Former Oilman T. Boone Pickens Makes a $2 Billion Bet on Alternative Wind Energy

By Jennifer Yousfi
Managing Editor

T. Boone Pickens made his fortune in oil. But now the Dallas oilman and famed former corporate raider is betting $2 billion that he can have the same success with a new source of energy - wind.

Pickens' Mesa Power LLP yesterday (Thursday) unveiled the first phase of an eventual $10 billion alternative energy project that has the potential to become the world's largest wind farm.

"You find an oilfield, it peaks and starts declining, and you've got to find another one to replace it," Pickens, who once operated one of the largest independent oil-and-gas production companies in the country, said of the deal. "It can drive you crazy. With wind, there's no decline curve."

Mesa Power will purchase 667 wind turbines from General Electric Co. (GE). Each turbine can produce 1.5 megawatts of electricity. The first phase of the project will produce 1,000 megawatts, enough energy to power 300,000 homes. GE will begin delivering the turbines in 2010, and current plans call for the project to start producing power in 2011.

"T. Boone Pickens' commitment underscores the ability of wind technology to help meet the country's need for diverse sources of energy," said Jeffrey R. Immelt, GE's chairman and CEO. "As America's demand for energy escalates, it is clear that wind can and will play a bigger part in meeting that need. We're excited to partner with an energy visionary like T. Boone Pickens to bring our wind technology to the marketplace."

Ultimately, Mesa Power plans to have enough turbines to produce 4,000 megawatts of energy, the overall project is expected to cost $10 billion and be completed in 2014.

Mesa Power has leased sparsely populated land in the Texas panhandle, where the wind often blows during daylight hours when energy needs are highest. Texas' Competitive Renewable Energy Zones (CREZ) transmission lines will deliver what Pickens hopes will be "cost effective and reliable electricity generated by renewable energy power projects."

"We have had a great response to this project," Pickens said. "We are making Pampa the wind capital of the world. It's clear that landowners and local officials understand the economic benefits that this renewable energy can bring not only to landowners who are involved with the project, but also in revitalizing an area that has struggled in recent years."

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"Alternative" Energy No Longer Just an Alternative

At a time when oil is costing upwards of $125 a barrel, alternative energy sources are no longer just for the environmentally conscious, but for the cost conscious, as well.

"The development of alternative energy projects, especially renewable resources such as wind power, is critical for the future of the country in the face of declining world oil resources," Pickens said.

For years, emerging economies such as China have chosen "cheap" over "clean" when it comes to energy sources. But with the cost of traditional fuel sources such as oil and coal skyrocketing, environmentally friendly choices are becoming more appealing.

When it comes to China investments, "the smart money is in the clean money," says Money Morning Investment Director Keith Fitz-Gerald.

And when it comes to alternative energy, wind power isn't the only option. The Solar Energy Industries Association (SEIA) says that solar power will provide 50% of all new electricity in the United States within eight years, creating tens of thousands of new high-tech jobs, while helping to conserve natural gas and saving American taxpayers billions in energy costs.

And while that estimate might be a bit ambitious, it's certainly true that solar power use is on the rise, both domestically and abroad.

One of the solar power stars is First Solar Inc. (FSLR), which designs and manufactures solar modules using a proprietary thin-film semiconductor technology. With that know-how, the company's average cost for making a solar module is among the lowest in the world.

Another up-and-comer is LDK Solar Company Ltd. (LDK), which expects to complete a brand-new silicon plant with a 1,000-ton production capacity this summer. And another plant with a production capacity of 15,000 tons per year is set to come online sometime next year.

If you prefer the built-in diversification that mutual-fund-type investments offer, consider an exchange-traded fund (ETFs) that focuses on such "clean" technologies as solar and wind power. One of the top ETF names is PowerShares WilderHill Clean Energy (PBW).

If you're the type of investor who prefers cool breezes to sunny skies, you could invest in the makers of wind turbines.

Two of the largest include GE and Siemens AG (ADR: SI). GE just received the $2 billion order from Pickens and expects another $6 billion in orders from the planned 4,000 MW Pampa project alone. And Siemens will supply the turbines for a 500 MW wind farm planned in the United Kingdom.

News and Related Story Links:

  • Forbes:
    Boone Pickens project buys 667 GE wind turbines
  • PR Newswire:
    Mesa Power Places World's Largest Single-Site Wind Turbine Purchase Order