Will Pickens' Scrapped Project Slow Wind Energy Momentum?

I was pretty bummed out yesterday after hearing that T. Boone Pickens would be canceling his 4 GW wind farm project. Not so much because that beautiful 4 GW wind farm won't be built in Sweetwater, TX – but because this little piece of news is likely to serve as an excellent opportunity for renewable energy naysayers to leave a fresh trail of misinformation about the wind energy industry.

It's already plastered all over message boards and blogs.

Here are a few comments that I found on one particularly hostile message board...

“Why did anyone believe this wind farm would ever get built? Wind energy is a scam. It's just another reason for big government to make more money off the backs of taxpayers.”

“T. Boone Pickens is only trying to make money. He realized that he couldn't make money from a stupid wind farm that nobody wants anyway, so he walked away. When are people in this country going to wake up and realize that coal is whats best for Americans. It's cheap and we have 500 years of it. Time to silence the crazy treehuggers that are bankrupting this country.”

“LOL! What a joke. Drill Baby Drill!!!”

We know why these folks are spouting off. They simply have no problem furthering our reliance on fossil fuels (which in some respects, could be perceived as treasonous). Environmental concerns are laughable to them (because most have absolutely no idea that natural capital can no longer be liquidated without fiscal consequences) and quite a few still believe that they'll be labeled as liberals if they embrace renewable energy integration.

I guess they didn't get the memo about how supporting the integration of renewable energy is probably one of the most patriotic things you can do.

Regardless, there seems to be a lot of speculation about why Pickens canceled the 4 GW farm, and is now restructuring his wind energy plans. But it is likely that the main reason is transmission.

In 2011, 687 GE wind turbines are scheduled to be delivered. But the necessary transmission lines being built to move all that wind power won't be ready until 2013. Bottom line: He can't have $2 billion dollars worth of turbines sitting around for two years while transmission is still being built. Therefore, Pickens is looking to build three or four smaller wind farms elsewhere.

Truth is, this is not an issue with wind energy. It's an issue with infrastructure. And much of the necessary infrastructure upgrades are being planned and built right now.

You see, transmission doesn't go up like shopping malls. These are huge, capital-intensive projects. But don't let the fossil fools use this as an opportunity to further their campaigns of misinformation about renewable energy integration. These upgrades and new developments ARE happening, primarily because our current infrastructure is crumbling, and it's in desperate need of modernization.

Of course, those billions (that's right, billions...with a “B”) in stimulus funds are going to enable this massive undertaking too. These upgrades will not only help us move all that new renewable power to the grid, but they'll also enable a more efficient utilization of all the power we generate – both renewable and non-renewable.

Of course, as a renewable energy advocate and investor, I'm primarily focused on renewables. And the fact is, across the nation, new transmission is being built in an effort to facilitate new wind energy projects. Sure, the recession has slowed development. But the recession has slowed development of coal, nuclear and oil projects too. Nothing has been spared. But when the smoke clears, it will primarily be renewable energy projects that get back on track the fastest.

Truth is, hardly anyone wants to touch a coal project these days, even if it is intended to be a mythical “clean coal” project. And while I believe it's possible that we will see some future nuclear development, issues with NIMBYism (Not In My Backyard), waste disposal and extremely high capital costs will make those projects a lot more difficult to get off the ground, compared to new wind farms, solar fields and geothermal power plants.

So yes, Mr. Pickens' announcement is a setback for the wind industry. But it won't stop the momentum that will continue to allow wind, as well as all other renewables to become a much larger part of our overall energy mix.

And investors who are forward-thinking enough to realize that fossil fuel depletion and climate change initiatives will dictate our future energy production, should benefit handsomely by going long on infrastructure and smart grid plays. Companies like Itron (NASDAQ:ITRI), ABB (NYSE:ABB) and American Superconductor (NASDAQ:AMSC). And of course, the solid renewable energy plays, like First Solar (NASDAQ:FSLR), SunPower Corporation (NASDAQ:SPWRA) and Ormat Technologies (NYSE:ORA) – just to name a few.

That being said, overall market conditions will continue to trump sector potential. Especially in these shaky economic times. And throughout the rest of 2009, and well into 2010, it's still going to be a bumpy road for everything. But long-term, we remain extremely bullish on renewable energy and grid development.

