Pickens Mesa Power Orders 1,000 MW of Wind Turbines

Per press release, edited slightly:

Mesa Power LLP, a company created by T. Boone Pickens, has placed an order with General Electric to purchase 667, 1.5 megawatt wind turbines for the worlds largest wind farm, capable of generating 1,000 megawatts, nameplate, of electricity, enough to power more than 300,000 average U.S. homes. The order is part of the $2 billion first phase, see previous post, of the Pampa Wind Project planned in the Texas panhandle by Mesa.

When all the phases of the project are completed it will become the world's largest wind energy project, with more than 4,000 megawatts, nameplate, of installed capacity. When completed, projected to be in 2014, the wind farm will be five times as big as the nation's current largest wind power project, now producing 736 megawatts.

Pickens said he expects that first phase of the project will cost about $2 billion. When complete, the Pampa Wind Project will cover some 400,000 acres in the Texas Panhandle.

Pickens envisions that large scale renewable energy projects like his Pampa Wind Project will permit the United States to become less dependent on foreign oil. Large scale renewable energy projects such as this are difficult to execute because they rely upon the Federal Production Tax Credit, which provides incentives for development of renewable energy. However, large scale renewable energy projects require commitments years in advance, while Congress has only extended the Production Tax Credit one or two years at a time.

Mesa Power is hopeful that the Pampa Wind Project will qualify for the Federal Production Tax Credits in 2010 and 2011 when the project will begin commercial operations. "I believe that Congress will recognize that it is critical not only to this project, but to renewable energy in this country, that they enact a long-term extension of the Production Tax Credits," Pickens said.

"You find an oilfield, it peaks and starts declining, and you've got to find another one to replace it," said Pickens, who once operated one of the largest independent oil and gas production companies. "It can drive you crazy. With wind, there's no decline curve."

An Austin-based Resource Inc. economic impact study, commissioned by Mesa Power, projects that the Mesa Power wind farm will bring significant increases in jobs and income for the five counties of the project investment zone (Carson, Gray, Hemphill, Roberts and Wheeler counties).

The study forecast the project would generate an estimated 1,500 jobs during the construction phase, and 720 during a typical year of the operation phase; personal income in the project investment zone will rise by $68.7 million per year during the construction phase, and $120 million during the operation phase. The more significant impact during the operation phase is largely due to lease payments to be made to landowners in the project area amounting to $65.3 million per year.

Resource Economics estimates that the total value of economic output in the region due to the project will be $380 million per year during the construction phase and $1.6 billion per year during the operation period, and additions to the tax rolls of school districts in the project investment zone will amount to $2.4 billion by 2018, assuming the school districts approve an application to limit appraisal values during the project's first 10 years.

Lots of news about big wind projects lately.  Pickens claim that the project is dependent on Federal Production Tax Credits is disappointing. It is too bad that wind power is not commercially viable without subsidies on a project of this size.  Others have claimed that it is competitive with natural gas power plants, I suppose that is dependent on the cost of power where the plant is built. Pickens said “I believe that Congress will recognize that it is critical not only to this project, but to renewable energy in this country, that they enact a long-term extension of the Production Tax Credits." The WSJ commented ". . . state-level incentives, such as laws requiring utilities to purchase clean energy, are bolstering growth in the sector."

Too avoid some comments, it must be remembered that with wind power, most of the news uses the  nameplate or nominal capacity, the power produced when the wind is blowing at some stated value, rather than the actual power that is produced.  The actual production is 25% to 35% of the nameplate capacity because the wind does not blow hard enough, all of the time.  This means that wind power especially, and to nearly the same extent solar power, must be backed up by some other generation means, unless it is tied into an extensive grid that uses geographical distribution, over a large region or even nationally, or combined with energy storage, to compensate for the intermittency of wind and solar power. Solar has the advantage of being fairly predictable as to when the sun will shine. Without backup power, energy storage or geographical diversity, it is usually estimated that sun and wind power can only be used for 20% to 30% of total power requirements. Tidal or wave power have some advantages that I will not go into here because their use is very dependent of favorable geographical conditions. Progress is being made on energy storage, but it is not quite ready for prime time. I support using  hot dry rock, HDR, geothermal power as baseline power to reduce the expense of interconnecting transmission lines, which will always be required to some extent. 

