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Pickens drops wind from his energy plan, but industry remains ‘healthy’ and ‘sustainable’, says analyst

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"Pickens drops wind from his energy plan, but industry remains ‘healthy’ and ‘sustainable’, says analyst"

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WindFarmAfter becoming a leading spokesman for the development of wind in the U.S., T. Boone Pickens says he’s officially abandoning the wind portion of his “Pickens Plan,” which originally proposed getting 20% of American electricity from wind (along with using natural gas as a transportation fuel).

According to a story in The Hill newspaper, Pickens claims he couldn’t make the economics of his plan work and is now focusing exclusively on pushing for natural gas:

Pickens has now canceled the bulk of a $1.5 billion wind turbine order that he placed with General Electric last year and says wind power will not be profitable until the cost of natural gas rises from $4 to $6 per million British thermal units. That, he estimates, will happen by 2016.

So, Pickens has turned his focus to lobbying Congress for the NAT GAS Act, a bipartisan bill introduced in April by Rep. John Sullivan (R-Okla.) to provide incentives for fleet vehicles to switch to natural gas. Pickens regularly fires up his private jet and makes the 1,000-mile journey between Dallas and Washington to push for the measure.

Cue the doubters who say this means wind can’t compete.

This news isn’t actually new; Pickens’ struggles with wind have been well documented. In 2009 he said he was putting development off a 4,000 MW wind farm on hold due to a lack of transmission and suppressed natural gas prices. Now it appears he is dropping the wind portion entirely, at least for the next few years.

Pickens’ decision to abandon wind is not actually an indicator of the broad health of the industry, says wind analyst Matt Kaplan with IHS Emerging Energy Research. It’s more a reflection of how specific markets around the U.S. are playing out.

“It doesn’t surprise me because of the market he chose to develop in. Building large scale wind projects in Texas simply doesn’t make sense at this time” due to a heavy reliance on natural gas and low demand for renewables (after a massive ramp-up) through the state-level target, says Kaplan.

Therefore, it’s been incredibly difficult for so-called merchant projects – farms selling wind power on the spot market that make up about 40% of the Texas wind market – to beat out the spot prices for natural gas. At the same time, developers looking for long-term agreements can’t seem to find those either, as Texas utilities have purchased enough wind to meet their required targets for now.

What we’re seeing, Kaplan says, is that development has shifted to California and Northeastern states with a lot more room in their renewable energy procurement targets. So even though natural gas prices are lower, utilities are more willing to sign power purchase agreements in these areas.

The state still leads the country in total MW developed, with over 10,000 MW.  Wind development in Texas has dropped precipitously in the last two years. In 2008, the state saw 2,600 MW of projects built. In 2009, that figure fell slightly to 2,300 MW. Last year, only 730 MW were built in the state, and this year Emerging Energy Research predicts we’ll see only 300 MW installed.

Meanwhile, across the rest of the country, development will stay relatively flat. Kaplan thinks we’ll see between 5 GW and 5.5 GW of new installed capacity in 2011, which is around the same as 2010 (5,115 MW). That level of development, between 5 GW and 6 GW, will probably stay consistent over the next few years.

Moving from 10 GW new capacity in 2009 to 5.1 GW in 2010 and beyond seems like a defeat. But Kaplan thinks it’s probably a good thing for the sustainability of the industry.

“It’s a return to reality; 10 GW per year just wasn’t sustainable. We think it’s really a more healthy trajectory for the industry – this moderation is going to make wind more cost competitive over the long term by forcing companies to improve technology, build better projects and reduce costs,” says Kaplan

Indeed, when I attended the American Wind Energy Association’s Wind Power 2010 conference last year, the theme for many of the companies was “back to basics” – meaning a focus on quality projects, better technologies and steady cost reduction.

– Stephen Lacey

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20 Responses to Pickens drops wind from his energy plan, but industry remains ‘healthy’ and ‘sustainable’, says analyst

  1. Jamie says:

    So Pickens is going for environmentally destructive “fracking” to get gas instead of investing in wind. Nothing like selling your soul for a buck while destroying the land you won’t live to see going massively downhill for your grandchildren.

