Published on November 5th, 2008 | by Sarah Lozanova10
Largest Wind Farm in World Halted By Credit Crisis
The credit crunch is not just hurting the banks and the real estate market. Even the billionaire and wind energy enthusiast, T. Boone Pickens is having trouble financing his high profile 4000 MW wind farm. The proposed Texas wind farm has a hefty $10 and $12 billion price tag.
Although we are used to hearing about climbing energy costs, the price of natural gas is actually down. Natural gas accounts for 20% of the nation’s electricity generation. The energy sector is also suspecting that the financial crisis may result in a global reduction in energy demand. Pickens’ plan calls for replacing natural gas with wind energy for electricity generation, while converting vehicles to run off natural gas. The natural gas currently used for electricity would be used for transportation and America could wean itself off foreign oil.
“I think it is all going to be put off, because we have got the credit crunch, one, but, two, natural gas prices [are down], so you are going to price wind off natural gas power and right now natural gas is so cheap there will be no new wind deals until natural gas price gets back up,” Pickens said.
“Presumably, a lot of capital would have to be raised to move these things forward, and that looks to be extremely difficult in these current conditions,” said Richard Murray, director of the University of Houston Center for Public Policy. “And if crude drifts back down to the $50 to $60 range, it is going to take a lot of the incentive away to shift your energy paradigm.” Crude was trading below $65 barrel on Friday afternoon.
Even Pickens’ energy related hedge fund, BP Capital, posted losses of 60% this year.
Pickens is certainly not throwing in the towel. He is creating a “New Energy Army” and strives to have 2 million members by enaugeration day. He currently has over 1.3 million members. Such publicity including television commercials and print adds for Pickens’ Plan has caused Americans to think about energy policy.
“His outcry has neighbors talking over the fence about our energy future,” said Ned Ross, director of regulatory affairs for a unit of utility FPL Group Inc in Texas. “People who either paid no attention to energy or didn’t care are in the debate.”
Now that the price of gas is below $3 a gallon in most markets, Americans are less likely to embrace natural gas for a transportation fuel, which would require significant infrastructure investments. Obama however is calling for a $150 billion investment in clean energy over the next ten years. The energy future of the U.S. is certainly in transition.