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T. Boone Pickens' $2 Billion Bet on Wind Energy

by: Money Morning May 16, 2008 | about stocks: FSLR / GE / LDK / PBW / SI    

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By Jennifer Yousfi

T. Boone Pickens made his fortune in oil. But now the Dallas oilman and famed former corporate raider is betting $2 billion that he can have the same success with a new source of energy - wind.

Pickens’ Mesa Power LLP yesterday (Thursday) unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world’s largest wind farm.

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

Mesa Power will purchase 667 wind turbines from General Electric Co. (GE). Each turbine can produce 1.5 megawatts of electricity. The first phase of the project will produce 1,000 megawatts, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

"T. Boone Pickens’ commitment underscores the ability of wind technology to help meet the country’s need for diverse sources of energy," said Jeffrey R. Immelt, GE’s chairman and CEO. "As America’s demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need. We’re excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy, the overall project is expected to cost $10 billion and be completed in 2014.

Mesa Power has leased sparsely populated land in the Texas panhandle, where the wind often blows during daylight hours when energy needs are highest. Texas’ Competitive Renewable Energy Zones [CREZ] transmission lines will deliver what Pickens hopes will be "cost effective and reliable electricity generated by renewable energy power projects."

"We have had a great response to this project," Pickens said. "We are making Pampa the wind capital of the world. It’s clear that landowners and local officials understand the economic benefits that this renewable energy can bring not only to landowners who are involved with the project, but also in revitalizing an area that has struggled in recent years."

"Alternative" Energy No Longer Just an Alternative

At a time when oil is costing upwards of $125 a barrel, alternative energy sources are no longer just for the environmentally conscious, but for the cost conscious, as well.

"The development of alternative energy projects, especially renewable resources such as wind power, is critical for the future of the country in the face of declining world oil resources," Pickens said.

For years, emerging economies such as China have chosen "cheap" over "clean" when it comes to energy sources. But with the cost of traditional fuel sources such as oil and coal skyrocketing, environmentally friendly choices are becoming more appealing.

When it comes to China investments, "the smart money is in the clean money," says Money Morning Investment Director Keith Fitz-Gerald.

And when it comes to alternative energy, wind power isn’t the only option. The Solar Energy Industries Association [SEIA] says that solar power will provide 50% of all new electricity in the United States within eight years, creating tens of thousands of new high-tech jobs, while helping to conserve natural gas and saving American taxpayers billions in energy costs.

And while that estimate might be a bit ambitious, it’s certainly true that solar power use is on the rise, both domestically and abroad.

One of the solar power stars is First Solar Inc. (FSLR), which designs and manufactures solar modules using a proprietary thin-film semiconductor technology. With that know-how, the company’s average cost for making a solar module is among the lowest in the world.

Another up-and-comer is LDK Solar Company Ltd. (LDK), which expects to complete a brand-new silicon plant with a 1,000-ton production capacity this summer. And another plant with a production capacity of 15,000 tons per year is set to come online sometime next year.

If you prefer the built-in diversification that mutual-fund-type investments offer, consider an exchange-traded fund (ETFs) that focuses on such "clean" technologies as solar and wind power. One of the top ETF names is PowerShares WilderHill Clean Energy (PBW).

If you’re the type of investor who prefers cool breezes to sunny skies, you could invest in the makers of wind turbines.

Two of the largest include GE and Siemens AG (SI). GE just received the $2 billion order from Pickens and expects another $6 billion in orders from the planned 4,000 MW Pampa project alone. And Siemens will supply the turbines for a 500 MW wind farm planned in the United Kingdom.

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This article has 31 comments:

  •  
    May 16 06:25 PM
    First Solar has a PE of 122 and a Fwd PE of 111. LDK is 23 and 21 respectively. SunTech is 46 and 30. All are high, although First Solar's is stratospherically high. But still all high. Fundamentals are fundamentals... they're overpriced. By the time solar is truly mainstream, who knows who the players will be. There will be tons of other entrants, many of them likely pricing these guys out of the business. PBW is also inherently overpriced because most of the stocks it contains are overpriced. About 30% of PBW is overpriced solar companies. It's not a matter of IF it takes a big hit, but WHEN.
    Reply
  •  
    May 16 07:14 PM
    Wind power was great in the 1600s but is laughable now. Sun power is used to heat your tent in the morning. Laughable
    Reply
  •  
    May 16 07:35 PM
    Well T boone Pickens, there's a man who knows something about energy!

