Billionaire “Pickens Plan” falls flat – wind farm not viable

The Don Quixote Plan has fallen flat. In less than three years, more than $80 million was spent on marketing for T. Boone Pickens’ wind turbine power generation plan. After the efforts, Pickens – who made his original fortune in the oil industry – has given up on his grandiose wind farm plan and will focus on natural gas.

The plan was to break America’s addiction to foreign oil, and since the namesake of the plan was an oilman himself, the plan was news … even without all of the TV commercials.

Pickens wanted to build up the capacity – by creating monstrous wind farms in strategic locations around the United States – to generate more than 20 percent of our electricity from wind power. He also wanted to improve transmission lines, reduce home and business energy costs through efficiency upgrades, and concentrate on natural gas as a transportation fuel.

It all sounds pretty good, but it turns out, wind power is not yet able to deliver, especially since natural gas (and oil) prices remain relatively low. From the Wall Street Journal.

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.

OK. So the natural gas prices are relatively low, and expected to stay low for the next decade due to increased production capabilities and extraction improvements by the industry. Even though the federal government and many states are throwing millions and millions of dollars at “clean” energy, natural gas companies keep doing their thing.

In the minds of many, those “dirty energy” efforts are destroying the ability for Al Gore and other carbon-trading junkies from making a few million dollars by ensuring you pay more for energy.

Now, to put this in perspective, I’m all for reducing our dependency on foreign sources of energy and I honestly think the market will work in our favor. The problem lies in the huge subsides that are paid out by the government to help finance grand plans that the industry and market are not ready for. This – quite honestly – is a get-rich scheme almost completely funded by the federal government.

Sure, Pickens spent $2 billion of his own fortune on wind turbines and he bet everyone would come running to wind especially with the million – more like billions – made available to investors. The market read the plan, looked at the federal grants, and simply said no thanks. Of course, a few people made a small fortune in the process.

So, what’s Pickens doing with his $2 billion in wind turbines that are probably sitting in a warehouse or on order?

He’s hoping to foist them on ratepayers in Canada, because that country has mandates that require consumers to buy more expensive renewable electricity.

Good luck with that.

As an interesting side, even though the wind energy proponents we’re supporting Pickens, they refused to mention he was also demanding we responsibly “drill baby drill” for crude oil everywhere we could here at home. That includes offshore drilling many environmentalists can not support.

Hat tip to Wind Concerns Ontario, with additional articles at Marketplace, Energy Collective, Sustainable Business, and the Daily Mail.