  2. Mac says:

    Wind Energy unfortunately will remain Healthy and Sustainable only as long as the taxpayer trough is gouged for subsidies. Unfortunately, neither wind or solar is “self” sustainable.

  3. Leif says:

    So Mac @ 2: How much are we subsidizing Fossil fuels?

  4. Nick says:

    Natural gas is *more* profitable. Plowing huge transmission lines through people’s property wasn’t working out so well, and alternative routes would have taken away some of the gravy. So, turn to the option that produces less obvious externalities.

    (That’s my naive take on it, anyway. I figured it was just a matter of time with him…)

  5. Mike Roddy says:

    When Pickens got on TV with his charming Texas grin a couple of years ago, the wind touting 80 year old billionaire said “I don’t need more money”. It smelled like a lie, and sure enough, it was.

    Solar made significant inroads in California in 1977-78. Two things happened: the state tax credits expired and, more importantly, gas prices collapsed.

    We’re now seeing cheap natural gas again, largely driven by fracking and Cheney’s energy policy- still in place- which exempted the gas companies from reporting the chemicals they use. Obama’s fracking and drinking water investigative committee is composed of gas industry execs and scientists.

    Gas prices are being manipulated down to defeat wind and solar, which lack the capital and long term, steady income to compete against an entrenched foe that poisons our water and bribes our government.

    Even the Democrats are muted about natural gas, mouthing the “bridge fuel” (30 years?) bullshit. The battle to defeat fossil fuels is going to have to be waged from the ground up. Young people, where are you? Get your butts out on the streets, and don’t put up with this calculated campaign to destroy your future.

  6. Sime says:

    Mac @ 2

    “Wind…taxpayer trough is gouged for subsidies”

    Mac are you claiming that renewables aka wind / solar are heavily subsidized and that said subsidies should be stopped?

    That being the case I presume you would also agree that stopping the somewhat larger subsidies and associated tax breaks to the highly profitable fossil fuel industry would create a level playing field within the energy market.

    Given such a level playing field who do you think would win.

    http://climateprogress.org/2010/08/03/energy-and-global-warming-news-for-august-3rd-fossil-fuel-subsidies-are-12-times-that-of-renewables-chamber-goes-after-climate-dissenters-in-its-ranks-ten-fights-on-global-warming-now-that-senate/

    http://climateprogress.org/2010/03/09/energy-and-global-warming-science-news-governments-spend-500-billion-a-year-to-subsidize-fossil-fuels-u-s-clean-tech-outpaced-by-china-chu/

    http://climateprogress.org/2010/05/16/eliminating-tax-subsidies-for-oil-companies/

  7. Mike Roddy says:

    Low gas prices are a result of Cheney’s energy policy, which pushed for fracking on public lands and weakened regulations. They foresaw the growth of wind and solar, and wanted to defeat it by starving their markets through cheap product. Obama is expanding gas drilling, and picked an industry heavy commission to investigate problems with fracking. Apparently, he works for them, too, and won’t get my vote.

    The oil and gas companies did the same thing in 1977-78, when California’s nascent solar industry collapsed due to cratering gas prices. They lacked the capital and steady market to continue. Promising solar patents were bought and shelved by oil companies, especially BP.

    In both cases, these low prices were manipulated as a way to maintain fossil fuel monopolies. Difficult to prove, but the signs are obvious.

  8. catman306 says:

    #2 Mac

    I’m not sure which country you are referring to that is getting its taxpayer trough gouged for subsidies by the wind industry, but I’ll take the USA as an example.

