Is the Pickens Plan Losing Wind?

One year ago to the day, T. Boone Pickens presented his eponymous plan to cure America's dangerous dependence on foreign oil. The media blitz was impressive, but have Pickens' ideas made a lasting impact on the way our country is addressing energy security matters?

Wind power, one of the pillars of the plan, certainly seems to be one of the most politically favored alternatives, with or without the Pickens push. In April, Energy Secretary Steven Chu identified wind energy as "one of the most important contributors to meeting President Obama's target of generating 10 percent of our electricity from renewable sources by 2012." There's a decent chunk of change earmarked for wind power in the federal stimulus plan, and the House energy and climate bill paved the way for a national renewable electricity standard, which would push more utilities to embrace wind projects.

That said, the wind isn't entirely at this renewable power source's back. As we've seen with First Solar (Nasdaq: FSLR  ) , SunPower (Nasdaq: SPWRA  ) , and the rest of the photovoltaic crowd, financing for clean energy projects has become strained as credit markets have tightened. The commodities collapse, which has brought down the cost of conventional electricity alongside natural gas prices, also challenges the economics of new wind installations.

Another stumbling block, which I touched on in our recent roundtable on the House energy bill, is transmission. Without extra high-voltage power lines stretching from windy regions to urban demand centers, wind power can't flourish. That's a key reason to keep an eye on infrastructure players like Quanta Services (NYSE: PWR  ) , EMCOR Group, and ITC Holdings (NYSE: ITC  ) . The last company, with its proposed Green Power Express line, is the purest play on transmission of them all. The stock ain't cheap, though, with valuation multiples more reminiscent of Google (Nasdaq: GOOG  ) than of Duke Energy (NYSE: DUK  ) .

Transmission capacity, as it turns out, is proving to be the prime sticking point in Pickens' own proposed giant wind project in Pampa, Texas. The state's putting in $5 billion worth of new transmission lines, but they won't run close enough to Pickens' site in the Texas Panhandle. With one gigawatt of turbines on the way from General Electric (NYSE: GE  ) , Pickens is still planning on installing plenty of wind power -- just not in the place he originally had planned.

As for the other prong of the Pickens Plan -- shifting our natural gas supplies from electricity generation to powering our vehicles -- I see far less momentum. Both next-generation biofuels and plug-in hybrid electric vehicles appear to have captured more mindshare. Warren Buffett, for example, is on board with the plug-in vehicles, through his investment in China's BYD. I'm also quite keen on diversifying our auto fleet away from a single source, whether it's a hydrocarbon, algae, or an ear of corn. Feedstock-agnostic electricity seems like the ticket to me. Wind, natural gas, nuclear, and other sources can all kick in.

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Fool contributor Toby Shute doesn't have a position in any company mentioned. Check out his CAPS profile or follow his articles using Twitter or RSS. The Motley Fool has a disclosure policy.


Read/Post Comments (8) | Recommend This Article (13)

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  • Report this Comment On July 08, 2009, at 4:31 PM, plange01 wrote:

    for sale pickens windmills cheap! with the depression in US getting worse oil after a recent hedge fund forced rally is rapidly falling and will go befow its spring levels in the 30's.the same is true with basically useless gold which has up till now been selling at ridiculous prices!this one can see prices in the low $200 range where it was only a few years ago...

  • Report this Comment On July 08, 2009, at 5:41 PM, stan8331 wrote:

    The point Pickens is trying to make is that there's zero chance of electric cars becoming the dominant form of highway transportation within the next 10 years, in which time massive amounts of greenhouse gases will be added to the atmosphere by hydrocarbon-burning internal combustion engines. Natural gas is the only cleaner motor fuel that's economically and logistically viable right now. It's a bridge, not a destination.

    The polar ice caps will continue melting while we wait for electric cars to become dominant. You can try to tilt the equation in favor of electricity by adding huge new taxes to oil and gasoline, but that would create a serious drag on the economy at a time we really can't afford it.

  • Report this Comment On July 09, 2009, at 1:02 AM, dgmennie wrote:

    Given present and projected energy needs, the only EXISTING technology that can meet the demand is nuclear (fission or possibly fusion someday). Renewable energy, such as wind and solar, should be encouraged as they have an important role to play. But until it is possible to meet the needs of even a SMALL modern city without covering much of the landsacape with windmills, solar collectors, and high-tension wires are we not fooling ourselves that some eco-friendly, painless 'solution' is at hand?

    Another possibility is giving up much power-using infrastructure such as the server farms that keep the Internet running, central air-conditioning, private automobiles, and suburban living in hostile winter climates.

    Hmmm....no takers? I am not surprized.

  • Report this Comment On July 09, 2009, at 6:58 AM, Fool wrote:

    My understanding is that Pickens favors replacing older large vehicles (trucks) with vehicles running on Natural Gas because Battery Technology now and in the near future is insufficient to provide the necessary power.

    The authors use of the term "power our vehicles" is misleading unless "our vehicle" is a Massive Truck

    He feels and I agree that more than anything else this is a National Security issue. We have ample supplies of Natural Gas, It's a cleaner fuel and the Dollars spent do not go overseas to those who "do not wish us well"

  • Report this Comment On July 09, 2009, at 8:03 AM, Melaschasm wrote:

    The government is choosing wind for electricity, and electricity for cars. Unfortunately, CNG is much better for cars, and wind is terrible for electricity.

    As is typical, the government has made bad choices for both electricity generation and powering cars.

  • Report this Comment On July 09, 2009, at 12:14 PM, billysbob wrote:

    A more interesting title to article would be "Picken's broke wind"

  • Report this Comment On July 21, 2009, at 11:02 AM, brianmccurdy wrote:

    Anyone else think that Pickens is just trying to get the Feds to build the transmission line with stimulus money? That's my theory...

  • Report this Comment On August 25, 2009, at 5:55 PM, makonako wrote:

    Pickens funded the "Swift Boat" slander campaign against John Kerry. That demonstrates to me the fact that the man has no scruples or honor, and will lie, cheat or whatever else to get what he wants. In this case he wants more money, and I'm sure he has not become any more honest since the Swift Boat funding. I don't trust anything he says. He is only after his own profits, and will say anything to get it.

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