Gone with the Wind


Greg updated us below on T. Boone Pickens backing off his wind-energy plans. As I’ve written repeatedly, wind, solar, and other alternative energies are not ready for prime time for several reasons: intermittency, small-scale technology, high costs, transmission limitations, etc. Add the low price and ready availability of U.S. natural gas to the list:

T. Boone Pickens’s decision to pull the plug on a big wind farm in the Texas panhandle highlights the hurdles clean-energy projects are facing in the U.S., including competition from newly cheap and abundant natural gas.

While problems plague all kinds of green-energy efforts, wind power has been hit especially hard. Because of the complications, growth in wind-power capacity this year is expected to be three-quarters of the increase in a record 2008, according to the American Wind Energy Association trade group.

Even cash-flush foreign utilities that in recent years have entered the U.S. wind-power market, such as Spain’s Iberdrola SA, have scaled back U.S. investment plans. And Mr. Pickens’s decision, announced Tuesday, to shelve his project for the foreseeable future has left him scrambling to find homes for 667 wind turbines that he ordered in May 2008.

The solar-power industry, which was flying high just a year ago, spent the first half of 2009 announcing layoffs. Some big solar-power projects were shelved.

“The vast majority of commercial projects are on hold,” said Rhone Resch, president of the Solar Energy Industries Association, noting that installations in California were down 60% in the first quarter compared with the year before.

One reason for the pullbacks is the plunge in natural-gas prices. Natural-gas futures on the New York Mercantile Exchange have fallen 72% from a year ago and dropped 2.2% on Wednesday to $3.35 per million British Thermal Units.

Inexpensive natural gas is generally bad news for renewable energy: Power plants that burn natural gas become even cheaper to operate when gas prices are low, making projects such as Mr. Pickens’s planned wind farm less economical. Other clean-energy technologies, such as solar power, are even more expensive than wind.

When natural-gas prices are high — as they were last summer when Mr. Pickens announced his Pickens Plan to wean the U.S. off foreign oil — clean-energy projects become more competitive.

Natural-gas prices have fallen because of greater supply and weaker demand, as U.S. natural-gas production has soared over the past year because of the exploration of new reserves. But the economic slowdown has curtailed gas demand, especially in the industrial sector, and analysts expect prices to stay relatively low for the next few years.


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