MidAmerican Energy Holdings Co., the power unit of Warren Buffett’s Berkshire Hathaway Inc. (BRK/A), agreed to buy wind turbines valued at more than $1 billion from Siemens AG (SIE) for five projects in Iowa, in the supplier’s biggest order to date for land-based wind equipment.
Siemens will provide 448 of its 2.3-megawatt turbines with total capacity of almost 1,050 megawatts, enough to power about 320,000 households, Munich-based Siemens said today in a statement.
MidAmerican is expanding in wind as costs fall. Turbine prices have declined about 19 percent from the first half of 2008, according to data compiled by Bloomberg, making wind power more competitive with energy produced from fossil fuels.
Wind turbines typically cost about $1 million for each megawatt of capacity, making the deal worth more than $1 billion, Markus Tacke, chief executive officer of Siemens Energy’s wind power division, said without providing an exact price.
The order will be “a significant chunk of our overall business,” Tacke said.
“The U.S. is leading the way toward grid parity,” Tacke said, the point when the price for power from renewable sources becomes competitive with conventional sources of energy such as natural gas and coal. “The industry needs volume and these large orders help drive down the costs of wind power.”
Power from coal costs about $78.30 a megawatt-hour, compared with $82.61 for onshore wind farms, according to data compiled by Bloomberg.
Siemens climbed 3.3 percent to 96.39 euros at 3:45 p.m. in Frankfurt, the most intraday since Nov. 7.
The turbines will be used for the 500-megawatt Highland wind farm in O’Brien County, the 250-megawatt Lundgren project in Webster County, the 138.6-megawatt Wellsburg site in Grundy County, the 117-megawatt Macksburg plant in Madison County and the 44-megawatt Vienna II project in Marshall County.
Siemens will supply hubs and nacelles, the car-sized units that house the gears, electronics and gearboxes for turbines, from its plant in Hutchinson, Kansas, and rotors and blades from its facility in Fort Madison, Iowa.
MidAmerican bought 258 turbines from Siemens in December 2010 for projects in Iowa. The state gets about a quarter of its power from wind, according to the American Wind Energy Association.
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