Warren Buffett's holding company, Berkshire Hathaway (BRK.A 0.97%) (BRK.B 1.16%), has so many subsidiaries that it's easy to overlook some. But its acquisitions in the energy sector have earned a second look. In this episode of "The Rank" on Motley Fool Live, recorded on Feb. 28, Fool.com contributors Jason Hall, John Bromels, and Travis Hoium discuss why the company's energy holdings set it up for success for the long term.
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Jason Hall: I want to lay out my case for why I think this is so important for the business today, and that's used to be MidAmerican Energy, that's NV Energy, and now it's all under the brand of Berkshire Hathaway Energy, and that's its utility subsidiaries but it's also pipelines and all this stuff. There is so much that is going on right there that is tied to renewables and tied to increasing the amount of renewables that can fuel the American grid, it's so easy to miss it. I think within five years, the MidAmerican Energy business will generate more renewable energy than all of its customers and I will need for all of their power. That's really super powerful. The business is in the middle of this quarter-century project to expand their energy transmission to the West, where we have a bulk of the U.S. population. Because what does the middle of the country have? Massive wind and solar resources that can be tapped.
Travis Hoium: And land.
Hall: Get that energy to the population, the demand centers, right, Travis?
Hoium: Yeah, absolutely. In the middle of the country has the land to put these assets.
Hall: Right.
Hoium: That's going to be the other key. If you're thinking about it from their perspective, we've already touched on maybe hydrogen will play a role in some of these things in the future. There's electric vehicles coming. If you have the cheapest area of electricity production, that's an incredibly powerful place to be. MidAmerican started with wind in Iowa. NV Energy was a way to play solar in Nevada. Two of your potentially long-term trends in energy right there, and Berkshire Hathaway is well positioned to both of them.
Hall: Yeah. No, doubt about it. John Bromels?
John Bromels: I wasn't as familiar with Berkshire Hathaway Energy, it's just not one of the --
Hall: Nobody talks about it.
Bromels: I covered energy stocks, because it isn't publicly traded on its own, it's not really one that you look at. Yeah, that's part of why I ranked it No. 4, but when I looked into it, I was really impressed with that portfolio of assets that it has. To me, it's actually very similar to the BNSF acquisition. It's a bunch of existing assets that are going to keep churning out cash for many years, and it's a business that has a moat that it's tough to get into. I mean, it's easier to get into now with solar wind things than it has been perhaps. But still you've got to own land, you got to own transmission, you've got to have it all hooked up. There is infrastructure costs beyond just the actual facilities themselves.
