calpers

Chris Reed
March 28, 2016

Is the California Public Employees’ Retirement System about to make another big mistake with a mistimed investment strategy, this time in the industrial solar sector?

Beginning 13 years ago, CalPERS invested heavily in real estate at the height of the housing bubble. From 2003 to 2006, the pension fund committed $46 billion to real estate investments, including ambitious projects in New York City and Sacramento that eventually went haywire. The result: In the year ending Sept. 30, 2009, CalPERS lost a stunning 49 percent of the value of its real estate portfolio. A November story in the Los Angeles Times depicted the nation’s largest pension system as only now digging its way out its disastrous investment choices in real estate.

Last week, CalPERS announced it would buy up to a 25 percent ownership stake in the 550-megawatt Desert Sunlight solar project near Joshua Tree National Park in eastern Riverside County, which was until recently the world’s largest solar plant.

CalPERS did so despite taking a bath on its clean energy investments in the 2014-15 fiscal year. However, analysts said that year was an outlier because of the abundance of cheap oil distorting energy markets. Meanwhile, there are many reasons investors are attracted to major solar projects, starting with the fact that state laws require utilities to buy steadily more renewable energy and that solar power technology used in large projects steadily grows more advanced.

Utility think tank warns of ‘potential obsolescence’

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