Comments

[Sakata:]

This is bad news for the short term. People looking for negatives ina situation tend to overreact to news like this. I'm probably too old to ride this one out and will have to carefully watch the conseuqences, but for anyone under 40 this could be an excellent opportunity to get in at bargain levels - just watch the market and see what happens.

Jul 09 09:13 AM

[jbde:]

you said .....
I guess they didn't get the memo about how supporting the integration of renewable energy is probably one of the most patriotic things you can do.

What a stupid thing to say - it's all about economics. The private sector will not invest unless there is a return. The government does need to encourage infrastructure by facilitiating power lines to the wind and sun belts. Subsidies and low interest loans will be required for a powerline operator to make such an investment.

Realitiy is that projects will develop closer to usage - solar and and wind, where the addative load on exisitng transmission lines is minimal.

Solar is still better as it can be 'hidden' on roof tops and the basic material [sand] gets cheaper to process into wafers. Thin film cannot compete with the potential decline in poly-si costs - with all in the foodchain being profitable. It will take years to build the capacity to make a dent in electric demand, but it's on the way.

Jul 09 10:12 AM

[Ferdinand E...:]

More wind energy is needed, but not as much as Mr Pickens tried to sell, nor dummies in the environmental camp believe is viable. You don't need to know physics, nor engineering, nor economics, nor grade school arithmetic to learn that all the talk about wind is largely a scam - largely but not entirely. Just read what is written about it in reputable newspapers and magazines.

Jul 09 10:13 AM

[User 443924:]

Jeff,

I should paraphrase when you take other people's posts and comments, unless they are from your blog and part of the T&Cs is that you are able to use their comments other than on your site and they opted-in.

Further, what you say about Wind is true to an extent. It is a great source of alternative energy. No the best in my opinion, but we all have our opinions.

However, the issue is about T. Boone Pickens reasons for pulling out of 4 GW project. Well I think it was perfectly stated. There are infrastructure concerns that by 2013 likely will not be in place otherwise he could have extended and renegotiated his equipment lease agreements for the turbines with GE. There is the issue of the credit market and his inability for even T. Boone Pickens to get capital financing. There is a big issue on oil and natural gas re-examing their lows.

T. Boone is a natural gas guy. He has to think about ROI. He isn't in the non-for-profit business, so where it is not economically feeseable he must re-examine his proposals.

When T. Boone started his Wind proposals it was when oil was testing highs never seen before. Further, he was the one spouting we will see $200/barrel oil. We never did around $148, but high oil and natural gas was the reason to move away from US dependency on oil and natural gas.

Now, about treason. Well it is not treasonous as defined in the US Constitution or by Statute or by Case law. It might be your definition, but the legal definition.

Finally, natural gas cannot be treasonous because it is all local. You don't have liquified natural gas tankers coming into the US from foreign soil.

So, the end game is Wind will become hot again when fossil fuels become expensive. It will happen. It always does. Don't fret nor are there needs for statements of treason because it weakens your argument.

Jul 09 10:29 AM

[Jimbo:]

I am an investor in a utility that has a significant footprint in wind (FPL). It must be noted that all alternative sources of energy have problems and consequences. I have read that the Danes, who are possibly the most advanced country in wind derived electricity in the world, have concluded that 20% is the maximum a grid can handle from wind. And not all objectors to wind are knuckle dragging neanderthals...that nice, pure in spirit liberal, Ted Kennedy doesn't want those nasty windmills spoiling his ocean view.

Jul 09 10:51 AM

[Lucius Quintus:]

It will take the BILLIONS of stimulus $$ to utilize the so-called renewable energy. It is not really patriotic to support projects that require subsidies to make them viable. The more one investigates investing ones own money in wind projects,the more reality appears. I suspect T. Boon found that out.

Jul 09 11:16 AM

[Trane250:]

There will be 450 million people living in the USA by the middle of this century. Wind and solar energy alone can't support a lifestyle that most of us are used to and that future generations will demand. These sources will always be supplemental. People who live in northern climes still need to heat their homes and businesses and those in southern climes have gotten used to mechanical refrigeration (air conditioning). We will need increased energy for transportation. There may still be some heavy industry around. There is only one clean source of power that can supply all of our energy needs long into the future. Nuclear.

