The Picken's Plan - A Look at Energy Realities

Posted on July 25, 2008 by Stephen K. Gardner

T. Boone Pickens has an energy plan and he should be commended for it. More policy makers and influential individuals should do so. Visions and ideas should be explored and discussed.

The essence of the Pickens Plan is to replace one-third of our foreign imports of oil with natural gas fired vehicles. In turn, natural gas produced electricity is replaced with wind power. Pickens believes that this transition can be accomplished in 10 years.

Wind power currently produces some 1 percent of the nation’s electricity. So, to produce an additional 21 percent in the next 10 years would require a gargantuan effort. But, what would be the impact on natural gas?

Let’s look at the numbers involved for natural gas. According to the Pickens Plan, we use 21 million barrels of oil per day of which 70 percent is imported. (I note that the Energy Information Administration uses 60 percent net imports, 30 percent of which comes from Canada and Mexico.)  Thus, according to Pickens, we use approximately 15 million barrels of imported oil per day.  At the same time, we consume on average about 62 billion cubic feet of natural gas per day. A barrel of oil is equal to 5,487 cubic feet of natural gas. Thus, to displace one third of our imported oil would require approximately 27 billion cubic feet of natural gas per day or close to 44 percent of our current natural gas consumption. This doesn’t take into account that gas consumption to produce electricity is projected to increase by 10 to 25 percent in the next 10 years.

Under the Picken’s Plan, since wind would replace natural gas used for electricity, theoretically it would be a wash in terms of our natural gas supply and prices. But, I wonder whether this is feasible in light of certain energy realities.

Here are three points to consider:

  1. A significant amount of natural gas fueled electricity is for summer peaking units. These units are held in reserve and turned on instantaneously during peak usage periods, generally in the summer. Without innovations in storage, it is doubtful that wind power would be able to perform this critical function for electric utilities; Wind power is intermittent and is non-dipatchable. This means that it can’t always be used when it is needed. To make matters worse, electricity traditionally peaks during July and August, which is the lowest month for sustained winds. Thus, natural gas would be required anyway as a back-up fuel. And, finally, wind is more difficult to transmit and would require substantial and expensive new transmission lines. 

  2. Wind is considerably more expensive than natural gas -- some put wind at five times the price of natural gas, especially when you factor in the price of new transmission and the cost of so-called shadow generation. Thus, already high electric bills will be strained.

  3. Natural gas prices are already at record highs. In the summer, natural gas is used to meet both electricity demand and to fill storage for winter consumption. If 44 percent of natural gas is used for motor fuels, which itself peaks during the summer, the strain on natural gas prices may be well substantial. This would both adversely impact residential consumers as well as industrial and commercial end-users who must rely year round on natural gas.

Don’t get me wrong. Personally, I am all in favor of wind power and think it is a critical element to a balanced energy plan. It’s just that broad and ambitious plans require a fuller understanding of energy realities.  

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International Wind Power

Posted on April 1, 2008 by James K. Alford
Wind energy experienced a record year of international growth in 2007. According to the Global Wind Energy Council (GWEC), installations of new wind energy facilities increased by thirty percent in 2007, with twenty gigawatts (GW) of new installations brought into service worldwide. According to a US Department of Energy May 2007 report, this follows seven years of growth in wind capacity at the rate of twenty-four percent per year in the US and twenty-seven percent per year worldwide. This growth has been driven in part by multinational utilities such as Iberdrola and Acciona, which joined FPL Energy and Babcock and Brown in 2007 as leaders in wind power plant ownership with new facilities installations in North America and worldwide. 

The annual 2007 survey by GWEC and Emerging Energy Research (EER) reflect that wind power ownership and installations continue to increase in North America, Europe, Latin America and Asia. EER reports that while the United States in 2007 remained the largest market with 5.2 GW of new installations, it was closely followed by Spain and China, which added 3.5 GW and 3.4 GW, respectively, to their total capacity of wind power. The other leading international markets include Germany, Canada, India, Denmark, Italy, the UK, Portugal, and France.

The development of wind power is now a global opportunity. For many companies, establishing operations in new international markets may be a sound and profitable part of their strategic growth, particularly markets in which sponsors can achieve greater cost efficiencies and profitability.

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Published in North American Clean Energy (May /June 2008)

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