Gale force

As costs continue to rise and consumers become ever more environmentally conscious, momentum is building behind wind power as a possible alternative to fossil sources. Power & Energy caught up with two people at the forefront of the push towards wind energy: Randall Swisher, of the American Wind Energy Association and T. Boone Pickens of Mesa Power.

The unlikely environmentalist – T. Boone Pickens exchanges oil for wind
When one of the country’s most influential oil men starts betting on wind as the future of energy, it’s clear that some kind of tipping point has been reached. T. Boone Pickens built his name and fortune finding and pumping the black stuff but now sees his future lying in more sustainable sources. Pickens’ Mesa Power company has recently announced plans for the biggest wind farm in the world and placed an order with General Electric to purchase 667 wind turbines capable of generating 1000 megawatts of energy, enough to power more than 200,000 homes. Taking advantage of some very breezy landscape on the Texas Panhandle, this ambitious project will eventually cost somewhere in the region of 12 billion dollars and is quite a commitment from the 80 year old Pickens.

Over the years, Pickens has made and lost more money than most of us will ever see. He’s also proven himself to be a plain speaker with an almost uncanny ability to predict the shifting tides of business. You don’t get the nickname ‘Oracle of Oil’ without knowing a thing or two. Aside from the financial rewards Pickens expects to reap from the endeavour, it is the increasingly unavoidable fact that the US cannot sustain itself on its current energy mix that is driving this project. “ Wind has to be developed in the United States,” he says. “We’re not going to continue importing 72 percent of the oil we use every day. I think everybody can see that we're going to break the country if we pay 700 billion dollars a year for imported oil.”

Pickens see the gains that can be made from wind energy as a vital element in securing a sustainable energy future for the US. The 20 percent of the nation’s energy mix that is earmarked to be taken up by wind energy will allow the natural gas that currently makes up a similar proportion of power generation to be diverted to transport. “ Natural gas is way too good of fuel to be using it for power generation,” Pickens says. “You pull that 20 percent out of power generation, replace that with wind and what does that do for you? I’ll tell you what it does for you. It reduces your dependency on foreign oil by 38 percent.”

But its not as simple as just erecting some wind turbines and watching the juice start flowing. One of the major brakes on exploiting the US’ abundant wind reserves is the lack of infrastructure to transport this power from where it’s generated to where it’s needed. To get around the traditionally slow pace of transmission development, Pickens is taking the unusual step of bankrolling it in house. “ To fit the schedule of when we're going be ready to start spinning, which will be the last of 2011, we need to have transmission in place at that time,” he says. “This is the only way we can time it to work that way. And, see, everything has got to happen fast for me, because I'm 80 years old. ”

Even as someone who has lived and worked with fossil fuels his entire life, the advantage of wind energy is clear to Pickens. In an age where there are very real concerns about declining supplies, the wind offers a limitless supply of cheap energy. Getting to the stage where it offers a reliable slice of US power needs will take a lot of work, as well as support from legislators. A cause for concern is that Congress will fail to renew the Production Tax Credit for wind energy at the end of the year. The credit currently gives a $20 per kilowatt-hour rebate for energy generated from renewable resources and is a vital component in getting such projects off the ground. Pickens is bullishly confident that the credit will be renewed. As he sees it, the stakes are just too high. “The United States today runs on 987,000 megawatts, and the demand is going to increase 150,000 megawatts in the next 10 years, that’s 15 percent,” he says. “We could supply most of that with wind from the Great Plains, from Texas to North Dakota, but we've got to set up corridors to the West Coast and to the East Coast.”

But Pickens seems set on his course whatever transpires in government. With the self-confidence and willingness to take risks that has characterized his decades in the business, he’s going ahead and putting his money where his mouth is. “I'm going to take action,” he states. “Opponents say it's going to cost so much to address. And I say, well, hell, go ahead and spend it. I'd rather take a chance that I'm right than that I'm wrong. I don't want to wait around until the house burns down 'til I decide whether it's a serious fire or not.”

The wind power evangelist – Randall Swisher tells Power & Energy that the future is in the wind

PE. Why should renewable energy be an important area for the utilities industry? What benefits will a greater focus on this bring?
RS. If you look at where the electric industry needs to go from a strategic standpoint, you see a number of challenges. You see global warming and an environmental imperative for utilities to do business in a different way. You see strategic energy considerations in terms of dependence upon fossil fuel, which is having an impact in terms of greater reliance on fuels like natural gas.

Right now, you see tremendous opposition in the US against greater dependence upon fossil fuels, other than those that incorporate with carbon capture and storage. You see a great reluctance on the financial side to incur the expense associated with nuclear plants. And you see a concern about the price volatility of natural gas.

So the options available to electric utilities over the next decade are fairly constrained. And that’s the reason you’ve seen utilities increasingly turning towards wind power. In 2007, wind provided 35 percent of the new generating capacity in the US. There’s a transition taking place and utilities moving pretty strongly in this direction. There are a lot of factors pushing utilities in this direction.

PE. What impact do you think the alternative renewable energy sector could have on the future of US energy generation?
RS. Well, I don’t think it’s really accurate at this point to even use a word like alternative. When wind is providing 35 percent of the new capacity, it’s more than alternative. It’s actually very much in the mainstream.