Jul 09 11:19 AM

[RLLH:]

While I have several alternative energy investments, I think your rant is a bit over the top. Could it be that people push coal, oil, gas, etc. because there is no practical alternative over the next couple of decades? Or do you support a return to the 1800's until alternative energy becomes practical (and affordable)?

Jul 09 12:32 PM

[Canadian Re...:]

Wind power is a "regulation driven" energy alternative. By this, I mean only the government can make it viable with the right kind of regulations.

If one searches "wind power" on the internet, one can find lots of web sites catering to this topic, both pro and con. Many of these sites are very logical in their arguments. I learn enough from these web sites to know that wind power will never be a reliable form of power/electricity. Base load still has to come from hydro-, various forms of fossil fuel burning and nuclear power plants.

Based on study of wind turbine installations in Europe, wind energy actually does not decrease the overall carbon footprint because backup power generation plants have to be idling all the time for ramping up when wind stop blowing.

Wind power proponents recognize the shortcomings of this alternative energy. That's why they are talking such thing as power storage systems. This creates other problems. Nothing in life is free.

Overall, wind power will be a niche play at best.

Jul 09 12:50 PM

[Jeff Siegel:]

RE: It is not really patriotic to support projects that require subsidies to make them viable.

I completely agree! Let's end all subsidies (both direct and indirect) for all power sources. Also attach the cost associated with the loss of natural capital. If we do that, I think you'll find renewables are quite competitive. Of course, if we do that you'll probably have to spend $13 a gallon for gas, and that would really put a kink in things. Point is - all power is subsidized. Don't buy the argument that it's just renewables.


On Jul 09 11:16 AM Lucius Quintus wrote:

> It will take the BILLIONS of stimulus $$ to utilize the so-called
> renewable energy. It is not really patriotic to support projects
> that require subsidies to make them viable. The more one investigates
> investing ones own money in wind projects,the more reality appears.
> I suspect T. Boon found that out.

Jul 09 01:03 PM

[Alan Young:]

Thanks for filling in the details. It's certainly true that the grid infrastructure has to be put in place for any major new development; but we need better grid anyway. It's just a matter of when.

Jul 09 01:10 PM

[Jeff Siegel:]

No, I just support an honest and competitive marketplace for energy. Something that has never existed. I'm not saying we turn off the switches on coal, natural gas or nuclear. I'm just saying that when we invest in future energy sources, those sources should be clean, not reliant upon depleting fossil fuels, and focused on long-term sustainability. That doesn't push us back to the 1800s at all. It actually moves us forward. Renewables are practical in many respects, and if you were to cut all those direct and indirect subsidies associated with other forms of power generation, you'll find that those other forms of power generation aren't quite as cheap as we think.


On Jul 09 12:32 PM RLLH wrote:

> While I have several alternative energy investments, I think your
> rant is a bit over the top. Could it be that people push coal, oil,
> gas, etc. because there is no practical alternative over the next
> couple of decades? Or do you support a return to the 1800's until
> alternative energy becomes practical (and affordable)?

Jul 09 01:12 PM

[quick:]

The easiest way to get pushed back to the 1800's is to rely on a dwindling supply of fossil fuels while at the same time not pushing for renewable energy while we have the chance. Sure we can just forget about wind, solar, and geothermal power for the next decade or two, but eventually these fossil fuel sources are going to run out and then what? We don't have a plan B, that's what. We'll probably end up importing all the latest technology from China or whoever else took the initiative to develop renewable energy.

IMO, we either pay a little now, or a lot later!


On Jul 09 12:32 PM RLLH wrote:

> While I have several alternative energy investments, I think your
> rant is a bit over the top. Could it be that people push coal, oil,
> gas, etc. because there is no practical alternative over the next
> couple of decades? Or do you support a return to the 1800's until
> alternative energy becomes practical (and affordable)?

Jul 09 02:02 PM

[JosephN:]

Lucius, Did you know Oil is one of the most heavily subsidized energy industries in the united states.

In fact, nearly all energy industries are subsidized by the government. Except many of the renewable forms, like geothermal which just got some help this year for the first time. Or Wind, which they take away the subsidies and give them back every couple of years.

