Ethanol was the first big scam in the War Against Oil.
Conservatives are already calling Pickens a hero, but I predict this will end in tears, and will be a major setback for wind development.
Let me count the ways this is stupid:
- Pickens is going to lose half the power he generates on its way to market. He’s using conventional power lines, and that’s their efficiency over 200 miles.
- He’s betting $10 billion on 2008 wind technology lasting for 20 years.
- He’s using conventional oil industry economics — lease the sky instead of underground — which is about a century too old.
- He’s assuming steady or rising prices for his supply. Won’t happen.
- Re-engineer the grid so it can buy as well as sell power.
- Improve the efficiency of long-distance power lines, and don’t site projects hundreds of miles away until that’s done.
- Saving energy through more efficient capacitors, bulbs and low-power computers is far more cost-efficient.
- Hydrogen is the way to sell power over long distances, not steel cable.
What happens to Pickens’ investment as solar power becomes more
cost-effective, which is certain over the life of his investment? What happens as geothermal plants are sited far closer to town than his wind turbines?
I’ll tell you what happens. He abandons West Texas to scrub. The boom turns to bust, as it has before. I know it’s the long run, and Pickens is certain to be dead when this goes toes-up, but it will.
Probably sooner than anyone thinks. And what will that do to the investment climate for alternative energy?