The credit crunch is not just hurting the banks and the real estate market. Even the billionaire and wind energy enthusiast, T. Boone Pickens is having trouble financing his high profile 4000 MW wind farm. The price tag on this Texas wind farm is a hefty $10 and $12 billion.
TheÂ credit crunchÂ is not just hurting the banks and the real estate market. Even the billionaire and wind energy enthusiast, T. Boone Pickens is having trouble financing his high profile 4000 MW wind farm. The price tag on this Texas wind farm is a hefty $10 and $12 billion.
Although we are used to hearing about climbing energy costs, the price of natural gas is actually down. Natural gas accounts for 20% of the nation's electricity generation. The energy sector is also suspecting that the financial crisis may result in a global reduction in energy demand.Â Pickens' planÂ calls for replacing natural gas with wind energy, while increasing energy security."I think it is all going to be put off, because we have got the credit crunch, one, but, two, natural gas prices [are down], so you are going to price wind off natural gas power and right now natural gas is so cheap there will be no new wind deals until natural gas price gets back up," Pickens said.
"Presumably, a lot of capital would have to be raised to move these things forward, and that looks to be extremely difficult in these current conditions," said Richard Murray, director of the University of Houston Center for Public Policy. "And if crude drifts back down to the $50 to $60 range, it is going to take a lot of the incentive away to shift your energy paradigm." Crude was trading belowÂ $65 barrelÂ on Friday afternoon.
Even Pickens' energy related hedge fund,Â BP Capital, posted losses of 60% this year.
Pickens is certainly not throwing in the towel. He is creating a "New Energy Army" and strives to have 1.4 million members by election day. He is just shy of his goal at this moment. Such publicity including television commercials and print adds for Pickens' Plan have caused Americans to think about energy policy.
"His outcry has neighbors talking over the fence about our energy future," said Ned Ross, director of regulatory affairs for a unit of utility FPL Group Inc in Texas. "People who either paid no attention to energy or didn't care are in the debate."
Now that the price of gas is below $3 a gallon in most markets, will Americans turn their attention elsewhere? As global action to combat climate change mounts, will market condition hinder renewable energy? Perhaps a down market may help fuel energy efficiency initiatives, which is one of the most effective ways to reduce carbon emissions.