Warren Buffett Energy Deregulation

Warren Buffett has identified energy deregulation as an oncoming financial opportunity that is felt throughout the United States. This market could be bigger than the Internet itself. The estimate is that by 2020, all 50 states would have a form of deregulation of energy. Consumers will be free of the monopolies and have more of a choice on how they pay for their energy. Deregulation is a $500 million industry, where Buffett says it will be the largest transfer of wealth in history.

Buffett is investing in electricity transmission because of trying unsuccessfully to buy California energy utility Oncor that had a $9 billion bid they gave up on. Paul Singer, the investor, had a battle over the Oncor Company, because he felt Berkshire Hathaway’s offer was too low. Energy transfer is a big business that relies on the connectivity of power plants to businesses or residents. Renewable energy is a booming business that is brand new in the 21st century. Electricity companies are something Buffett calls “recession resilient” if only because there is constant demand for electricity from renewable or otherwise energy sources. The growth of solar and wind power is exponential but require high voltage wires in the regions that utilize solar, hydro, or wind power.

Utilities are focused on using tools called network sensors. The United States power grid requires 42,000 miles of high voltage, adding to the 450,000 miles that already exists in order to transmit the energy to the customers that need it. Deregulation is defined as giving customers a choice about who they do business with when it comes to choosing their energy resources, on a state-by-state level. Competition can bring new ways of choosing a supplier, since you want something that can fit your needs, since deregulation is managed by the federal government.

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