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Texas wind: Boone Pickens’ big, big bet
Oilman T. Boone Pickens’ love affair with wind isn’t brand new—he’s been touting the idea of “peak-free” energy since he decided to build America’s biggest wind farm in Texas. What’s different is the way he’s going about it.
Mesa Power, Mr. Pickens’ new energy firm, placed a huge turbine order with GE Thursday, the first step toward the eventual 4 gigawatt wind farm. What’s striking is that he’s plowing ahead on the project even though federal subsidies for wind power are up in the air, so to speak. Either he’s confident that Congress will have renewed clean-energy tax credits by the time the Pampa project breaks ground in two years—or there are other big drivers for wind power besides the federal trough.
We’ve mentioned before the U.S. wind power industry is going gangbusters in spite of concern over the tax-credit renewal (which isn’t any closer today, despite another attempt by the House to give wind subsidies another year.)
But Texas is the biggest wind-power state in the U.S., itself the fastest-growing wind power market in the world. So what’s driving that? Consumer appetite for cleaner energy, even if it costs more? State renewable-energy standards that oblige utilities to get a certain share of their juice from wind (and solar and the like)?
What doesn’t appear to have tilted the tables in favor of Mesa’s multi-billion dollar bet is Texas’ renewable-energy transmission system, the Competitive Renewable Energy Zones. Though Mr. Pickens said in Thursday’s press release that he plans to run his wind farm’s energy through those deregulated transmission lines, the issue is far from decided. There’s a squabble over how much renewable energy can be sent through the new transmission lines, paid for by ratepayers.
But the old oilman might rewrite the rules entirely: As the Dallas Morning News reported today, Mesa might end-run utilities regulators altogether:
If they don’t [designate a line to the Pampa project], Mr. Pickens said, he’ll just build his own private transmission line. That could rock the traditional regulatory framework of a grid paid for by all power users and extend Texas’ experiment in deregulation to a whole new side of the industry.
Even though that could tack on an extra $2 billion to the cost of the Pampa wind farm, Mesa might be calculating that the economics are compelling enough at a time of rising energy demand and dwindling power alternatives. Or maybe it’s just another game of Texas Hold ‘Em.
Posted by Keith Johnson
Environmental Capital – WSJ.com
15 May 2008
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