The legendary Warren Buffett made headlines recently when Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) subsidiary MidAmerican Energy entered the solar industry in a big way. Betting somewhere shy of $3 billion on solar power seems like a big endorsement of solar, but this requires a closer look at what Buffett is really investing in.

A very Buffett-like investment
The first thing to note is that Buffett didn't buy any solar manufacturers or suppliers that may be high-risk investments. He bought the Topaz power-plant development from First Solar (Nasdaq: FSLR) and partnered with NRG Energy (NYSE: NRG) on Agua Caliente. These two projects have fixed costs upfront and will pay back through power purchase agreements with the utility to create consistent cash flows.

These developments act more like bonds than equity investments. But there is some equity upside if the project generates more electricity than modeled or initial costs are lower than expected.

Buffett is also taking advantage of a federal loan guarantee on the Agua Caliente project and cash grants from the federal government to pay for a portion of the development. He cashes in on rates established with the utility long before solar-module prices began plummeting in 2011.

Buffett may like solar, but he likes it because it pays consistent cash flows and he can predict a return on investment, not because he's hugging trees in his spare time.

Buffet and wind
MidAmerican Energy is also one of the country's biggest wind-turbine owners. The same concept as solar applies here. Buffett doesn't like wind because it's clean or environmentally friendly. He likes it because it's a low-risk energy source paying consistent cash flows that provide a predictable return.

Betting on oil
If you really want to know what energy source Buffett is betting on, you can look at his holdings. Buffett owns major positions in ConocoPhillips (NYSE: COP), ExxonMobil (NYSE: XOM), and General Electric (NYSE: GE). The first two are major oil producers, and the last builds power plants and provides a number of energy services, particularly to the utility market.

What Buffett really thinks about energy
Our addiction to oil isn't going anywhere anytime soon, and that's what Buffett is really betting on. Wind and solar are just low-risk investments that act like bonds, an attractive way to invest in energy right now.

So next time you think Warren Buffett is a big fan of renewable energy, consider that he really just owns renewable energy because it's a relatively low-risk investment. What he's really betting on in the energy sector is oil.

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