    Ah atleast here in Europe Wind energy is a fairly easy play. You can put the majority of youre portfolio the few established pure play wind turbine manufacturers, and youre yearly returns are great. Only few big company's like vestas, and their products are all in high demand, their stocks rise more because they keep to their core bussiness in the strong growth market that is manufacturing Wind turbine's.

    There are virtually no established pure play wind company's to find in the USA, hence for stock growth potential reasons the group of pure play solar company's have gotten much more attention in the past by US investors. There are quite a few beauties of solar company's in te USA that are established already, have stellar growth rate's and hence probably are excelent investments for the long term. Since Solar energy is less established, it has a longer growth potential. Solar energy is more expensive than wind energy, otoh has the potential in the end to be cheaper than wind energy.

    Wind energy evolves in technology to, so wind energy is going down in price over time with better and larger turbine's. Wind energy is nearing grid parity very fast now, excelerated partly because traditional energy sources become more expensive while they improve in price. Becuase Wind energy is nearer than solar to grid partity, wind energy will hit the critical point faster where they are simply THE cheapest form of energy, And that could become soon indeed. At that point wind energy would enjoy far larger preference and investment, and their growth market would be stellar for years to come, as long as conditions remain that power becomes more expensive or remains expensive.

    Obviously, Wind power won't satisfy everyone's needs, because they arn't so easily placed like solar panels are, and that the potential of producing youre very own energy speaks in the advantage of solar in the long run. But Wind energy has far better outlooks in the short term.

    Hence why i quite like these European wind turbine manufacturers. They have a great potential for the next years, and it aint hard to pick winners.

    Europe is a very large wind market, And nowhere are there more turbine's to be found han in the Whole European union, but india has it's own pure play wind turbine manufacturer Suzlon to, and it's a great company, building up to 5MW turbine's, same as the tubine's of Repower, and the largest currently in the market.Wind is an obvious anwer for india, wich has few domestic energy sources. I'm not aware of Chinese pure play turbine manufacturers in China yet.

    The Wind farmers are often quite solid investments to. It's not that hard, important is to find an good spot, the more wind the closer to grid parity, or even at or under grid prices.Some listed pure playwind farm development firms in the USA look very attractive, as they can reach very solid profit margins after time with enough turbine's installed, the better placed and the higher electricity goes, the more profit for them. There are many established wind farm company's in europe, but few are pure play, most of the wind farms are owned by utillity's and turbine manufacturers themself. Most pure play Wind famer company's though can easily reach profitabilety in the long term. But due to the large demand of wind tubine's and the long backlogs of turbine manufacturers, many of the smaller listed wind farm stocks are of have been taken over.

    So one should be very wary of the short and long term potential of wind energy. Largely because company's like vestas are Winners that will go much higher in the future. Even at their current yearly production rate, and they have been producing for decade's, they have only yet filled 1,3% of total world electicity need. With all th current production power of wind turbine manufacturers, maybe it will be possible to install for about 0,4% of total world electricity need. To achieve that the industry will still have to expand a lot this year, let alone for the goals of the next years.

    I m long primarily on European turbine manufacturers Vestas wind, Gamesa technologica, Repower adn Nordex AG. I have a diversified energy portfolio but these company's are just to solid as long term winners that i would be a fool for not being content with the obvious very good long term growth of these company's as main investment. And i would highly advice them for european's reading this board. I do have a lesser share in solar, but some of the solar stocks do outperform the turbine manufacturers.





    Reply
  •  
    May 16 07:40 PM
    Correction

    "Even at their current yearly production rate, and they have been producing for decade's, they have only yet filled 1,3% of total world electicity need. With all th current production power of wind turbine manufacturers, maybe it will be possible to install for about 0,4% of total world electricity need THIS YEAR. (2008)
    Reply
  •  
    May 16 08:51 PM
    CLH, it is your comment that is laughable. You just don't get what solar and wind are about. By using less land than now used for coal mining, solar power plants in the southwest could power the whole country. 24 hours a day. Solar thermal plants can store heat to generate power at night. And we could easily have 20% wind power in less than 20 years. Denmark already has 20% wind power, and parts of Germany and Denmark have 40% wind power.

