Wind farm paid £1.2 million to produce no electricity

A wind farm has been paid £1.2 million not to produce electricity for eight-and-a-half hours.

By Edward Malnick and Robert Mendick

9:00PM BST 17 Sep 2011

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The amount is ten times greater than the wind farm’s owners would have received had they actually generated any electricity.

The disclosure exposes the bizarre workings of Britain’s electricity supply, prompting calls last night for an official investigation into the payments system.

The £1.2 million will go to a Norwegian company which owns 60 turbines in the Scottish Borders.

The National Grid asked the company, Fred Olsen Renewables, to shut down its Crystal Rig II wind farm last Saturday for a little over eight hours amid fears the electricity network would become overloaded.

The problem was caused by high winds buffeting the country in the wake of Hurricane Katia.

In total, 11 wind farms were closed down last week, receiving a total of £2.6 million. The money – detailed in calculations provided by National Grid – will be added on to household bills and paid for by consumers.

As Britain pushes for more and more wind farms, critics claim the size of the ‘constraint payments’ will grow accordingly – raising serious concern about the long-term suitability of wind power to meet Britain’s energy needs.

Crystal Rig received by far the largest single payment because the National Grid runs an auction, inviting energy companies to say how much they want in compensation for switching off.

Crystal Rig’s owners asked for £999 per megawatt hour of energy they would have produced had they been switched on. Incredibly, the figure Crystal Rig had bid was accepted by the National Grid.

Had the turbines remained on, Crystal Rig’s owners would have received the going rate of about £100 per megawatt hour instead. Half of that is in the form of a generous consumer subsidy.

Tim Yeo, chairman of the Energy and Climate Change Select Committee, called for an urgent inquiry into the prices paid to the wind farms.

“The very principle of paying wind farm owners for not producing is one that is offensive to consumers,” said Mr Yeo, “It looks like a new version of the Common Agricultural Policy where people are paid not to produce things.

“It looks on the face of it like an extraordinary overpayment by National Grid, for which an urgent explanation is required. This requires an immediate investigation by the energy watchdog Ofgem.”

The National Grid runs a ‘balancing mechanism’ to ensure electricity supply meets national demand. Electricity cannot be stored.

In a further twist, traditional coal- and gas-fired power stations were also running on reduced power last week – but energy companies actually paid the National Grid to do so. That is because the companies made savings by not having to burn as much fossil fuel.

Dr John Constable, director of the Renewable Energy Foundation, an energy think tank which spotted the size of the payment at Crystal Rig, said: “This system appears to be unreasonable, is certainly not in the consumer interest, and requires the urgent attention of the regulator, Ofgem.

“These very high constraint payments show that the scale and pace of government’s subsidy-driven push for wind has outstripped National Grid’s ability to integrate this uncontrollable source of energy at tolerable cost. A pause for thought would seem to be wise.”

The National Grid spokesman said: “The payments are based on what the operators bid and how many megawatt hours are constrained off.”

The spokesman said they took the cheapest bids first before being forced to accept the Crystal Rig bid in order “to operate the network safely”.

A spokesman for Fred Olsen Renewables said: “Crystal Rig is one of the largest wind farms in the UK so it is one of the last farms we intend to get switched off, so the price is set that high.

“There are about four or five developers who do the same thing, set it at the £999 level to try and keep it up as long as possible. Crystal was one of the last to be shut off.”

An Ofgem spokesman said: “We routinely monitor the market and over the past few days we have been looking carefully at the bidding behaviour of generators behind constraints, including wind generators.

RenewableUK, the industry trade body, said wind farms were not the only sources of energy to be occasionally paid to be shut down.

A spokesman said: “Wind turbines are generating a great deal of clean, green energy – the problem is that the National Grid simply doesn’t have the capacity to take it all in.

“This shows that we urgently need the National Grid to be upgraded to cope with the extra electricity that the wind industry is generating with increasing efficiency.”

Wind farm paid £1.2 million to produce no electricity – Telegraph

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