Personally I would love to see Oil and Coal companies lose all their subsidies and that money go to future energy tech.


On Jul 09 11:16 AM Lucius Quintus wrote:

> It will take the BILLIONS of stimulus $$ to utilize the so-called
> renewable energy. It is not really patriotic to support projects
> that require subsidies to make them viable. The more one investigates
> investing ones own money in wind projects,the more reality appears.
> I suspect T. Boon found that out.

Jul 09 05:54 PM

[User 444327:]

Nuclear energy is a renewable energy and its not smoke comming out of the stacks its steam. If t-bone was smart he would have researched what he was throwing his money into and realized that the electricity is not going to jump from the tower to a grid. And who ever wrote that quote on the top is a idiot, wind energy is a private market the government doesn't control it.

Jul 09 06:27 PM

[Universal H...:]

Joseph, did you know that the oil industry is responsible for generating approximately $1.5 trillion in tax revenue for governments at the Federal, State and Local levels? That's a darn good return on investment for the paltry $56 billion they receive in subsidies.

I hold several "green" investments, but I am not so delusional as to think that renewable energy companies, most of which are years if not decades away from profitibility, are even close to being capable of replacing that tax revenue. Having the technology is one thing, but's a completely different matter to be able to implement that technology from the standpoint of economics. I think that was the whole point of this article, and was certainly at the root of Pickens' decision.


On Jul 09 05:54 PM JosephN wrote:

> Lucius, Did you know Oil is one of the most heavily subsidized energy
> industries in the united states.
>
> In fact, nearly all energy industries are subsidized by the government.
> Except many of the renewable forms, like geothermal which just got
> some help this year for the first time. Or Wind, which they take
> away the subsidies and give them back every couple of years.
>
> Personally I would love to see Oil and Coal companies lose all their
> subsidies and that money go to future energy tech.

Jul 09 07:26 PM

[wirestripper:]

Look around.............

No, I mean really look far and wide........

What you will see is a universe powered by fusion and carbon!

You don't see wind, and the only real battery is the creation of hydrogen and hyro-carbons. It's all right there and as natural as apple pie.

Hydro-carbons are what we have in abundance, and what we will be using for a long time to come. Peak oil is a myth. WE just picked the LOW HANGING FRUIT.

Anything else is Conceptual BS. It will not happen unless some idiot wants to pay ten times what it's worth and that just won't pass the test of time/money.

I have a question......Do liberals actually learn how to be idiots or are they born that way? Why must we subject ourselves to this nonsense for a single second, just to prove them wrong.

Disgusted................

Jul 10 12:55 AM

[wirestripper:]

T-Bone was just blowin hot air to sell his book, nat gas, to the congress. When they did not build his grid for him, there was no reason to pursue it.

I wonder how many turbines he has saddled himself with under contract. I would guess there is some money that will have to be recouped.


On Jul 09 06:27 PM User 444327 wrote:

> Nuclear energy is a renewable energy and its not smoke comming out
> of the stacks its steam. If t-bone was smart he would have researched
> what he was throwing his money into and realized that the electricity
> is not going to jump from the tower to a grid. And who ever wrote
> that quote on the top is a idiot, wind energy is a private market
> the government doesn't control it.

Jul 10 01:02 AM

[Danny Newton:]

There is no such thing as renewable energy. Energy can not be created or destroyed, only changed in form.

Jul 10 02:14 AM

[Rusty Fairfax:]

Evidently the author is not yet globally focused. There many countries that are turning to wind energy and establishing a new manufacturing line of business.

Any energy producer needs transmission lines to take the energy to market. If Texas is too slow for the 4 GW facility, then it makes immenient sense to place the wind farms where the infrastructure is coming online or exists.

Texas is still bringing on board in 2009 and 2010 several more installations generating 2 GW... Wind energy is NOT evaporating. Texas is also home to a national wind energy research center. The author of this article is far too pessimistic. For each MW brought onboard, it's 1MW less that is needed from fossil fuels. THAT is Picken's message.

The nice thing about wind is that it's 24hrs a day.... solar electric and solar/thermal can't match it.

Time to take off the blinders... look beyond the horizon...

Aug 31 12:14 PM