Comments

[Sebastien]

I really like your blog but if I may give you a piece of advice, you should add more pictures to your blog entries... I looked for a contact form to email you and couldn't find anything, which is why I'm reaching out to you on this comment form. Keep up the good job (hopefully with more pix ;-)

[Mike]

One pic is fine with me; I learned how to read books without pictures when I was 8.

[Kit P]

More evidence that the United States is number one when it comes to many things including making electricity. And no, not one of many. Looking at IEA data for 2007 for OECD countries, it takes all the generation from #2 t0 # 7 to match US generation.

Poor Mr Pickens is going to be surprised to find out that wind does not “will permit the United States to become less dependent on foreign oil” and “With wind, there's no decline curve” if you can erect wind turbines faster than they break.

At least T Bone did not make any ridiculous claims about reducing saving the planet. He wants PTC to increase his profits.

Looking at the IEA data for 2007 for OECD countries that provide 'leadership' for wind there is some interesting results:

The winner is Denmark where 83% of electricity is produced by burning fossil fuels. Very very green. The Netherlands in next at 79% fossil. Portugal – 69%, Germany 68%. Spain is not doing too bad at 62% but that may have more to do with 18% nuclear generation than wind and solar.

Excuse me but I will ignore these folks when they pitch their 'good' ideas for reducing ghg.

Next I took a different approach. I looked to see who was burning the least fossil fuel to make electricity. The winner is the Swiss at 3% fossil, 40% nuke, and the rest hydroelectric. Cheaters.

Sweden is not far behind at 9 % fossil, 40% nuke. France at 12% fossil, 85% nuke. Slovak Republic 27 % fossil, 51% nuke.

[David Walters]

The key of course is the the natural inverse proportion of nuclear to fossil. With wind and no nuclear, it means building into the system a set amount of fossil for spinning reserve. Thus the Germans plant to build 8 brand spanking new dirty coal plants to supplement wind energy. Well done. Of course they were going to build 23 (!!!!) plants but there was so much opposition they cut it down by 2/3s. Now they are projection a defecit in power, made up by...the always ready French nuclear grid. What can one conclude about this.

Well, Pickens knows the score...the profit margin he expects, to be pocketed by his company, equals the tax subsidies he'll get for buildng and running wind turbines. If the money is there, go for it.

David

[Bob Wallace]

'With wind and no nuclear, it means building into the system a set amount of fossil for spinning reserve."

Not necessarily, at all.

Spinning reserves or nuclear are not the only ways to solve the problem.

First there's linking geographically distributed wind farms. With HVDC transmission lines this is very effective (multiple major studies already completed).

Second, there's the ability to greatly decrease the amount of idling fossil with accurate and timely forecasting.

Third, there's non-spinning standby. In my area we're gearing up for a new wind farm. The natural gas peaker/standby plants are getting upgraded turbines that can go from a standstill to full speed in less than 15 minutes.

Fourth, there's storage, an area that needs attention IMO. Pumped-up hydro, compressed air, flow batteries, flywheels - there are solutions yet to be perfected, but some already in use.

Fifth, there are other non-fossil/nuclear sources that even if they happen to be periodic don't covary with wind. Tides don't always flow, the sun doesn't always shine, ..., but those sources have their own cycles.

Germany may be building coal plants now because that's the solution at hand.

That does not mean that stand by spinning coal is likely to be the solution a decade from now.

[Kit P]

David, Pickens is sooooo Texas. ERONisc!!! Buy up all of GE's industrial capacity to build wind turbines. No risk unless states and feds suddenly decide that cut incentives which would be bad policy. Building wind up is not a bad think just not a solution to AGW or a reliable supply of electricity.

If Pickens wanted to show leadership, he would ...... As a matter of disclosure, the company I work for has recently .....

Never mind, the least I can do for my employer is send some emails before posting business ideas on the Internet. Presenting ideas at work is like playing chess, you need a strategy.

[Kit P]

“That does not mean that stand by spinning coal is likely to be the solution a decade from now.”

Wrong Bob, if you pick ineffective solutions to solve a problem you will still have the problem decades from now.

“In my area we're gearing up for a new wind farm. The natural gas peaker/standby plants are getting upgraded turbines that can go from a standstill to full speed in less than 15 minutes.”

Somebody should tell Bob that 'natural gas peaker/standby plants' burn fossil fuel and are not very efficient. Again Bob is wrong. His area is gearing up to import huge amounts of natural gas. Read your state report and do the math. Wave a picture of a solar panel or wind mill in front of Bob and that is all he sees.
However, there is a huge increase in the amount of electricity produced by fossil fuel in Texas, California, and Spain at the same time there is a huge building boom in wind that is resulting in an insignificant increase in electricity produced by wind.

