BHE's 2024: A Renaissance in Energy Investment and Growth

In October 2024, Berkshire Hathaway fully acquired Berkshire Hathaway Energy (BHE) ↗. This was great news not only from a financial perspective but also from a structural one—no more sifting through separate annual reports and questioning any (real?!) discrepancies. 2024 was a strong year for BHE, with net earnings of approximately $4 billion. Let’s take a closer look at how this was achieved.

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Introduction

In the ever-evolving landscape of the energy sector, Berkshire Hathaway Energy (BHE) stands as a formidable force, wielding a diverse portfolio that spans regulated utilities, natural gas pipelines, and renewable energy projects ¹. The year 2024 marked a pivotal chapter in BHE's journey, underscored by strategic acquisitions, robust financial growth, and the navigation of operational challenges. This year has been transformative, not just for BHE, but for its parent company, Berkshire Hathaway, as it solidifies its grip on the energy unit through full ownership.

The strategic implications of Berkshire Hathaway's full acquisition of BHE cannot be overstated. By acquiring the remaining 8% stake from the Scott family, Berkshire now commands 100% of BHE, a move that aligns seamlessly with Warren Buffett's long-term investment strategy ⁵. This acquisition is a testament to the energy unit's integral role within Berkshire's broader portfolio, which includes titans like BNSF and GEICO ⁵.

Tracing its origins back to its acquisition by Berkshire in 2000, BHE has undergone a remarkable evolution from MidAmerican Energy to its current form ↗. This transformation has been punctuated by significant milestones, including a name change in 2014, and now, full ownership by Berkshire ⁵. These developments set the stage for a comprehensive exploration of BHE's activities, achievements, and challenges in 2024, all within the broader historical, economic, and political frameworks that shape the energy sector today. BHE is a formidable enterprise, employing approximately 24,000 workers across its operations in the United States ¹:

BHE Division	Number of Employees
Corporate Office	32
PacifiCorp	4,783
MidAmerican Energy	3,427
NV Energy	2,273
Northern Powergrid	2,527
BHE Pipeline Group	2,692
BHE Transmission	726
BHE Renewables	345
MidAmerican Energy Services	75
HomeServices of America	6,757
Total	23,637

This article will delve into the intricate tapestry of BHE's 2024 journey, blending factual analysis with historical insights. From financial performance and strategic investments to energy infrastructure and international ventures, we will dissect the various facets of BHE's operations, offering shareholders a detailed understanding of the company's trajectory and future prospects.

Financial Performance and Strategic Investments

BHE's financial performance in 2024 has been nothing short of impressive, with net earnings soaring by $1.1 billion, a staggering 116.4% increase compared to 2023 ¹. This remarkable growth is a testament to the company's strategic foresight and operational resilience. Central to this financial upswing is the strategic acquisition of the remaining 8% of BHE from the Scott family, a move that not only consolidates ownership but also enhances financial and operational efficiencies ⁵.

A significant factor contributing to BHE's improved financial health in 2024 is the reduction in pre-tax loss accruals for wildfires, which plummeted from $1.7 billion in 2023 to $346 million in 2024 ¹. This reduction has alleviated financial pressures, allowing BHE to channel resources towards growth and innovation.

The U.S. utilities' electric utility margin also witnessed an uptick, increasing by $274 million (3.6%). This growth is partly driven by a 3.6% rise in retail customer volumes, with notable increases at NV Energy, PacifiCorp, and MEC ¹. However, this success is tempered by the historical volatility of interest rates, which influenced BHE's increased interest expense due to new borrowings at a 5.5% interest rate ¹.

To provide a clear visual representation of BHE's financial journey, the following table compares key financial metrics from 2019 and 2024:

Category	2024	2023	2022	2021	2020	2019
Revenues:
Energy operating revenue	$21,566	$21,280	$21,069	$18,935	$15,556	$15,371
Real estate operating revenue	$4,354	$4,322	$5,268	$6,215	$5,396	$4,473
Other income (loss)	$428	$406	$56	$(163)	$79	$270
Total revenue	$26,348	$26,008	$26,393	$24,987	$21,031	$20,114
Costs and expenses:
Energy cost of sales	$6,616	$7,057	$6,757	$5,504	$4,187	$4,586
Energy operating expenses	$10,403	$11,412	$9,233	$8,535	$7,539	$6,824
Real estate operating costs and expenses	$4,509	$4,316	$5,117	$5,710	$4,885	$4,251
Interest expense	$2,528	$2,283	$2,140	$2,054	$1,941	$1,835
Total costs and expenses	$24,056	$25,068	$23,247	$21,803	$18,552	$17,496
Pre-tax earnings	$2,292	$940	$3,146	$3,184	$2,479	$2,618
Income tax (benefit)*	$(1,871)	$(2,022)	$(1,629)	$(1,177)	$(1,010)	$(526)
Net earnings after income taxes	$4,163	$2,962	$4,775	$4,361	$3,489	$3,144
Net controlling interests of BHE subsidiaries	$137	$352	$423	$399	$71	$18
Net earnings attributable to BHE	$4,026	$2,610	$4,352	$3,962	$3,418	$3,126