    Go to Green Wombat to read about solar thermal projects in California, Arizona, Nevada. There are several articles there.

    blogs.business2.com/gr.../

    And go to Set America Free for a sensible energy proposal for the U.S using current technology.
    www.setamericafree.org...
    A Blueprint For U.S. Energy Security

    And go to Scientific American for a proposal to supply 69% of our electricity from solar power plants in the southwest by 2050. The cost in public money is 1/8 as much as annual subsidies to oil. And less than it cost to build out the internet over the last 35 years.
    Scientific American A Solar Grand Plan
    www.sciam.com/article....

    And to see the real costs of fossil fuels and the enormous subsidies for oil, go to:
    www.setamericafree.org...

    Photovoltaics are very near grid parity already, with Nanosolar already there.

    "Nanosolar’s founder and chief executive, Martin Roscheisen, claims to be the first solar panel manufacturer to be able to profitably sell solar panels for less than $1 a watt. That is the price at which solar energy becomes less expensive than coal.
    With a $1-per-watt panel,” he said, “it is possible to build $2-per-watt systems.
    According to the Energy Department, building a new coal plant costs about $2.1 a watt, plus the cost of fuel and emissions, he said."
    from www.grinzo.com/energy/.../

    "I'd put my money on the sun & solar energy. What a source of power! I hope we don't have to wait until oil and coal run out before we tackle that." Thomas Edison, 1931

    Solar thermal power plants such as Ausra's generate electricity by driving steam turbines with sunshine. Ausra's solar concentrators boil water with focused sunlight, and produce electricity at prices directly competitive with gas- and coal-fired electric power."

    "All of America's needs for electric power – the entire US grid, night and day – can be generated with Ausra's current technology using a square parcel of land 92 miles on a side. For comparison, this is less than 1% of America's deserts, less land than currently in use in the U.S. for coal mines."

    "In recent months, PG&E has signed deals for more than a gigawatt of electricity — enough to light more than 750,000 homes — with solar power plant developers."
    "The solar thermal industry is in its infancy but utilities like PG&E (PCG), Southern California Edison (EIX) and San Diego Gas & Electric (SRE) have signed several contracts for solar power plants and negotiations for gigawatts more of solar electricity are ongoing." from Green Wombat

    "There are areas in Denmark and Germany who use more than 40 percent of their electricity from wind. From what I have read, they are less concerned about the intermittency than we are in the United States even though we aren't at 1 pecent yet. Why? Because we are told by the fossil fuel guys, hey, can't use wind, can't use solar, what about the intermittency. If wind gets up to 40 percent of the electricity we use and solar gets up to 40 of the electricity we use, the other percents of electricity we need can be made up from the fossil fuel plants that are still there. If they are run less at full power, they can last a long time. That can be your electricity `battery."
    gristmill.grist.org/st...

    The difference? No oil industry lobby in Denmark. Period

    And Abu Dubai gets it too.

    "Abu Dhabi is not content to just sell you the oil that fuels your SUV; now its going to sell you sunshine to keep your lights on and power your electric car when the internal combustion engine goes the way of the buggy whip. Masdar, the oil-rich emirate’s $15 billion renewable energy venture, and Spanish technology company Sener on Wednesday announced a joint venture called Torresol Energy to build large-scale solar power plants in Australia, Europe, the Middle East, North Africa and the United States."

    Specifically they are eying the same U.S. southwest where the SciAm article advises Americans to build solar power plants.

    "The irony is too rich to leave unsaid: A leading oil producer invests billions in carbon-free energy while a leading consumer of fossil fuels - the United States - continues to subsidize Big Oil while while offering only tepid support for green technology."

    from Green Wombat

    From the SciAm article Solar Grand Plan
    "The greatest obstacle to implementing a renewable U.S. energy system is not technology or money, however. It is the lack of public awareness that solar power is a practical alternative—and one that can fuel transportation as well. Forward-looking thinkers should try to inspire U.S. citizens, and their political and scientific leaders, about solar power’s incredible potential. Once Americans realize that potential, we believe the desire for energy self-sufficiency and the need to reduce carbon dioxide emissions will prompt them to adopt a national solar plan"

    Reply
  •  
    May 16 09:38 PM
    What is the relative potential of wind power verus tide or current power from the ocean?

