The 2008 “Pickens Plan,” U.S. financier T. Boone Pickens’ proposal to reduce U.S. dependence on foreign oil, anticipated that 20% of American power generation could come from wind while natural gas could power the nation’s transportation sector. At the time, he received support from unlikely sources, including the executive director of the Sierra Club, Carl Pope.
Pickens’ interest in wind generation, however, has been steadily decreasing since his plan was initially announced, and in a recent interview with Roll Call, he said he’s entirely shelving the wind portion of his plan. According to Pickens, wind is not financially viable because natural gas is too cheap. Until the cost of natural gas rises, wind generation doesn’t make economic sense. In the meantime, he is focusing entirely on getting natural gas into the energy market.
The move has produced a backlash from some of the environmentalists that formerly supported the Pickens Plan. They accuse Pickens of lobbying for incentives in order to make more money off natural gas, and they complain that the natural gas industry is too unregulated to be considered a clean source of fuel. The process known as “fracking,” which is used to produce natural gas, has been questioned as a possible source of groundwater contamination.
Meanwhile, supporters of wind power say Pickens’ move shouldn’t be seen as a reflection of the health of the wind industry as a whole, but as how things happen to be playing out in Texas at this particular time. Wind industry analyst Matt Kaplan, with IHS Emerging Energy Research, told Climate Progress that it’s very difficult right now for wind farms to beat out natural gas on the spot market. It’s also difficult for developers to find long-term agreements in Texas since Texan utilities have already purchased enough wind power to fulfill their required targets. Other markets, however, still have a lot of room for renewable energy development. California and the Northeastern states, in particular, are willing to sign power purchase agreements. Overall, Kaplan thinks development will stay relatively flat until the price of natural gas begins to rise.
“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,” Kaplan told Climate Progress.
Peter Kelley, the vice president of the American Wind Energy Association, told Roll Call, “We agree [with T. Boone Pickens] that natural gas prices won’t stay as low as they are today for very long, and that’s one of the reasons we believe wind energy needs to be a bigger part of our energy mix all along, so electric utilities can lock in long-term low rates today.” Indeed, Pickens’ organization stresses that wind power is still an important piece of America’s energy independence. They’re just not building large wind farms in Texas for the time being. Considering Pickens expects natural gas prices to rise by 2016, however, we have to wonder why it doesn’t make sense to continue planning for wind farm construction now.