Berkshire Hathaway Energy's earnings have shown a steady upward trend since 2019, rising from approximately $3 billion to around $4 billion in 2024. While there are many factors behind these numbers, the overall trajectory is solid and encouraging for shareholders. Reflecting on the broader economic implications, BHE's financial performance in 2024 is emblematic of the dynamic interplay between macroeconomic forces and energy market trends. As the energy landscape continues to evolve, BHE's strategic investments and financial prudence position it well to capitalize on emerging opportunities and navigate future challenges.

Energy Infrastructure and Technological Advancements, Renewable Energy Challenges and Opportunities

In a bold move to modernize and enhance connectivity between the U.S. Eastern and Western electric grids, BHE U.S. Transmission has announced its involvement in the North Plains Connector transmission project. This ambitious initiative, revealed on January 8, 2025, in Helena, Montana, is a collaboration with North Plains Connector LLC, a wholly owned entity of Grid United ². The project is set to feature a 420-mile high-voltage direct-current transmission line, a technology historically significant for its efficiency in reducing energy losses over long distances. This advancement not only symbolizes a leap in energy infrastructure but also reinforces BHE's commitment to strategic, long-term planning, as evidenced by its 10% ownership stake and the project's expected operational date in 2032 ².

The economic and political ramifications of this project are profound. Governor Greg Gianforte of Montana has expressed gratitude for this collaboration, highlighting its potential to solidify Montana's status as an energy leader ². The project is anticipated to have a substantial economic impact, with approximately $3.2 billion in investments and 75% of the line's capacity already secured through MOUs with participating utilities ². This underscores the project's significance in fostering regional energy independence and economic growth.

BHE's support for the Inflation Reduction Act's technology-neutral energy credits further exemplifies its forward-thinking approach. These credits aim to reduce energy costs and create jobs, aligning with BHE's mission to provide secure, affordable energy while meeting increasing demand ³. As Patrick Reiten, BHE's senior vice president of public policy, noted, these incentives are pivotal in shaping the energy landscape, offering a historical continuity of energy incentives that have driven innovation and growth in the sector ³.

Key features and benefits of the North Plains Connector project include:

1. Capacity: 3,000 megawatts, with BHE's share at 300 megawatts.
2. Length: Approximately 420 miles.
3. Economic Impact: Estimated $3.2 billion investment.
4. Operational Date: Expected by 2032.
5. Political Support: Strong endorsements from local leaders, emphasizing regional energy leadership ².

The suspension of BHE Renewables' geothermal projects near the Salton Sea presents a complex narrative of challenges and opportunities in the renewable energy sector. These projects, which aimed to add 357 megawatts of renewable energy to California's grid, have been halted due to transmission interconnection challenges, permitting delays, and the absence of state-backed offtake agreements ⁶. Historically, geothermal energy has played a crucial role in California's clean energy goals, offering a stable and reliable source of baseload power.

The economic and social implications of this suspension are significant, particularly for Imperial County. With an unemployment rate of 17.8% and poverty levels between 19% and 21%, the anticipated creation of over 1,500 construction jobs and 183 permanent operational jobs would have been transformative ⁶. The projects were expected to contribute $3.82 billion in economic impact over 30 years, highlighting their potential to drive local economic development and support state clean energy objectives ⁶.

Despite these setbacks, geothermal energy remains a strategic component of BHE's renewable portfolio. The potential for future development persists, contingent upon resolving interconnection and permitting issues. Additionally, the collaboration with Occidental Petroleum on a direct lithium extraction (DLE) project underscores BHE's commitment to innovative and sustainable energy solutions ↗ ⁷.

Local stakeholders and community leaders play a pivotal role in advocating for sustainable energy solutions. Their efforts to maintain a healthy infrastructure and promote economic development are crucial in navigating the challenges faced by BHE's renewable energy projects ⁶.

Challenges	Opportunities
Transmission interconnection challenges	Potential for future geothermal development
Permitting delays	Job creation and economic impact
Lack of state-backed offtake agreements	Support for state clean energy goals
Economic and social implications for locals	Collaboration on innovative energy projects

Therefore, while BHE faces significant challenges in its renewable energy endeavors, the opportunities for growth and innovation remain robust.

