It appears from an article in the Sunday Telegraph for the 23rd of February 2014 that the Minister of State for Energy, Mr Michael Fallon MP, has written to the wind industry trade lobby, Renewables UK, instructing them that he will not tolerate the current demands for constraint payment compensation well in excess of lost subsidy.
The scandal of constraint payments to wind power was first revealed by Renewable Energy Foundation in 2011, and we have argued from the first that government and the regulator, Ofgem (to whom we wrote on the 6th of May 2011 suggesting an inquiry), must intervene to protect the consumer and the reputation of the energy sector.
REF publishes the only conveniently accessible data set on this important subject:
The REF data pages have formed the basis for numerous stories in the UK and international press.
As a result of this publicity the average bid to reduce wind output has fallen very significantly from an average of more than £200 per MWh in 2011 to £86 per MWh in 2013. However this average remains in excess of what is reasonable given that the subsidy forgone by onshore wind farms is approximately £50 per MWh. Furthermore, the average price demanded masks the fact that there is a wide range of charges with 18 onshore wind farms charging less than £80 per MWh whereas 11 others charge from £81 to £162 per MWh not to generate.
We infer that by exposing the industry’s abuse of market power to public scrutiny we have saved the UK consumer many millions of pounds in fact and many more millions prospectively.
Mr Fallon’s intervention is to be commended, and will, we trust, reduce the consumer cost of wind power constraint payments to justifiable levels.