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Texas Wind: Boone Pickens’ Big, Big Bet


By Keith Johnson
Wall Street Journal
May 15, 2008


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.

Pickens: I’ll build it, if you won’t come

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.

 

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