    What is the relative potential for floating offshore wind platforms (where wind is unobstructed) versus wind power on coastal land (where togrophy, trees and structures may obstruct wind)?
    Reply
  •  
    May 17 08:23 AM
    CLH,

    IMO you are a fool! Truly an idiot in your ridiculous remarks.
    Hopefully an Old Fool who won't be around that much longer.

    Thank You T. Boone Pickens, Hope you make TONS OF MONEY. The
    solution to America's energy crisis will be found in Capitalists like Mr. Pickens -out to make a buck! - NOT in the fools in the U.S. Congress, out to maximize their power and our TAXES.

    The a bright energy future is truly in alternative energy sources such as windpower and solar and geothermal and Nuclear. It is also in allowing AMERICAN COMPANIES to explore and drill for oil, in Alaslka, throughout the U.S. and off all the Coasts (California, Florida, Gulf, East Coast).

    I agree on FSLR being too pricey, personally I prefer STP with its Chinese connection - the future preferred provider of much needed Chinese power. AND ESLR with its overseas connections.

    Finally, to all concerned, please remember that it is the POWER REQUIREMENT AT THE MARGIN that determines the effect of the demand curve on priving. In other words, if we can reduce oil demand AT THE MARGIN thru bringing on alternative sources - solar,wind,nuclear, then that will serve to bring down the marginal price of the next barrel of oil.

    Also remember ANWR and the PRISTINE is merely another word meaning BARREN. Drill up there, and any environmentalists that don't like it = well shun them -energy wise - do not allow these environmental protesters access to ANY power or gasoline to drive,heat/cool their homes, etc. Let them cogitate in the dark and cold on the ignorance of their philosophy that puts ignorance ahead of peoples needs.

    Thank you T.Boone Pickens. - Where do I invest?
    Reply
  •  
    May 17 08:34 AM
    Hello. Wind power is at grid parity and better, at least here in Ireland. Currently the average cost of producing power is between 5 & 5.5 euro cent per kw/hr. The wind farm companies (those that own the wind farms) secure 15yr PPA's (power purchase agreements) from Electiricty wholesalers. These agreements are underwritten by the Government. Currently rates for PPA's around 6.1 to 6.3 cent per Kw/hr. The regulator in Ireland estimates that the BNE (best new entrant) price for electricity production is in the region of 8 cent Kw/hr.

    You should be able to deduce from these figures that yes wind power is competetive and is at grid parity without subsidies of any kind except for the Gov underwriting the PPA.

    As a matter of interest, the wind farm companies estimate that the cost of construction of the wind farms ranges from €1.5-€1.8m per installed MW and that the IRR of the projects range from 10-15%.

    Finally, it is important to note that the wind speeds are very good in Ireland (7-8 mtrs sec for average sites) and also that these costs and returns relate to on-shore wind farms.

    NC180570 Ireland
    Reply
  •  
    May 17 09:46 AM
    i wonder if solar power will get the big financing wind receives. if not why not? will it be because solar power is decentralized (with the exception of fslr utility scale solar farms) . large industry is promoting wind and fslr because then they can still charge the end user for the electricty. better for the consumer is residential solar to be off the grid.

    banks and utilities are under threat from decentralized solar installations and will continue to recommend wind on cnbc(ge is owner) and centralized solar installations( banks control the financing and protect their bond holdings in utilities)

    industry is a potential impediment to much solar legislation being proposed unless it is fashion to preserve their economic interests. not the interests of the consumer.

    recently citibank put a buy on fslr and a old on spwr and a sell on eslr. eslr and spwr sell panels for your home. citibanks solution foe the energy crisis barely even includes solar.

    there is no reason to drill in anwar. solar can more than meet our energy needs if the investment is made agressively.
    Reply
  •  
    May 17 10:22 AM
    Wind and solar will certainly help our energy situation. The problem comes in transmission lines and loss of power as distance increases from source. Let's build nuclear plants. The second problem is how do you drive your car on electricity? We need fossil fuels and should start drilling now! Wind power will run into the law of diminishing returns - land for use, material to build/repair, and people to maintain.
    Reply
  •  
    May 17 11:16 AM
    I could see drilling in The Arctic National Wildlife Refuge if there were honest attempts in Congress to develop an energy plan (LMAO). Of course the pesky indigenous population doesn't want drilling up there but that has never stopped the U.S. government before since most Americans would rather see every species in the world extinct than to change their energy use habits.
    Reply
  •  
    May 17 11:31 AM
    Thanks Mr. Pickens, we need investors like you.

