Windy bank holidays, when wind power output is high but demand is low, can force National Grid to make significant constraint payments to wind farms, plus related payments to conventional generators, to cope with the surplus, unusable electricity generated by wind farms, usually because the windfarms are located behind a grid bottleneck.
2016 has proved to be the most expensive Easter holiday period to date for wind farm constraint payments, with a total of £3.7 million being shared between 39 wind farms.
The following table shows the breakdown of wind farm payments for the four days from Good Friday 2016 to Easter Monday. Whitelee, near Glasgow, was the big winner receiving more than £600,000 to curtail their output over that period. In addition to this constraint payment, the wind farm owners would also receive their wholesale payment for the electricity constrained off. Assuming wholesale rates of £35 per MWh, this would take Whitelee’s total return for the holiday period for not generating electricity to nearly £1 million.
|Wind Farm||On or Offshore||ROC Multiple||Wind Energy Curtailed (MWh)||Constraint Payment||Constraint Price per MWh||Subsidy Foregone per MWh||Excess Charged per MWh|
|Robin Rigg E||Off||2||792||£111,517||£141||£90||£51|
|Robin Rigg W||Off||1.5||807||£88,369||£110||£68||£42|
|West of Duddon||Off||2||345||£49,464||£144||£90||£54|
|Beinn an Tuirc||On||1||56||£3,280||£58||£45||£13|
The main justification given for paying wind farm generators to turn their turbines off is to compensate them for the Renewables Obligation subsidy which they cannot claim for the curtailed output. The table above also shows how many Renewable Obligation Certificates (ROCs) each wind farm receives for each megawatt hour (MWh) generated. This varies from 2 ROCs/MWh for new offshore wind farms to 0.9 ROC /MWh for new onshore wind farms. The value of each ROC is approximately £45. We also show in the above table the excess charged by each wind farm over and above the subsidy lost. It can be seen that the individual wind farm companies were demanding from £13 per MWh up to £67 per MWh more than the foregone subsidy to reduce output. To our knowledge there is no justification for compensation in excess of income lost, or for the disparity in sums charged between wind farms. We assume that both facts are the result of market power; in other words that the wind farms are exploiting their advantage to extract as much as they can from National Grid.
It is important to remember that electricity consumers also pay for the replacement electricity which has to be provided by conventional – usually fossil-fuelled – generators on the other side of the grid bottleneck. In other words, when wind is constrained off on one side of the bottleneck, conventional generators must be constrained on on the other side. Combined Cycle Gas Turbines (CCGT) generators usually provide the rebalancing energy. Thus, if we assume that gas was the replacement fuel for the onshore wind constrained off over the Easter holiday, we can estimate that the additional costs are a further £2.3 million, bringing the total additional cost of the wind farm constraints to £6 million over the four days.
While reinforcements to the grid network will in the short term reduce these constraint payments, it is likely that consumers will see no reduction in total cost, since the grid expansion is itself very costly and must be paid for by consumers. In the medium term, it is expected that even with grid reinforcements, wind constraint payments, particularly to Scottish wind farms, will rise again, as more wind power is built north of Tweed.
REF has consistently argued that the electricity system costs of wind power have been downplayed and neglected by both industry and government, to the disadvantage of the consumer. The continuing difficulties that National Grid experiences in stabilising the UK system at reasonable cost confirm our view. This is a very expensive way of reducing emissions, and in part to blame for the continuing deindustrialisation of the UK economy, as witnessed this week by the closure of Tata Steel.
In this context there can be little or no justification for the consenting of further wind farms, and arguably even those wind farms already constructed and consented should be forced to pay for the system difficulties that they are causing.