PE. OK let me rephrase. How important is it then for renewable technologies to be developed in tandem with traditional methods?
RS. We work very closely with the renewable trades. We share a common strategic vision and that is that the world will need all the megawatts of renewable energy, that we will be able to install in the foreseeable future. Looking at technologies like wind and solar, they are very different technologies but we view them as being complementary. They’re not really competing in the market.

PE. What do you feel are the major technology challenges facing the growth of renewable energy and utilities in general?
RS. One of the big issues that the electric industry is facing going forward is the need to invest substantially in transmission infrastructure and in more efficient ways of managing our transmission grid. So, I think there’s certainly a growing interest in technologies like demand response and new transmission technologies that utilize transmission lines and transmission infrastructure more efficiently. At this point, there’s a virtual consensus in terms of the importance of moving in that direction.

What we don’t have at this point is the solution in terms of how the cost of that infrastructure investment will be allocated to customers. I think it’s very important that we face that issue and find a way of really facilitating the investment that needs to take place. There’s certainly not a shortage of capital. There are plenty of sources of capital that are looking to invest in transmission infrastructure. We just need a clearer formula in terms of how those costs will be allocated.

PE. What do you see as the key factors that are driving this interest in sustainable energy from both the perspective of business and the consumer?
RS. Well, four dollars for a gallon of gas certainly doesn’t hurt in terms of getting people’s attention. But it’s very clear we have a fundamental problem in terms of our reliance upon fossil fuels. It’s very clear from the global warming challenge that we need to think about energy in a different way. We just finished our annual conference, Wind Power 2008 in Houston. We had over 13,000 people there which is a growth of more than 80 percent over last year.

There’s this tremendous infusion of people capital companies into the wind sector. It’s really driven by the realization that business as usual is no longer going to work. We’re not going to solve the challenges facing the electric industry by looking at the future through a rear view mirror. New technology such as wind and other end goals will inevitably play an increasingly large role. And where we shape the electric industry to ensure the technologies like wind and solar and other renewables can play that increasingly big part.

PE. Can you tell us about some of the initiatives underway at the American Wind Energy Association and what your biggest challenges are? What are the key projects you’re working on that demonstrate your commitment to developing cheaper, cleaner and more efficient sources of energy?
RS. Last month the US Department of Energy released a technical report analyzing the feasibility of wind providing 20 percent of the nation’s electricity by 2030. That’s a terribly important final analysis because it demonstrated quite clearly that 20 percent wind is feasible. We think that that analysis really provides a strategic framework for this industry moving forward.

We’ve identified the critical constraints or barriers to wind achieving that market share and are in the middle of launching a strategic initiative to systematically overcome each of those barriers. Those barriers include things like the need to invest in transmission infrastructure, the need to achieve stable consistent policy support for wind over the long term, the need to build out the wind supply chain here in the US to take full advantage of the opportunity to build new manufacturing jobs in this country.

If you achieve the 20 percent wind target, you’ll see over half a million new jobs here in the US. It will reshape the power industry to accommodate more of a variable resource like wind. We’ll then have to deal with some of the exciting challenges in terms of reaching out to communities and proactively managing some of the risks to wildlife or other environmental concerns. Last but not least we have to ensure that we’re continuing to reduce the cost of wind and continue to improve the performance of the technology as it continues to move forward.

Right there, you’ve got an agenda that will keep us busy for years. But, I think we know what we need to do to achieve that kind of market share over time. If you look at the trends that the electric industry will be dealing with over the next decade or two, they are all going to favor the wind industry moving forward.

We’re talking about trends like global warming. Trends like increased cost and vulnerability associated with fossil fuel because of the strategic reliance and dependence upon fossil energy and the price volatility of fossil fuels. Along with all the pother factors I mentioned, those are what’s going be driving this change. There’s a tremendous economic development opportunity associated with wind the growth of the wind market here in the US.

Finally you have the simple fact that people like this technology. There’s very strong and broad public support for utilities doing more with wind. That’s something else that will continue to fuel the interest in this technology from electric utilities.

Randall Swisher has served as Executive Director of the American Wind Energy Association since 1989. Prior to that, he worked as Legislative Representative for the American Public Power Association and as Energy Program Director for the National Association of Counties. He has also worked as Professional Staff for the House Interior Committee's Energy and Water Subcommittee and as Executive Director for the D.C. Public Interest Research Group, where he first became involved with renewable energy advocacy in 1975.

T. Boone Pickens built the largest independent oil company in the United States and flourished as an entrepreneur after leaving it, generating hundreds of millions of dollars in the process. Among his lengthy accolades, Financial World named him CEO of the Decade in 1989 and the Oil & Gas Journal listed him as one of the “100 Most Influential People of the Petroleum Century.”

Top 10 states of wind resource potential (kWh) [Source: AWEA]
01 North Dakota (1210)
02 Texas (1190)
03 Kansas (1070)
04 South Dakota (1030)
05 Montana (1020)
06 Nebraska (868)
07 Wyoming (747)
08 Oklahoma (725)
09 Minnesota (657)
10 Iowa (551)

Counting on wind

• The US installed 5244 megawatts of wind energy in 2007, increasing capacity by 45 percent
• The wind fleet now numbers 16,818 megawatts and stretches across 34 states
• Wind farms will generate around 48 billion kWh of energy in 2008
• The energy generated will power the equivalent of over 4.5 million homes