    Arguements over which is the BEST alternative energy play is largely a waste of time.

    I don't have the resources to know which of the alternative energy plays is is best, and I doubt you do! (I suspect several will survive, as they meet different needs). So I am investing in as many as I can--but I want to spread my risks, so I mostly invest through ETFs.
    Reply
  •  
    May 17 12:32 PM
    Good article and comments. Seeking Alpha is very informative. Great writers.
    Reply
  •  
    May 17 12:56 PM
    I hope Boone's investment doesn't turn out to be only a lot of hot air.
    Reply
  •  
    May 17 01:01 PM
    I agree that windpower is a great resource and is at grid parity in some places. However, there are many places in the US (unlike Ireland) where the wind resource is terrible.

    Also, the costs quoted for building wind farms in the 5 cents/KWH produced range do not include transmission costs and line losses. In the US, it is getting harder and harder to build transmission facilities--with Texas being more the exception than the rule, especially where Pickens has put his farm in.

    Next, I completely disagree with the comments above stating that wind is going to get cheaper. Wind has three big costs--land, turbines, and transmission. None of these are likely to go down. Turbines contain a lot of steel and other materials which are unlikely to decrease in cost. Neither is farmland, where many of the wind farms are going in. Finally, I doubt the steel in the transmission poles or the metals in the transmission lines are going to get cheaper.

    So wind costs ARE going to increase.

    But solar panel costs are going to decrease because about 50% of the cost of a poly-based solar panel is due to the poly. Many people expect poly to decrease by 50-75% in 2009-2010, which should reduce panel cost by 20-30%.

    In addition, wafer thicknesses have dropped from 220 microns a couple of years ago to 145 microns at the leading edge today, and efficiencies (both conversion and production efficiencies) should save another 30%. Therefore, I believe that in 3 years, the cost of poly-based panels will be about half what it is today.

    There is NO way that wind will even be at the same price in 3 years as it is today unless farmland, steel, copper, concrete, carbon fiber, etc drop in price going forward. And who believes that?

    Solar WILL decrease in price going forward, and by even more than 50% if a disruptive technology is able to be commercialized. For example, if a new process is discovered that simply increases PV efficiency from 18% to 36%, the cost of a PV panel will drop by 30% overnight. I cannot see a disruptive technology lowering the cost of wind.

    Having said all that, I believe both solar and wind will grow by leaps and bounds globally for the next few years. But solar will overtake wind once panel costs drop by 50%, which I expect will happen within 3 years.

    Jack Yetiv
    Reply
  •  
    May 17 02:16 PM
    Jack Yetiv or anyone, is there a possibility to place solar panels under the forest of wind turbines?
    Reply
  •  
    May 17 02:23 PM
    If the numbers quoted in the article are correct, 4000 mW for $12 billion with no fuel costs sounds great. Due to the run up of steel, a 1000 mW reactor is now running $8 billion. Why aren't more deep pocket investors in the game?

    It makes no sense to keep fighting the war on terror at the same time the West is sending trillions (yes, trillions) of dollars to the bad guys every year. We must change our ways, our else we will be
    destined to become the serfs of the Arabs and the Chinese!

    If the EU can use solar and wind at above 45 deg N latitude, we should be kicking a** in the desert southwest. I was chuckling to myself when driving through western Oklahoma and spotted a wind turbine farm next to an oil field. T. Boone is no eco-nut; thar's still
    money on the ground.
    Reply
  •  
    May 17 02:28 PM
    Further question: what is the cost component for transmission with respect to a solar power public utility, placed in a spot that is remote from the city it serves? (PG&E, Southern California Edison and San Diego Gas & Electric.) And isn't this an even more remarkable cost component for power generated (by, say, Raser Tech) in the middle of the Nevada desert? How does Ormat do it?
    Reply
  •  
    May 17 02:35 PM
    Very interesting. I got invested in green companies early--solar, geothermal, wind, uranium...and lost my butt in a number of more speculative stocks mostly b/c they were being played by the momos / hedgies, and one had to be quick on the feet...I was too slow. Too bad...some I sold even or at a loss have now recouped and would have been profitable trades, but I had already put whatever profits I'd made back into O&G. Still hold a portfolio of uranium companies...?profitabl... within a few years?...will hold and find out.

