Thursday, November 13, 2008
T. Boone Pickens Wind Farm Project In Trouble
T. Boone Pickens is delaying the plan for his Mesa Power company to build the Pampa Wind Project in Texas. It was being billed as the world's largest wind farm project. Pickens spent $57 million on television during the general presidential election campaign on commercials publicizing how his plan could help the U.S. wean itself off oil imports by using wind energy to reduce natural gas use in power plants and divert it for use in vehicles. Pickens plans looked very attractive when oil was around $150 per barrel during the summer of 2008, but it is less than half that amount going into the winter months. Moreover, although renewables tax credits were extended in the financial bailout bill, the renewables industry depends on equity and credit just like other industries to complete projects. The current financial climate works against financing large capital cost projects.
Pickens planned to finance the project with 30 percent equity and 70 percent debt and the debt part is now problematic for the project considering the Wall Street meltdown. The project was to build 667 wind turbines using General Electric tirbines capable of generating 1,000 megawatts of electricity, enough to power more than one million homes. The first phase of the project, projected to cost $2 billion, was supposed to come online in early 2011. Pickens also blames the falling price of natural gas for the delay (or cancellation) of his project.