Goldman strikes gold in California

New York, 28 July 08 - Commodity traders at Goldman Sachs are acquiring a taste for the Californian desert, where developments in solar power are taking off. Like most bets wagered by the US broker-dealer, its investment in solar power, and energy in general, has started to pay dividends.Cogentrix Energy, bought by Goldman Sachs in 2003 for $2.4bn (€1.5bn), has become one of the most active filers of land claims to develop solar plants in the desert, with the first due to go online in 2012.

Last year, Goldman Sachs' fixed income, currencies and commodities group generated record revenue of $16.2bn, 13% higher than in 2006.

It partly attributed the rise in commodities to a gain of about $800m from the sale of a majority interest in 14 power generation facilities held by Cogentrix Energy.

Larry Kellerman, managing director of the FICC division and president of Cogentrix Energy, said: "Unlike some other financial firms, we are interested in hands-on ownership, which is central to the operation and development of power plants."

He described power generation as an interface between capital markets and commodities. He said: "The plants are capital intensive, so Goldman Sachs can add value by advising on the greatest availability of capital at the lowest cost, while commodities risk management is important."

Goldman Sachs started buying power plants in 1998 when it teamed up with electricity producer Constellation Energy to create Orion Power Holdings. In 2001, the partners agreed to sell Orion to Reliant Resources for $4.6bn. The deal closed in February 2002 after Enron collapsed, sending wholesale energy prices tumbling.'''

Original Source:Shanny Basar, DowJones Financial