gas and liquefied petroleum gas business for $3.3 billion.

After this transaction is completed, BHE will own a 75% limited partnership interest in Cove Point LNG and operate the Cove Point liquefied natural gas project.

The valuation of BHE, Buffett's most important wealth engine, has reached nearly $90 billion, while Berkshire Hathaway only paid $2 billion in 1999 to acquire a 76% stake in its predecessor, MidAmerican Energy.

This means that in 24 years, Buffett's $2 billion investment has multiplied 45 times. In the annual shareholder letter, he even referred to BHE as one of Berkshire Hathaway's "four jewels."

In Berkshire Hathaway's portfolio, BHE is not the largest. However, the successor chosen by Buffett is the current CEO of BHE, Greg Abel, which shows Buffett's emphasis on BHE and investments in the energy sector.

BHE's Business Map

Buffett said in his 2022 letter to shareholders, "BHE has become a leading force in utility power plants and wind, solar, and transmission fields in most parts of the United States." Buffett described it as "our last giant."

BHE is the fifth-largest utility holding company in the United States. In 2022, BHE's operating revenue was $26.393 billion, while its parent company, Berkshire Hathaway, had revenue of $302.09 billion, with BHE accounting for 8.74%, second only to the insurance and railroad businesses.

BHE has eight business divisions: PACIFIC SECURITIES, Central American Energy, Nevada Energy, Northern Grid UK, Northern Natural Gas, BHE GT&S, Kern River Gas, and BHE Renewable Energy.

As of December 31, 2022, BHE has invested over $31.6 billion in its own wind, solar, and geothermal projects.

In terms of wind power, as of the end of 2022, BHE has invested approximately $14.4 billion in wind power, with an installed capacity of 7.4 GW. PACIFIC SECURITIES plans to add 9.11 GW of wind power capacity in the next 20 years. In the field of photovoltaic power generation, as of the end of 2022, BHE has invested a total of $7.3 billion in photovoltaic power generation. Its Topaz and Solar Star power plants, both located in California, have a combined installed capacity of 1.136 GW of solar power generation.

Its subsidiary, NV Energy, plans to have 525 MW of contracted solar resources for commercial operation by August 1, 2023, and aims to have an additional 400 MW of self-owned solar resources and 1.318 GW of contracted solar resources for commercial operation by August 1, 2024.

The aging power grid in the United States has to some extent hindered the development of renewable energy. Therefore, in addition to new energy generation, BHE has made significant investments in the power transmission system:

BHE's subsidiary, PACIFIC SECURITIES, plans to build approximately 2,365 miles of new high-voltage transmission lines by 2027, with a total investment of approximately $11 billion.

BHE's subsidiary, Nevada Energy, is establishing a transmission system in the region to harness the abundant renewable energy resources in western and northern Nevada, thereby transforming Nevada's clean energy landscape. The project is estimated to cost $2.8 billion.

BHE's AltaLink has constructed a 350-kilometer power grid in Alberta, Canada. BHE also has $3.2 billion in transmission assets in Texas and Kansas through joint ventures, which are currently in operation or under construction.

At the same time, BHE also has a strong natural gas pipeline network. As of 2022, BHE Pipeline Group transports approximately 15% of the natural gas in the United States.

BHE plans to invest an additional $5.5 billion in 2023-2024, increasing the scale of its new energy assets under management to $42.3 billion. Of this, $4.6 billion will be primarily invested in wind farm development and equipment replacement, and $900 million will be added to solar power plant development.

Interested in buying BHE shares?

Barron's answers: You can't.

Currently, Berkshire Hathaway holds 92% of BHE's shares, with the remaining 8% owned by early investors of MidAmerican Energy and former Berkshire Hathaway board member Walter Scott.

Scott passed away in 2021 at the age of 90. Those who are currently following Berkshire Hathaway are waiting to see if Scott's heirs will sell the shares this year.

The most recent sale of shares occurred in June 2022, when former BHE CEO Greg Abel sold 1% of the shares back to Berkshire Hathaway Energy for $870 million.

Jim Shanahan, an analyst at Edward Jones, believes that BHE will serve as a stable cash flow guarantee in the conglomerate's business matrix.

"BHE will contribute decent and stable cash flow for Berkshire Hathaway. Currently, BHE accounts for about 10% of Berkshire Hathaway's total revenue, and this proportion will increase over the next five years.

Assuming BHE's current market value is $90 billion, it accounts for approximately 12% of Berkshire Hathaway's current market value of $760 billion.

If BHE goes public, it will become the second-largest utility company in the United States in terms of market value, second only to NextEra Energy.

When Berkshire Hathaway initially acquired MidAmerican Energy, Buffett stated, "We are willing to spend more time waiting for it to realize its potential."

Barron's Weekly believes that perhaps investing in BHE best reflects Buffett's wealth-creating patience."