Wind farms paid £30m to shut down during high winds

February 24, 2014 by  
Filed under Green Energy News

The payments are made to wind farm owners on top of “green subsidies” that
they already receive to encourage renewable power plants to be built.

These subsidies are set by the government but paid ultimately from customers’
household bills.

On a daily basis, the National Grid forecasts what the likely demand for
electricity will be and assesses it against the generating capacity of wind
farms, as well as coal, gas and nuclear power stations.

When there is expected to be too much electricity generated by power plants
for the network of transmission cables to handle, the National Grid invites
companies to bid for compensation to shut down some or all of their
equipment.

Wind farms are often thought to be among the first generators chosen to be
switched off because they are relatively easy to stop, by applying brakes to
the turbines to halt their movement.

Individual wind farms companies set the levels of their compensation demands
and the National Grid then chooses which bids offer the best value.

The total amount paid out through these compensation arrangements – known as
“constraint payments” – has risen dramatically in the last four years as the number
of onshore wind turbines
has grown. Between 2010 and October 2012, £17.8
million was paid in total.

But new figures based on Ofgem data disclose that these payments are expected
to cost consumers £30 million this year.

On one day in August last year, 27 wind farms across the country had to shut
down some or all of their turbines, costing more than £2 million in
constraint payments, according to figures from the Renewable Energy
Foundation.

In the first six weeks of 2014 alone, more than £4.2 million has been paid to
wind farms to switch off their equipment, the Foundation said.

However, under pressure from the government, the average compensation payment
has fallen significantly, even though the total has risen.

A new licence rule which applies to larger wind farms bans them from charging
high prices, at the expense of consumers, when they are asked to switch off
their turbines.

But smaller wind farms are exempt from the licence requirement and Mr Fallon
is concerned that some are now charging the National Grid unduly high prices
to shut down.

Smaller wind generators are charging the Grid 30 per cent more on average to
switch off turbines than larger power plants, the figures showed.

In a letter to Renewable UK, the trade body for wind power, Mr Fallon said
this practice must end.

Mr Fallon urged wind power companies to show “restraint” in the prices they
charge for compensation.

“Bids being accepted by National Grid to reduce generation from a few licence
exempt wind farms are substantially higher than those relating to licensed
wind farms,” Mr Fallon said.

The energy regulator, Ofgem, has contacted some of the offending wind farm
owners and these companies should “cooperate”, explain why their charges are
so high, and, “where appropriate”, reduce their bills, he said.

Mr Fallon said “the government stands ready, if necessary”, to force
individual wind farms to comply with tougher rules if they fail to cut their
charges.

Ministers are also prepared to “extend the discipline” of the licence rules,
which prevent larger wind farms exploiting the compensation scheme, to all
onshore wind farms regardless of their size, he said. This will be done
“through changes to legislation, should that prove necessary”, Mr Fallon
warned.

The estimates seen by the Telegraph suggest that on average, wind farms that
are exempt from the licence rules were paid £104 per megawatt hour to turn
off their turbines last year, compared with £80 per megawatt hour for larger
licensed generators.

It is understood that eight wind farms in particular have been charging
excessive rates in exchange for shutting down turbines during windy weather,
although they have not been publicly named.

Mr Fallon has also written to Energy UK, representing the major power
companies, Scottish Renewables and the Renewable Energy Association.

Maria McCaffery, Renewable UK’s chief executive, said the wind farm industry
had already taken steps to bring down costs of compensation and would
continue work to “provide the best value for money for consumers”, she said.

“As the cost of using fossil fuels is so high – and importing gas is
particularly expensive – we need to lessen our dependence on them by
harnessing our own abundant, clean and totally sustainable resources,” she
said.

“Wind is playing an increasingly vital role in our electricity mix as a
flexible energy source that can be managed to fit our electricity demands by
shutting down and powering up more easily and more quickly than other forms
of energy.”

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