    I'm sticking with O&G for now...they are here and now, BUT...I agree with solar being a disruptive marketable (non-repressed by TPTB) technology away from being cost-effective. But that technology would IMO also require its use in cloudy areas!!

    My difficulty is in separating out three basic concepts / arenas: 1)investment, 2) personal use, 3) natl policy, which actually influences #1 more than most investors will ever want to accept, but will also affect prices for individual users. In fact, all three will interact and none are indpdt of the others.

    The stock market has become a casino, as alluded to by some here, with much control by TPTB behind the scenes, both by influencing policy and by controlling purse strings for potential disruptive technologies coming to market. We've all heard of processes invented already decades ago for doubling or even tripling gas mileage that were suppressed and never brought to market...THESE WERE REAL!!! So policies of our "govt"...and by that I mean our electable govt... have had very little to do with what is cost effective or rational in terms of preservation of valuable resources (just as BTW drilling or no in the ANWR has absolutely NOTHING to do with ecology...believe me or be stupid...or if I'm feeling nice, I should say "naive"...!!... is all about politics and preservation of POWER and electability and donation profiles/lobbying.

    I keep thinking about having/building/findin... a place somewhere (do I really want to stay in the US?...probably...despi... the fact that "it's still the best place to live in the world" IMO could very easily be a backward-looking statement of has-been truth in the not very distant future. Those aspects of our country and its foundation of laws and rights and liberties that have made it more or less paradaisical to the world have been all but stripped away...it's just the effects of that stripping that have not fully hit yet, but that could be one martial law declaration-causing crisis away...but I digress.)...somewhere, again, where I could set up a windturbine complete with efficient batteries of all necessary sizes and types / battery-charging equipment (and BTW, no discussion of windpower is complete w/o discussing the absolutely sordid state of inefficiency of batteries...?also a conspiracy??) and put solar panels on my roof, have my own deep and clean source of water, and an inground 1000 gallon gas tank to use as needed. But what's that going to cost me, and would the govt decided that I was and anti-govt entity if I put a big fence up and send the ATF to see if I had WMD...ie, guns...and blow me up before ever asking me or finding out? It's all going to depend on the market and on our govt's policies, if I'm planning to stay in this country, unless I'm indpdtly wealthy. And even then, what about our NON-indpdtly wealthy friends and family? Do we start our own commune..."Branch... here we come again?

    OK...just throwing out a Saturday afternoon stream of consciousness. There's talk...and then there's individual action. It's the translation that's tough.

    jt
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    May 17 03:20 PM
    Yes, you can place solar panels below turbines, but there are a lot of pluses and minuses to take into account.

    Pluses--you already have the land, and possibly transmission, and if the solar resource provides power at different times than wind, then you can use the transmission resource more fully.

    Minuses--some shading issues, and usually the unlevel terrain that is ideal for turbines (see Altamont Pass in Calif) is probably not so great for placement of solar panels.

    But here is the kicker on solar--look at what Souther Calif Edison is doing--250 MW of solar on 65 million square feet of EXISTING commercial rooftops. Beauty is that NO new transmission is needed because the power will be used locally and will flow through EXISTING electrical lines--just in reverse. And no EXTRA real estate is needed--the warehouse owner gets paid by SCE for use of his roof, and SCE has a place to put panels invisibly because most commercial roofs have a nearly flat pitch.

    VERY cool.

    Jack
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    May 17 03:20 PM
    Conspiracy?? See the film, "Who Killed the Electric Car": GM, Ford, Toyota... etc. The administration in power at the time? Certainly. See R Reagan dismantling the solar panels at the White House.
    Reply
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    May 17 03:26 PM
    Yes, JT, I saw one of those devices for tripling gas milage on the Sci Fi channel (it was a little pill to drop into a gas tank filled with water!).

    BTW, there is a surplus of uranium, it may take years for speculative players to be profitable.

    Like P. T. Barnum said...
    Reply
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    May 17 03:40 PM
    Lots of comments since this morning.. I have some

    To clarify Jack Yteiv's comment regarding cost of producing electricity via wind in Ireland - yes at 5cent Kw/hr it does include transmission costs. As the electricity for sale is measured at the substation on the windfarm, the losses are negligible, but in any event are included within the 5cent Kw/Hr.

