Pickens to scale back world’s largest wind project
T. Boone Pickens will “scale back” a multibillion-dollar project to build the world’s biggest wind farm in Texas because of the capital market crunch.
The Texas oilman’s Mesa Power LLP had announced plans for a four-phase project to add 4,000 MW of wind power to the Texas grid last year. The Pampa Wind Project was to be completed in 2014.
Pickens had said in May, as Mesa Power announced it had ordered 667 wind turbines from GE, that the first phase of the project would alone cost about $2 billion. The whole 2,700-turbine project was originally expected to cost $10 billion.
“The capital markets are problematic for everyone, and we are keeping an eye on them. We are committed to wind development projects and believe it’s a viable business for us. The capital markets may lead us to scale back a bit but we are still going forward with our wind business,” Pickens said in a statement e-mailed to POWERnews.
News of the Pampa Wind Project scale-back follows a report from The Wall Street Journal that half of the investors in a Pickens energy-oriented equity hedge fund have asked to withdraw their money. Pickens and his investment firm have lost about $2 billion since peaking in late June, the newspaper reports.
As shown by recently released quarterly earnings, the renewable energy industry has generally felt the brunt of the capital market crunch—despite an extension of tax credits by Congress last month.
According to The Energy Daily, Florida-based FPL Group Inc., one of the nation’s biggest wind developers, said it would reduce its wind expansion drive in response to tightening financial constraints. Duke Energy has also downsized a $100 million initiative to develop 20 MW of solar capacity through installation of rooftop photovoltaic arrays in North Carolina.
In the only explanatory statement for the Pampa Wind Project delay, Pickens told CBS’s 60 Minutes that natural gas prices, which had fallen 50% since July and are hovering at $6.80 per million Btu, had played a central role.
“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,” he said.
Meanwhile, Pickens continues to solicit support for The Pickens Plan, a $58 million public relations campaign to wean the U.S. from its reliance on foreign oil with natural gas and wind energy. At least 10 U.S. governors have signed the “Pickens Pledge” since Sept. 15.
Sources: Mesa Power LLC, The Wall Street Journal, The Pickens Plan