Real Estate and Market Dynamics

In 2024, HomeServices of America, a key player in BHE's portfolio, faced a challenging landscape marked by a decline in net earnings of $120 million, primarily due to ongoing litigation and elevated home prices ¹. This decline reflects broader historical trends in the U.S. housing market, where fluctuations often mirror economic cycles. The settlement of claims against HomeServices in April 2024 marks a pivotal moment, potentially paving the way for more stable operations moving forward ¹.

The real estate market is notoriously sensitive to a variety of economic factors, including interest rates, inflation, and consumer confidence. As interest rates rise, borrowing costs increase, which can dampen housing demand. Conversely, high home prices, while beneficial for sellers, can deter potential buyers, creating a complex environment for brokerage businesses.

HomeServices' strategic role within BHE's diverse portfolio cannot be overstated. As a residential real estate brokerage, it serves as a barometer for economic health and consumer sentiment. Despite recent challenges, its contribution to BHE's overall financial performance remains significant, offering insights into the broader economic landscape.

Historically, real estate markets have been closely tied to economic cycles, with downturns offering valuable lessons. The 2008 financial crisis, for instance, underscored the importance of prudent lending practices and market diversification. As BHE navigates current market dynamics, these lessons remain relevant.

Key factors affecting HomeServices' performance in 2024 included:

1. Litigation: The resolution of claims in April 2024 provided a clearer path forward.
2. Market Conditions: High home prices and interest rates continue to challenge the brokerage landscape.
3. Strategic Decisions: Adaptations to changing market conditions will be crucial for future success ¹.

International Ventures and Climate Resilience

BHE's international subsidiary, Northern Powergrid, has taken proactive steps to bolster its infrastructure against severe weather impacts, investing £18.6 million in vegetation management in 2024 ⁴. This initiative is part of a broader strategy to enhance climate resilience, with plans to invest around £80 million from 2023 to 2028 ⁴. Such investments are crucial in the face of climate change, which has historically influenced energy infrastructure resilience both in the UK and globally.

Northern Powergrid's efforts underscore the importance of climate resilience in BHE's global strategy. By focusing on vegetation management, the company aims to reduce the risk of power outages caused by severe weather, thereby ensuring a more reliable energy supply. This proactive approach not only offers economic benefits by minimizing disruption but also supports environmental sustainability. The political and regulatory environment in the UK plays a significant role in shaping energy infrastructure investments. As governments worldwide grapple with climate change, regulatory frameworks increasingly emphasize resilience and sustainability, influencing corporate strategies. By investing in climate resilience, BHE not only strengthens its international ventures but also aligns with global sustainability goals. These initiatives reflect a forward-thinking approach, positioning BHE as a leader in the energy sector's transition towards a more sustainable future.

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Conclusion

As we reflect on Berkshire Hathaway Energy's (BHE) transformative journey in 2024, it is evident that this year has been marked by both significant achievements and notable challenges. The strategic acquisition of the remaining 8% stake from the Scott family has not only solidified BHE's full ownership under Berkshire Hathaway but has also enhanced its operational efficiency and financial performance, culminating in a remarkable 116.4% increase in net earnings compared to the previous year ¹ ↗. This financial resurgence is a testament to BHE's resilience and strategic foresight in navigating the complexities of the energy sector.

The ambitious North Plains Connector transmission project stands as a beacon of BHE's commitment to modernizing energy infrastructure and enhancing connectivity across the U.S. electric grids. This initiative, with an estimated $3.2 billion investment, exemplifies BHE's proactive approach to addressing the evolving demands of the energy landscape ². Furthermore, the company's support for the Inflation Reduction Act's technology-neutral energy credits reflects its dedication to fostering innovation and job creation, aligning with broader economic and environmental goals ³.

However, 2024 was not without its challenges. The suspension of geothermal projects near the Salton Sea underscores the hurdles faced in the renewable energy sector, particularly concerning transmission interconnection and permitting delays ⁶. Despite these setbacks, BHE's ongoing collaboration with partners like Occidental Petroleum on innovative projects showcases its commitment to overcoming obstacles and pursuing sustainable energy solutions.

In the realm of real estate, HomeServices of America encountered a decline in net earnings due to litigation and market conditions, yet the resolution of claims offers a pathway toward stabilization ¹. This highlights the interconnectedness of BHE's diverse portfolio and the importance of adaptability in navigating market dynamics.

BHE's international ventures, particularly through Northern Powergrid, emphasize the critical need for climate resilience in energy infrastructure. The £18.6 million investment in vegetation management is a proactive measure to mitigate the impacts of severe weather, showcasing BHE's forward-thinking approach to sustainability ⁴.

Looking ahead, BHE is well-positioned to capitalize on emerging opportunities within the broader energy market, particularly as global sustainability goals gain momentum. The company's strategic investments and long-term planning will be vital in navigating future challenges while enhancing its role as a key component of Berkshire Hathaway's diversified portfolio ↗.

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