    Regarding whether wind is going to get cheaper going forward, well thats debatable but here are some facts. In the last 4 years the cost per MW of installed wind generation has increased from €1-€1.2m to €1.5-€1.8m. Most of this increased cost has come due to the increased cost of turbines (except US manufactured read GE sourced in the last 6months). Another element of the increased cost has come from the pressure now to put connection cables underground rather than overhead.

    On the other side of the equation turbines have become more efficient. On one particular site in Ireland a developer had initially planned to erect GE 1.5MW turbines. Planning took longer than expected and Nordex had released their N90 2.5MW turbines. The Nordex turbines Mw for MW will produce 17% more electricity than the GE turbines. Having said that, at this stage I would largely believe that wind technology is mature and further efficiencies will be small scale.

    The limitations on windpower in any country are:

    1. % if power currently being generated by wind - up to 20% generally no problem. Beyond this the intermittent nature of wind generation can cause problems
    2. Getting planning permission to build the windfarm.
    3. Reasonable proximity to the grid for connection
    4. Reasonable wind resource (windspeed). Where windspeeds are lower such as in Germany 6mtrs sec V 7.5 in Ireland, they will use class 2 and 3 wind turbines which will have proportionally larger rotor diameters relative to the generator capacity of the turbines.

    The issue of land for turbines is not a cost issue as the landowner will get a % of the gross electricity sale from the turbine. This is relatively fixed and therefore is not a cost that I see as going up.

    At the end of the day I believe that windpower is the most effective and cost efficient method of generation for the first 20% of requirement so long as the windfarms are onshore. Its main limitation is the intermittent nature of the generation. Cost wise, I do not believe that it will get significantly more or less expensive.

    It is important to remember that profitable wind generation is utility scale. In Ireland the average sized turbine is 2.5Mw with a tower 80-90mtrs to the nacell and with a 90mtr rotor diameter with an installed cost of approx €4m.

    Disclosure - I do not have any solar, wind or oil stocks but would love to invest in solar and wind.

    NC180570 Ireland
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    May 17 04:23 PM
    "Next, I completely disagree with the comments above stating that wind is going to get cheaper. Wind has three big costs--land, turbines, and transmission. None of these are likely to go down. Turbines contain a lot of steel and other materials which are unlikely to decrease in cost. Neither is farmland, where many of the wind farms are going in. Finally, I doubt the steel in the transmission poles or the metals in the transmission lines are going to get cheaper."


    Turbine's may contain a lot of steel, an output per turbine of 2 to 3 MW per piece is fairly comon now. solar panels are a fraction of this output, So you usually need hundreds of solar panels to reach the output of 1 single turbine, and solar panels are not made from polysilicon alone. Land costs should be much higher for solar farms atm because of the number needed to reach the same output of 1 turbine. But turbine's improve in capacity to. With 5MW turbine's already available in smaller ammounts, and company's developing turbine's of even larger turbine cappacity, with the latest engineering advantage's. Turbine's have so much evolved trough the last 20 years in capacity, Comming from much lower outputs per turbine in the '90 and early 2000, but having matured while the market kept growing at a steady rate.

    I think solar is a very interresting energy alternative and will improve in cost in time. However Solar is still very small compared to not only wind energy, but also the whole world's energy usage. But even wind energy is still very small compard to the world's energy usage. In 20 Years the Wind energy sector managed to build enough turbine's to provide 1,4% of world's energy. It's not that wind energy could even dream to satturate the market in a short time, it will take years, even a decade with fast growing production potential of turbine's to even reach a possible 10% of world usage in a world where energy usage grows. Meanwhile solar will expand next to wind energy at an even somewhat faster speed, but the whole solar industry atm can only supply a fraction of the potential future market. Both wind and Solar have a few decade's worth of long term growth in my oppinion.

    However i do regard certain wind energy stocks, especially established wind turbine manufacturer like Vestas, as the most easiest no brainer sure fire winner stocks in the whole market space. When it comes to solar, it is somewhat harder to find a stock of wich you can be that sure that it will actually will become big in the long term.

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    May 17 07:09 PM
    OK, so I believe we have all now agreed wind is not going to get cheaper because at best, small increases in efficiency will be balanced by increases in cost of materials, etc.

    As to cost of solar panels, EVERBODY agrees that they will drop in cost by at least 30-40% in the next few years--DESPITE the other components of the panels because the major cost is poly (note that FSLR makes panels for $1.14/watt versus double that for poly-based panels, per watt; that $1.14 includes ALL the materials in the FSLR panel plus all manufacturing costs).

