Today Reuters posted a story called “Pickens backs off wind farm project”
Texas oil billionaire T. Boone Pickens has called off plans to build the world’s biggest wind farm in the Texas Panhandle, the Wall Street Journal said.
Pickens said the wind farm project was scuttled partly because of the lack of adequate transmission lines to carry the electricity from remote locations to cities, according to the paper.
The oil tycoon had hoped to build new transmission lines but could not secure financing, the paper said.
This paper neatly summarizes the impossible economics for most of these large scale alternative energy projects, focusing on areas that aren’t usually covered well by the media or academics.
One of the favorite alternative energy projects involve wind energy, basically giant windmills / turbines that generate electricity when the wind blows. Wind energy viability is determined by a lot of factors, including:
1. how much the wind blows, or more accurately, how “steadily” the wind blows at a relatively high rate of speed
2. cost of the turbines / windmills
3. reliability of the turbines / windmills (one of the major manufacturers out of India has been recalling and having issues with the blades)
4. ability to find permits to site the blades (famously the Kennedy’s are blocking them for damaging the “view” off their compound on the East coast)
5. amount of subsidy that the state power commission / Federal government is providing for the energy (else they generally aren’t financially viable)
6. access to transmission lines to bring the electricity back to the urban areas that are most likely to utilize this electricity
7. access to funding (debt and equity) that allows the developer to build and secure the land, materials and equipment to complete the job
Of all these items, people tend to focus on items 1-4 above, with some understanding that without 5 (subsidies or requirements to “source” a certain percentage of generation alternatively), it isn’t going to just happen.
However, #6 and #7 are actually the biggest bottlenecks right now, and tied to long term items that the state, local and Federal authorities are doing the least about.
Item 6 – I would view our transmission grid the same way that you’d view the layout of factories during communism; based on a blueprint of assumptions from a methodology long since passed by. Back in the days when you could actually BUILD a transmission line, before you had to snake it around every coyote, plant, and sign of human habitation, the lines were built to connect the power sources at the time (hydro, coal, nuclear) with the population centers and large industrial areas at the time. Basically, we are talking about the 60’s and the early 70’s. This grid is what it is – in some places it makes a lot of sense, in some places (like near high growth areas in Nevada and California) it makes little sense – but you need to understand that it simply can’t be “fixed” by a policy paper or by throwing a few billion dollars at it here and there – it would take a major project, on the order of construction of the original interstate highway system, to fundamentally “fix” the grid to map it today where the people, industry and power sources of the FUTURE will lie, and require massive amounts of political will to fight NIMBY’s every step of the way to make it happen. Basically, this means we have what we have and, with only minor changes and upgrades along existing “rights of way”, it isn’t changing.
Item 7- access to funding for transmission is VERY difficult, for a host of complex reasons. Basically the underlying financial support network for many types of projects was taken away by “deregulation” (I use the words in quotes because it wasn’t deregulated, just regulated differently), where utilities in MOST areas could recover these types of infrastructure costs in the “base” rates charged to customers. Today generation has been mostly deregulated (meaning no one is building anything except for “toy” alternative projects and gas-fired peak plants) and the local distribution company (which is saddled with buying power and makes little money in the best of times) has to front the bill for transmission. Building transmission is a lonely business – it costs billions, and all it does is lower the price of power to the end customer and can reap a “toll” along the way between the generation site and the power user. Back in the old days, utilities would invest in transmission because it is critical to reliability and allowed them to expand their revenue base, but today these super high risk investments, which face fanatical opposition from local residents, are generally beyond the pale.
Pickens basically gave up because #6 and #7 were not viable.
Reality is going to hit all of the alternative energy concepts, sooner or later.
Cross posted at LITGM