The Mancunion

Britain's biggest student newspaper

UK wind farm constraint payments ‘scandal’

New information has revealed that in 2017 the National Grid paid wind farms more than £100 million to be switched off and not produce energy, despite preventative measures

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The Renewable Energy Foundation (REF) has revealed that wind farms were paid more than £100 million last year to switch off their turbines — an increase from the £6 million paid out in 2012.

The National Grid pays all renewable and non-renewable energy generators ‘constraint payments’ to alter their production, so as to avoid the blackouts that both over- and under-supply would cause. The gas industry (which supplies the UK with 42 per cent of its electricity) was paid almost twice as much as the wind industry in 2017.

The majority of the UK’s main wind farms are in Scotland, an area that has high energy output but relatively low energy demand. However, large quantities of energy are unable to be stored, and the grid connections between Scotland and England are not adequate to take on the excess energy from Scotland. Larger wind farms are part of the energy sector’s Balancing Mechanism, a system used by the National Grid to balance these differing levels of supply and demand. As demand fluctuates throughout the day, the supply must continually match it every second.

In order for this system to work, the National Grid takes bids from energy firms to alter the amount of energy they supply. For conventional energy firms that use fossil fuels, it is cheaper to pay the National Grid to produce less energy than it would be to continue to use up their supply of fossil fuels. However, renewable energy has no fuel costs and therefore would not benefit from such a system.

Instead, wind farms and renewable energy firms propose positive bids to the National Grid, they tell the National Grid that they will turn off their wind farms if they are paid a certain amount per megawatt hour. These payments are known as constraint payments, which have been widely criticised.

However, some, including Leo Hickman writing in The Guardian, have raised concerns about the REF’s agenda in providing such statistics. Despite its name, it is frequently cited by publications mostly opposed to wind-farm development such as The Telegraph and the Daily Mail. It is also supported by anti-wind campaigners, such as former Ulster Unionist MP and former British Airways “press supremo” David Burnside, and has “impressive links to City financiers and energy consultants.”

There has been some legislation implemented in an attempt to prevent constraint payments getting too high since this ‘wind farm scandal’ first surfaced in 2010, in the form of the Transmission Constraint Licence Condition (TCLC) which was introduced in 2012 and was made a permanent condition in 2017.

Despite these efforts to control the compensation payments, and reducing the added costs passed on to consumers by the National Grid, many wind farms were still placing excessive positive bids, with a current average compensation payment of around £70 per MWh to switch off, almost 40 per cent higher than when they produce energy.

Wind farms are on the rise in the UK, and by 2020 it is thought that wind farms will grow to produce 10 per cent of the UK’s energy. This rise is especially prominent after the COP23 in November 2017 advocated an accelerated reduction in coal reduction, with the UK announcing that it plans to have phased out coal entirely by 2025. With the number of wind farms rising, many are calling on the National Grid to update its infrastructure in order to avoid excessive constraint payments.

 

  • Chris Brown

    The headline only tells part of the story.

    Constraint payments are nothing new. The National Grid has been paying coal and gas generators – and others – to change their planned output well before any wind farms were built.

    If you look at the latest data from the National Grid (table 5.2.2) you will see that the constraint payments made to gas power stations were more than twice as much as those made to wind farms (£196.94m compared to £84.83m).

    https://www.nationalgrid.com/sites/default/files/documents/MBSS_Nov_2017.pdf

    I hope in the interests of balance the Mancunian will publish a correction to this story.

    • Tristan Parsons

      We have corrected the article.

    • Lyndsey Ward

      No need for a correction at all.

      NG doesthe fine tuning second by second by asking for more or less generation and
      either paying for it or compensating for a generator’s lost sale of electricity
      when it is asked to shut down. Constrained off oil, coal or gas generators then
      give NG a rebate for the saving on fuel. Constrained off wind generators lose
      the sale of electricity but also lose their subsidy worth about as much again
      as the cost of the electricity and need to be compensated for this loss. That
      is only fair and reasonable. However, that makes wind about twice as expensive
      as other technologies and NG also has to balance its books so NG never chooses
      voluntarily to constrain off wind energy for routine balancing of the grid.

