Thursday, June 4, 2009

Goldman Sachs and the Solar Land Rush (FSLR; GS)

What with the First Solar/OptiSolar land deals in the news*, I thought I'd go back to the archives for an interesting story on Goldman Sachs and land in the Southwest. Not only were they a major investor in (and bookrunner of) First Solar, they have been acquiring land for their own account.
First though, from DMSolar:
Solar Projects create demand for desert land

A modern-day land rush is under way in the deserts of Arizona and the Southwest as public utilities and speculators vie for vast tracts of public and private land on which to build massive solar-power plants.

The boom is creating a market and boosting the price for outlying-subdivision land that had become seemingly unsalable after the housing market went bust.

On Saturday, a solar-land auction will be held in Phoenix.

So far, more than 40 solar projects have been proposed for Arizona. The plants require a huge amount of land for their vast solar arrays and a considerable amount of water. If built, they would tie up more than 725,000 acres and generate enough electricity to power 25 million homes, far more than Arizona needs.

The rush to claim property has raised concerns from environmental groups that call the process a land grab. They worry that land and water are being tied up by speculators and that not enough care is being given to ensure the projects are viable and that the impact on sensitive sites and groundwater is minimal.

“We are very supportive of a mix of renewable generation,” said Sandy Bahr, director of the Sierra Club’s Grand Canyon Chapter in Phoenix. “But we’re not in favor of paving the desert with mirrors.”

The land rush is being driven by rules in Arizona, California and other states that require utilities to generate more power from renewable resources: 15 percent in Arizona by 2025 and 33 percent in California by 2020.

Generous state and federal subsidies, plus billions in economic-stimulus money earmarked for solar power, create an additional incentive to tie up land.

Arizona, which according to the National Renewable Energy Laboratory has some of the richest solar land in the country, has become the focal point of the land rush. Much of the prime land for solar use is along the Interstate 10 corridor between Buckeye and the California state line. Other hot spots can be found around Kingman and west of Wickenburg.

Potential buyers include utilities such as Sempra Energy and PG&E; investment banker Goldman Sachs; Spanish, Israeli and German solar firms; and speculators....MORE

HT: SolarFeeds (where five of our posts are either most popular for the week or the month!)

From the archive, July 15, 2008:
Solar's Red Hot Real Estate Market

From Fortune:

The Southwest desert's real estate boom
From California to Arizona, demand for sites for solar power projects has ignited a land grab.
A solar land rush is rolling across the desert Southwest. Goldman Sachs, utilities PG&E and FPL, Silicon Valley startups, Israeli and German solar firms, Chevron, speculators - all are scrambling to lock up hundreds of thousands of acres of long-worthless land now coveted as sites for solar power plants.

The race has barely begun - finished plants are years away - but it's blazing fastest in the Mojave, where the federal government controls immense stretches of some of the world's best solar real estate right next to the nation's biggest electricity markets. Just 20 months ago only five applications for solar sites had been filed with the BLM in the California Mojave. Today 104 claims have been received for nearly a million acres of land, representing a theoretical 60 gigawatts of electricity. (The entire state of California currently consumes 33 gigawatts annually.)

It's not just a federal-land grab either. Buyers are also vying for private property. Some are paying upwards of $10,000 an acre for desert dirt that a few years ago would have sold for $500....MORE

And again, October 8, '08:
Was Solyndra the Reason Goldman Sachs Threw First Solar Under the Bus? (FSLR; GS; SPWRA)

Goldman Sachs' downgrade of Sunpower and more particularly First Solar, with which Goldman was underwriter, major shareholder and best buds, got the investoblogs humming yesterday.
GS owned 4,300,000 shares of FSLR as recently as August, 2007. The Walmart heirs were original funders of FSLR (and the largest holders). One of the things brought up on the blogs is a passage from a Fortune article we linked to in July:

...No one has been as quick to move into the Mojave -- or as tightlipped about it -- as Solar Investments.

That entity, it turns out, is Goldman Sachs' solar subsidiary. The investment bank's designs on the desert are a topic of intense interest and speculation. Goldman declined to comment. But here's what we know:

Solar Investments filed its first land claim in December 2006 and within a month had applied for more than 125,000 acres for power plants that would produce ten gigawatts of electricity. Many of the sites lie close to the transmission lines that connect the desert to coastal cities. (Goldman has also staked claims on 40,000 acres of the Nevada desert.)

Nobody expects Goldman to begin operating solar plants. It will probably either partner with another developer or sell its limited-liability company (and its leases) outright. The firm has been making the rounds of solar developers....

"I view Goldman as a very interesting indicator of things to come," says Brian McDonald, PG&E's director of renewable-resource development...

*First Solar May Not Have Optisolar's Desert "Land Rights" (FSLR)

More on the First Solar/OptiSolar Land Deal (FSLR)