The billionaire energy tycoon T Boone Pickens has scrapped a $10bn (£6.3bn) plan to build the world's largest windfarm in the panhandle of Texas, dealing a setback to a broader effort to wean the US off its dependence on foreign oil.

Pickens blamed technical problems in transporting power between the proposed site of the system, which was to be in agricultural land hundreds of miles north-west of Dallas, and major population centres.

The demise of the project leaves Pickens, 81, with a challenge in dealing with an initial load of 687 giant wind turbines, already on order from General Electric and due for delivery from 2011. He hopes to build a series of smaller power generation farms instead of a single enormous one.

"My garage won't hold them," said Pickens. "They've got to go someplace."

Pickens, who built his fortune in the oil and gas industry, has spent the last year vigorously promoting a self-proclaimed "Pickens plan" which aims to make the US independent of foreign sources of oil by switching to domestic natural gas and wind generation. He has bankrolled television commercials advocating the idea and has lobbied lawmakers in Washington.

The colossal wind farm, which Pickens described to the Guardian last year as "mind boggling", was to have been a centrepiece of the plan. By 2014, it was supposed to have a capacity of 4,000 megawatts of energy derived from 2,700 turbines on 200,000 acres of land – enough to power a million homes.

He told the Dallas Morning News this week that construction of a transmission line to the site had proven difficult: "It was a little more complicated than we thought."

Instead, his company, Mesa Power, is looking at six possible sites across the US Midwest and south-west, as locations for three to four windfarms of about 150 turbines each.

"I don't think the first place we build, though, is where we thought we would build because we don't have the transmission," said Pickens.

Barack Obama met Pickens during the election campaign last year, saying he was keen to discuss an "intelligent energy policy", despite the billionaire's record of supporting Republican politicians. In 2004, Pickens bankrolled a series of controversial spots known as "swift boat" advertisements which attacked the war record of Democratic contender John Kerry.

Pickens' argument for wind is largely on financial, rather than environmental, grounds. He points out that the US imports 65% of its oil which, he says, is both an economic and a security threat. He told Congress that $10 trillion would leave the country to buy foreign oil over the next decade.

In March, Pickens was awarded the honour of "Texan of the year" by the state's Republican governor, Rick Perry, who said the Pickens plan could "change the world forever".