      In practice, wind is only constrained off if NG has to deal with an excess of generation and has exhausted all cheaperoptions. This puts the wind generators in a very favourable negotiating position because NG cannot allow excess windgeneration to destabilise the system.
      The outcome is always a payment to the wind generator well in excess of
      his losses.

      • Chris Brown

        It would help the discussion if you checked the facts rather than just cutting and pasting stuff written by someone else. Particularly when you don’t credit them. http://www.caithnesswindfarms.co.uk/Brief-explanation.pdf

        Firstly While Stuart Young is correct that the National Grid fine tunes the grid minute by minute electricity is bought by them from suppliers in half hour segments called Settlement Periods. Elexon has a beginners guide to how the energy market works. https://www.elexon.co.uk/wp-content/uploads/2017/11/beginners_guide_v6.0.pdf

        Section 5 of the Monthly Balancing Services Summary says that that the National Grid resolves constraints through different mechanisms, including “bids and offers in the Balancing Mechanism, PGBTs, Trades, SO-SO actions and through contracted services.” https://www.nationalgrid.com/sites/default/files/documents/MBSS_Nov_2017.pdf

        Appendix 1 and Appendix 2 of the Transmission Constraint Management Requirement Notice: Invitation to Tender Pack show how the contract fee is calculated for coal and gas generators. There is no mention in either appendix of a rebate paid by generators for the saving on fuel. https://www.nationalgrid.com/sites/default/files/documents/TCMRN-03-17%20Anglia%203%20Nov%2017%20-%208%20Dec%2017%20-%20Results%20-%20EXT_1.pdf

        In May 2017 Ofgem issued updated Transmission Constraint Licence Condition Guidance to prevent generating companies from gaming the constraints system. Anyone found in breach of the licence conditions is likely to be fined heavily. https://www.ofgem.gov.uk/system/files/docs/2017/05/2017_tclc_guidance.pdf

        Phil Sheppard, National Grid’s Head of Network Strategy, has written an article on why constraint payments are needed and in the long-term interests of the UK. http://nationalgridconnecting.com/grounds-for-constraint/

        • Lyndsey Ward

          It was sent to me as an explanation so don’t tell me what I can and cannot do especially as he is a colleague and we work closely together exposing the wind policy insanity in Scotland. The fact is the reckless over deployment of wind by the SNP administration is causing grid problems and huge expense to the consumer.

          • Chris Brown

            It is polite to credit people for their work.

            I would be interested to see any evidence you have supporting the assertion that wind farm developments in Scotland are threatening grid stability. This is what constraint payments are designed to prevent. Read the Phil Sheppard article for an explanation.

            If you don’t support building wind farms, where do you propose we get our electricity from in the future? A large number of power stations will be closing soon.

            • Lyndsey Ward

              Somewhere reliable. Wind is not.

            • Chris Brown

              “Constraint payments to Scottish wind farms are ludicrous.” What evidence is there to back up this opinion?

              “Somewhere reliable. Wind is not.” I don’t understand this, please clarify.

              You haven’t said where we should get our electricity from in the future if it isn’t from wind power or supplied any evidence to show that wind farm developments in Scotland are threatening grid stability.

            • Chris Brown

              In Scotland Longannet power plant (2.4GW) is due to close in 2020, Hunterston B (965MW) is due to close by 2023, and Torness (1,364MW) has just had its closing date pushed back to 2030. Elsewhere in the UK other large power plants are due to close by 2030.

              You should also note that the upgrade to the grid network connection between Scotland and England is due to be completed by 2021 which will allow more electricity to be moved between them when needed.

            • Lyndsey Ward

              Constraint payments to Scottish wind farms are ludicrous.

            • barrry baptist

              YOU are deluded.

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