Bob, I did the math and showed you that your solution is ineffective. Please stop repeating the same solution unless you can provide an analysis to support your position.

[Bob Wallace]

Actually Kit, you are again driven to the state of wrongness by your extreme negativity.

We have fairly large amounts of natural gas here in the county and are in the process of developing more wells in order to replace what we do import. Importing worked when prices were down. Now it makes sense to punch in some more wells.

We are also discussing the fact that natural gas turbines are not a good long term solution, but they are what we have available at the moment.

We are a testing area for wave and tide. We have people working on pump up hydro in the area. And we are looking at all the other solutions that you chose to ignore.

You, in your twisted desire to "win the game" cherry pick any fault that you can find and blow that out of proportion, award yourself a big blue ribbon, and spend the following moments patting yourself on the back (or engaging in some other type of one handed pleasuring).

Quit being a jerk.

Use your background and experience to do something positive for a change.

Solve a problem. Don't settle for the lesser role of just being one.

[mds]

From the previous post:
“ ‘Don't get the idea that I've turned green. My business is making money, and I think this is going to make a lot of money.’ “
I would suggest Mr. Pickens would not risk good money to a possibly unprofitable venture if the PTC is not renewed. I think Mr. Pickens would like to have the PTC for additional profits. This is not a bad thing. The USA should extend the PTC if they want to be major players in the wind industry. Heeelllooo ...667 wind turbines ordered from GE! ...$2 billion spent in the USA! The source of our energy is shifting and if you don't want to be net importers...

Kit P,
Liked your data on countries with lowest CO2 output. Very Enlightening. Clearly nuclear should be part of the picture. Still you have a fault in your arguement:
"if you pick ineffective solutions to solve a problem you will still have the problem decades from now" Wind is obviously becoming more and more cost effective, in spite of Reagan's almost killing it off in this country. Solar is shaping up to blow it away. It is not really a question of whether it will be there. It is more of a question of how much the USA wants to be a producer of this technology. Nuclear, wind, and solar are going to be big. Clearly the market is already deciding this. (Nuclear waste storage and development is more subsidized than wind or solar.)

Bob,
I agree. Some additional points:
1. Wind can provide something like 20% of grid power without much problem in load leveling. That's a lot of displaced coal.
2. Smart grid technology can allow some devices to use power only when wind or solar are available. This together with HVDC connection across the USA sun belt is why solar is going to combine with electric transport technology (PHEVs, E-REVs, & BEVs) to grow both like weeds. ...no storage or base-load required there. It's not just electric transport. There are several air conditioning systems now coming to market that use ice, cold rocks, or batteries to run on off-peak electricity. Make off-peak price, wind power output, and solar power output information available via the www and you can have these devies pull their power when you want.
Smart grid will allow users to use more electricity when solar, wind, or wave power are availble.
Here is a link for you:
http://tyler.blogware.com/blog/_archives/2008/3/24/3600473.html “Sempa Power can swing both ways” Gas or Electric Heat - March 2008
“It has developed software that does an up-to-the-minute analysis of natural gas, propane, oil and electricity rates and can switch a customer between electricity and fossil fuels whenever the rate is lowest.”
“payback of just three years. This is because natural gas tends to be cheaper than electricity during the day but more expensive at night”

Is it just human nature or is it something about our culture in the USA specifically? Why do I always run across discussions aimed at monolithic solutions?

Our opinions of which technology to use for more electric power would seem to be of lesser consequence. The electrical market is a mix now and is obviously moving to a different mix. Reagan and the Bushs have not killed wind or solar. They're going to be part of the mix.

Nuclear AND solar AND wind.

[mds]

...or maybe it's just Kit P being monolithic here.

[Lad]

I believe the long term future of energy in our country will transition to solar power generation and electric drive transportation; simply because the sun is the largest and most stable form of energy we have available. All the other forms are essentially interim solutions to satisfy the political and economic interests of the various interim energy stakeholders. Pickens and his investment in government supported wind energy is just such an example.

Our need to continue using fossil fuels will someday peak as their cost continues to escalate and solar energy is developed and moved to mainstream energy production. Only a good government energy policy and solar energy development and production breakthroughs can accelerate this transition.

[Carl Hage]

Pickens claim that the project is dependent on Federal Production Tax Credits is disappointing.

