Renewable Energy Foundation

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Santa's Christmas present for wind farms

Over the Christmas period, high winds accompanying Storms Barbara and Conor combined with low demand for electricity to deliver a £7 million gift to the owners of wind farms in the form of constraint payments. Constraint payments occur when wind farms are paid not to generate, usually in periods when wind generation is surplus to demand. The bulk of these payments are made when wind generation cannot be used in Scotland, and there is insufficient grid capacity to export the energy to England. The cost of these payments is borne by electricity bill payers throughout the United Kingdom.

The peak payments over the current holiday season were made on Christmas Day, as summarised in the following table drawn from the REF datasets:

Table 1: Constraint payments made to wind farms over the Christmas holiday period 2016

Date Cost GWh Average Price per MWh Number of wind farms
22-Dec-2016 £900,546 13.7 £66 29
23-Dec-2016 £1,121,658 17.5 £64 26
24-Dec-2016 £1,412,780 21.1 £67 27
25-Dec-2016 £2,075,340 31.4 £66 31
26-Dec-2016 £1,492,452 22.7 £66 25

The big earning companies were Scottish Power (SP) and Scottish and Southern Electricity (SSE) which made £3.5 million and £2.5 million respectively over this period.  Whitelee (owned by SP) and Clyde (SSE) were the most heavily constrained taking £1.9 million and £1.2 million respectively, but 35 wind farms in total shared in the windfall, as recorded in the following table:

Table 2: Constraint payments to wind farms over the period 22 December - 26 December 2016. Offshore wind farms are in italics.

Wind farm Cost MWh Price per MWh
Whitelee £1,901,946 30,735 62
Clyde £1,202,642 17,607 68
Griffin £554,786 8,326 67
Black Law £411,132 6,769 61
Harestanes £401,778 6,635 61
Arecleoch £385,448 6,325 61
Hadyard £331,933 4,982 67
Gordonbush £167,204 2,509 67
Strathy North £157,872 2,562 62
Farr £152,197 2,089 73
London Array £139,149 1,054 132
Mark Hill £132,274 2,207 60
Millennium £125,798 1,657 76
Kilbraur £121,193 1,597 76
Beinn an Tuirc £112,027 1,869 60
Fallago £109,714 1,304 84
Crystal Rig £77,251 887 87
Dunlaw £73,293 1,223 60
Toddleburn £73,127 1,098 67
Beinn Tharsuinn £61,848 1,032 60
Moy £48,118 580 83
Dunmglass £42,095 683 62
Lochluichart £41,494 500 83
Clashindarroch £39,087 483 81
An Suidhe £32,427 458 71
Tullo £22,432 270 83
Assel Valley £18,686 246 76
Clachan Flats £17,458 291 60
Minsca £16,506 197 84
Edinbane £11,857 141 84
Westermost Rough £6,282 43 145
Foudland £4,932 58 86
Barrow £4,440 53 84
Robin Rigg £2,581 24 109
A’Chruach £1,771 22 82

Several wind farm companies have increased the prices they charge to reduce wind farm output during 2016. For example, the price for Clyde wind farm was increased by nearly £3 per MWh on 13 December 2016 to £69. The price charged is to compensate for the subsidy forgone when a wind farm is constrained off the grid; this is currently £45 per MWh, so the payments actually exceed by a large margin the income lost, meaning that wind farms actually make more money when they are constrained off the system than when they are generating normally. For example, the owners of Clyde are claiming an extra £24 per MWh for unexplained reasons and £3 of this rise occurred just prior to the Christmas storms.

There are now 52 wind farms in the United Kingdom that receive constraint payments; 37 are onshore, all of which are located in Scotland. To date, these wind farms have received a total of over £274 million from electricity bill payers for not generating. Large scale deployment of wind farms in the area of greatest constraints continues apace. The justification for the prices charged for reducing output remains opaque and while this is the case the opportunity for exploitative pricing continues. REF has consistently argued since we first revealed the constraint payments that the compensation to wind farms should be capped by the regulator at the subsidy income lost.

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