    The American Wind Energy Association (AWEA) is calling for a level playing field in tax subsidies for the energy industries. Check out this interview with AWEA CEO, Denise Bode. She did an awesome job in this interview, despite the incredibly rude criticism.
    http://www.youtube.com/watch?v=21R8pxVgw0M

    Also, the AWEA website has information on the current subsidies provided by the federal government. Do some independent research on the Renewable Energy Production Tax Credit (PTC). It isn’t exactly the most gouging subsidy out there. The fossil fuel industry receives far more, and they are permanently embedded in the tax code, unlike the renewable energy PTC which has expired in the past.
    http://www.awea.org/_cs_upload/blog/5400_1.pdf

    So it seems like your remarks are unfounded, unless you have some evidence to share.

  9. otter17 says:

    Oops, #8 catman306 is actually my comment. My browser filled in the wrong info.

  10. catman306 says:

    Joe, perhaps the autofill portion of the blog needs to be shut off for awhile.

    I had otter17 info fill in on another thread.
    And Joan Savage’s was autofilled on this posting.

  11. Joan Savage says:

    What a twist. Natural-gas cars are a veritable Edsel-Studebaker of the alternatives to electric cars, cars that could use wind-generated electricity some day.

    Meanwhile, the Southwest is getting drier. Wind is the only energy source that doesn’t need much water, as David Roberts at Grist has pointed out. It shook me to see water requirement numbers for a large solar farm. And, Picken’s new favorite, fracking for gas, is notoriously water demanding.
    So, the Southwest should be looking at its wind resources.
    Soon. If they want to stay there.

    To illustrate the trend, a graph of the Lake Mead water levels is available at
    http://www.arachnoid.com/NaturalResources/
    based on
    http://www.usbr.gov/lc/region/g4000/hourly/mead-elv.html

    P.S. The CP webpage software is still messed up. Under the “Leave a Reply” it auto-filled with Leif (I’m honored but I am not he!). This has happened to several, see other posts. It’s giving away the “will not be published” information.

  12. otter17 says:

    #10 catman306

    Yeah, I agree with disabling that feature.

    Sorry, I didn’t look before I clicked. I was totally psyched to post information on wind energy, and I rushed to click the submit button.

  13. Mike Roddy says:

    Joan Savage, Dave Roberts made a rare error in using old water consumption figures for solar. The new 440 MGW Brightsource plant in Ivanpah uses dry cooling, cutting water consumption by 90%. Others will follow with this technology.

    Ivanpah water consumption will be about the same as a golf course, while providing electricity for 140,000 homes. For comparison, the Palm Springs area has about 150 golf courses for about the same number of houses.

    Coal and nuclear use far more water, but people don’t mention it because they are so entrenched, especially in Arizona.

  14. sault says:

    Sounds like it’s time to increase the RPS requirements…Is that even possible in today’s political environment?

  15. Joan Savage says:

    Thanks, Mike Roddy (#13) for the most welcome update on dry cooling in solar, although measuring water use in golf courses doesn’t ring a quantitative bell for me here in the soggy northeast!

    Stephen, in that regard, I had put in a request for you to take a look at how climate changes are likely to affect the energy sources. Mike Roddy’s info reawakened that interest.

    Joan Savage

  16. Ziyu says:

    @#14 Sault, depends whether you’re talking about federal or state government. In states, there’s a slim chance that RPS requirements will be increased. Except for Colorado. They have a good chance of doing that. In federal government, it’s heresy to not give full support to fossil fuels.

  17. sault says:

    Ziyu, this is why the EPA rules were an important last line of defense to maybe retire some coal power production, but the EPA caved just the other day. The emmissions rules updates have been put on hold indefinately. Maybe after the election silly season is over (does it ever really end anymore?), we’ll see some movement at the federal level.

  18. Mulga Mumblebrain says:

    Those who complain of ‘subsidies’ for renewables forget that coal and hydrocarbons receive literally infinite subsidisation by being allowed, under the rules of really existing market capitalism, to write off the pollution that they produce as ‘externalities’. In the case of greenhouse gas emissions, which, plainly, have already passed numerous ‘tipping-points’, that ‘externality’ means the rapid destabilisation of our climate, the collapse of industrial civilization and the deaths of billions. But, hey, what’s that compared to trillions in fossil fuel profits?

  19. mozi says:

    All wind farms use several natural gas plants as backup