It's worth stating what the PTC is: 1.5 cents/kWh for the first 10 years of operation. As a percentage of revenue, it's not huge, but enough to compensate for the indirect subsidies of dirty energy, and make wind profitable.

We also don't have a Pollution Tax Penalty. If there was a fee associated with CO2, NOx, mercury, particulate, etc. emissions, then a PTC wouldn't be necessary. If pollution were taxed and refunded to people, it would give an economic incentive to conservation as well.

[Kit P]

It looks like mds was being logical until he stated drinking Bob's kool aid.

“wind, and solar are going to be big”

Sorry, mds do have a concept of the difference between big and little?

If you look at impact on how we live, the air tight Franklin Stove was big and still is. Putting electricity in our homes was big and still is.

Many of the posters here have has no comprehension of the difference between 0.8% and 99.2%. For those who build power plants, renewable energy is fun as long as we get to pass the cost along to the customers.

“Why do I always run across discussions aimed at monolithic solutions?”

Sometimes that is just the way the numbers work out. If you live in a cabin in a remote location, that air tight Franklin Stove is big. Please do not forget that the stove was a product of the industrial revolution where child labor that was as repugnant as slavery.

If you live in a small town, I can put together a sweet 5 MWe biomass plant that is sustainable. The 5 or so employees will all be able to afford a local 1500 square foot home and a new Corolla every five years or even a bass boat if you make the car last longer. For that small town, renewable energy is big.

However, for society as a whole 'renewable energy other' is 0.8%. For every large city, you need a large nuke or fossil plant. Show me your plan to put 4000 windmills in San Francisco. And another 4000 windmills in Oakland, 4000 windmills in San Jose ans so forth. This is where large central generating facilities like Moss Landing and San Onfre. Or maybe a million roof solar systems to replace each large central plant.

I hope this illustrates the magnitude of the issue. If there was no power plants retiring, no immigration, and no increase in demand for big screens TVs, each 4000 windmills will increase winds share by 0.2% . Increasing our industrial capacity by a factor of 4 (per the DOE report) and assuming some offshore wind mills will be larger (it makes the math easier) would result in a 1% increase per year.

I suspect I am the only who took the time to read the DOE report. Wind will always be an insignificant source of electrician. Same with solar. It is not about choice, it is about physics and pouring concrete.

[Carl Hage]

Let me also compare the 1.5 cent/kWh Production Tax Credit for wind energy to the Cap-And-Trade price/kWh. The EU carbon trading price on May 16 is 24.85 EUR or $38.6494 USD/ton. Based on figures from eia.doe.gov, at this price average coal generators would pay 4.0c/kWh, gas 2.6c/kWh. Carbon Capture and Sequestration is estimated to be $100-300/ton, or
10.5-31.5 c/kWh-coal, 6.6-19.8 c/kWh-gas.

So the current subsidy is substantially less than EU carbon trading costs.

[Bob Wallace]

Kit, you probably aren't old enough to have seen the transition from horses to cars.

My grandfather was.

You probably aren't old enough to have seen the transition from ground travel to flight.

My father was.

I'm thinking you're older than me (at least in spirit, you are) and during my lifetime I've seen a transition from radio to TV, from mechanical calculators to electronic calculators, to computers.

I've seen the transition from prop planes to jets, from being ground bound to people in space, from vinyl to tape to CDs to blips stored stored on a hard drive.

None of those transitions happened over night. Changeover went from 0.01% to 0.1% to 1% to 10% and at somewhere a critical point was reached, the change acquired great momentum, and the old technology was swept away.

Wind has been lagging at well below 1% of total electricity used in the US for a few years. It's on track to hit 1% this year. It stands a good chance of hitting 2% in less than three years.

Look back to the top of the page and you'll see someone who's going to kick it up above 2% and on to the next level.

We're in the early stage of another great transition, a change from generating our energy from fossils fuels to harvesting it more directly from the sun.

The transition won't be without false starts, some wasted effort, or what might look from here enormous expense.

But whatever it takes, we'll do it. We have too many external pressures that will shove our sorry butts down that path and too many excited young minds who are jumping up and down with the excitement of playing this great game.

Grumpy old naysayers are just going to get passed by like the old farts who stood on the sidelines and howled-

"That thing will never replace horses!"

"Man will never fly!"

"No one will ever walk on the moon!"

Want to spend your time figuring why an idea wont' work and then do your best to p!ss on the parade?

