After 30 months, countless TV appearances, and $80 million spent on an extravagant PR campaign, T. Boone Pickens has finally admitted the obvious: The wind energy business isn't a very good one.
The Dallas-based entrepreneur, who has relentlessly promoted his "Pickens Plan" since July 4, 2008, announced earlier this month that he's abandoning the wind business to focus on natural gas.
Two years ago, natural gas prices were spiking and Mr. Pickens figured they'd stay high. He placed a $2 billion order for wind turbines with General Electric. Shortly afterward, he began selling the Pickens Plan. The United States, he claimed, is "the Saudi Arabia of wind," and wind energy is an essential part of the cure for the curse of imported oil.
Voters and politicians embraced the folksy billionaire's plan. Last year, Senate Majority Leader Harry Reid said he had joined "the Pickens church," and Al Gore said he wished that more business leaders would emulate Mr. Pickens and be willing to "throw themselves into the fight for the future of our country."
Alas, market forces ruined the Pickens Plan. Mr. Pickens should have shorted wind. Instead, he went long and now he's stuck holding a slew of turbines he can't use because low natural gas prices have made wind energy uneconomic in the U.S., despite federal subsidies that amount to $6.44 for every 1 million British thermal units (BTUs) produced by wind turbines. As the former corporate raider explained a few days ago, growth in the wind energy industry "just isn't gonna happen" if natural gas prices remain depressed.
In 2008, shortly after he launched his plan, Mr. Pickens said that for wind energy to be competitive, natural gas prices must be at least $9 per million BTUs. In March of this year, he was still hawking wind energy, but he'd lowered his price threshold, saying "The place where it works best is with natural gas at $7."
~ The Wall Street Journal, A Wind Power Boonedoggle by Robert Bryce
Grouch: Boone should have known better. He was dead on with his call that natural gas should be the fuel of the next 25 - 75 years while the technological challenges of alternative energy got solved to make it cost competitive in a free and open marketplace. It's unusual to see a veteran energy guy like Boone get sucker punched by the siren's call of wind power.
I keep hoping wind power will somehow work, but it just doesn't seem to be taking off. As you pointed out, why should it? There is a cheaper alternative. Unless natural gas completely goes away,nobody will be willing to pay for windmills and such.
ReplyDeleteI wonder what Al Gore's response will be...
The response will be outlined in my post this evening.... so stay tuned.
ReplyDeleteI read that the demise of his wind farm was he couldn't hook up to the transmission lines. To far away.
ReplyDeleteCost of hooking up to the transmission lines was just one of many problems, including the cost per kilowatt hour as compared to traditional energy sources.
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