    One point that I thought I made clear (but obviously did not) is that SCE's decentralized model does NOT require any new real estate, NOR any distribution infrastructure. Look up SCE's press release dated 3-27-08.

    Also, we did not discuss maintenance on wind turbines versus essentially no maintenance on solar panels.

    Finally, a small drop in the wind resource makes it uneconomic because electrical power output is a square function of wind speed. If you get down to 5 meters/sec, power content of the wind decreases more than 50% (56% to be exact) from 7.5 m/s, effectively more than doubling the cost of the windpower (10.5 cents/KWH).

    Bottom line today: If you have such a fine wind resource (avg wind speed 7.5 meters/sec= almost 20 mph 24/7), wind is very cost effective, and much better than solar--TODAY. But few places have such constant wind. As to those other places, solar will become competitive soon, if it isn't already.

    Jack
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    May 17 08:35 PM
    i feel like in the past week or so, the solar craze has suddenly turned to wind. thats ok, because i have been loading up on zolt, but i am still a solar bull!!!

    -scott
    solarfeeds.com
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    May 17 10:30 PM
    I'm surprised that no one's mentioned wave power here. It is by far the most promising new source of renewable energy as compared to wind power (wave power is 1000-times more dense than wind power). There are a few companies doing this, among my favorites is Finavera Renewables. Their products work brilliantly, the only drawback I see is that wave power isn't perceived very well by the market yet, it's somewhat misunderstood. I think that mindset will change as our energy needs escalate. Wave power solutions aren't really viable for regions without much coastline, so I think wind power offerings also have their uses in the market. The US is more or less surrounded by water so wave power is perfectly viable here in North America.

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    May 18 12:07 PM
    I still don't get why every article touting solar or wind power constantly refers to the price of oil. Oil in this country is used for transportation and chemicals, not power generation. Even China is getting away from oil as a power generator.

    If there is an "enemy" here it is coal, not oil. Yes, oil fields decline but wind doesn't always blow, so to speak. Next thing we will see are the same people who oppose oil drilling off America's coastline now objecting to these "unsightly" wind farms.Just ask Teddy Kennedy, who last year killed a local wind project over ruination of the view.

    And if you want to talk about placing wind farms where no one ;lives,well no, and I mean no one lives in ANWAR. Not even the Inuits or Eskimos. Why, too darn inhospitable, even for them.

    There is no science involved in this stuff anymore, it's just pseudo-religion and political gotchas.
    However, Pickens maybe on to something when viewed with the backdrop of 60 planned coal fired plants being cancelled the last 3 years due to uncertainty of future environmental laws.
    Please, somebody write an article on alternative power generation and speak to future demand against coal and natural gas and hydro capabilities and liabilities, not oil.
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    May 19 12:28 PM
    An excellent discussion.

    I hope to hear more about the commercial viability of wave power.
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    May 21 02:01 PM
    Enormous potential in wave power... ever go body surfing? And it's perpetual, non-stop. But highly problematic in terms of environmental cost and infrastructure development. In America everyone frowns when someone wants to drill offshore somewhere; imagine the backlash this would cause.
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    Jun 18 11:44 PM
    It's a matter of perspective. I've heard that energy storage technology is still several decades off from being economically feasible or viable. Therefore theirs no real way to store excess power generated during off peak periods.

    And that part of Texas has periods in the summer and fall when their's little or no wind blowing. There for backup power is needed and you can't conveniently ramp up coal powered plants or nuclear plants to supply intermediate demands.

    And the third issue is that Pickens is anticipating a cap and trade bill to make wind power more profitable. See: www.energycentral.com/...
    This is like the hype with ethanol.

    The reality is that it's a lobbyist scheme to make money of off CO2 emissions under the supposition that it will deter AGW which is an absolute scam. I can't believe that McCain is not aware of it and he probably is counting on lobbyist money from self interested companies that stand to profit from the cap and trade scam. Private industry has done more to cut CO2 emissions then European cap and trade program ever has or will. Co2 is not the driver behind AGW, it's primarily the Sun!

    Drill here and there to eliminate the present energy crunch and plan for the future. It's takes a viable economy to enable funding for R&D. Have incentives toward developing more viable alternatives to energy need including more fuel efficiency. Economics can do the rest, the government just screws things up more with more regulations and mandates.
    Reply
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