Or want to spend your time identifying potential problems and the doing the more interesting work of creating potential solutions?

Up to you.

[Angus]

Here in eastern Canada there is progress with wind energy but for the most part disapointing. In the eastern most province there is some small scale projects and one servicing an isolated community encorporates wind generation, hydrogen storage from excess wind(still experimental) and back up diesal(i believe the total savings was some 33 000 litres per year since wind turbines were installed). But the mother of all renewables is still Hydro with a total of some 2800 MW for the island portion and 5000 MW for labrador with a potential of some extra 2800 MW if an agreement can be reached with Quebec. What is interesting is that the Churchill Falls Hydro Dam(sold mostly to NY via Quebec) created an artificial penisula with ideal conditions for wind generation(5000 MW) and it can be tied into the existing grid. Several companies have approached the provincial government for development of this unique situation but because of a dispute over the origional development, all is on hold. That would be a total potential of 7800MW of renewables at a relatively low cost because the hydo dams would be used as a backup to wind. As the wind generates electricity the water level in the dams would be maintained at a more constant height and would be readily availible as a reserve.

[Bob Wallace]

I think you also have tidal generation research occurring at the Bay of Fundy. That's a huge resource.

http://www.alternative-energy-news.info/press/tidal-power-project-bay-of-fundy/

I read an article recently about how Henry Ford came very close to building tidal generators there. Almost a hundred years ago. Bet it happens this time.

[Angus]

The problem with all this is the foot print on the environment. Hydro dams have a huge potential but the area flooded is enormous. One Russian scientist I spoke to sincerly believed that daming rivers in Canada, Norway and northern Russia is having an effect on the climate. Another point he makes is that the salinaty of the oceans could be affected. All valid points to be considered.

It's imperative that we put conservation and efficiency at the top of the agenda with energy and until we do, very little is going to change.

[George Bruce]

Wind "farms" harvest subsidies.

[Benjamin Cole]

Windfarms, solar, geothermal, nukes and PHEVs (the Volt is coming).
OPEC is dead, and happy will be the day. OPEC is a zombie now -- walking 'round, not knowing it is dead.
We need more posts here in the Energy Blog.
A fleet of EVs and a grid juiced by clean power plants -- the future is bright, maybe better than ever before,
Short oil now. I am worried oil will collapse so much it will crush alternative fuels and conservation measures. Just like the last time.

[Bob Wallace]

George - you don't have your facts straight.

Many energy generation methods are subsidized. It takes that to get new technology up and going sometimes.

Benjamin - OPEC, and the non-OPEC oil producing countries, are going to be eating our lunches during the transition period. You're a bit early, IMHO, to start the celebration. Ready your budget for some big hurts as all those oil places get what they can while the getting is good.

This time around, they can't produce enough refined fuel to flood the market like was done before. The market has grown too much.

And last time we didn't really have alternative technology like we now do. We didn't have the advanced batteries, we didn't have large scale wind underway, we didn't have cheap solar.

[Benjamin Cole]

The sniveling doomster naysayers, the TOD crowd, just doesn't get it. Either: 1) Oil prices come down, or 2) we switch to PHEVs and non-oil-burning power plants. There is no doomsday. I actually prefer option 2, as it will make for cleaner air, and a better balance of payments.

[Kit P]

George, they are called production tax credits (PTC). The electricity generating industry pays lots of taxes. When the industry invests in generation that has higher capital cost but reduces the amount of NG used and therefore ghg produced, a reduced federal tax rate is applied to so that the profit margin is sufficient to get projects built. Since all US citizens benefit form importing less LNG, I think this is a good policy.

The use of the word 'subsidy' generally is indicative of a shallow and baseless objection to something.

[Michael Cain]

Pickens envisions that large scale renewable energy projects like his Pampa Wind Project will permit the United States to become less dependent on foreign oil.

There's a hell of a jump between what is (generously) a renewable version of a 415 MW generating plant and becoming less dependent on foreign oil that is used almost exclusively for transportation applications. I would be more willing to believe that as Pickens' motivation if he were investing in something that made electrified transport more widely available -- building light rail, high-performance battery tech, etc.

[Cyril R.]

Wind "farms" harvest subsidies.

If wind is competitive with just 1-2 cents/kWh, then that can be taken as proof that wind power is almost competitive in a free market, and electric generation is NOT a completely free market anywhere on this planet, so what's your problem?