UPDATED 22 November 2016: SEE POSTSCRIPT BELOW
On the 28th of October, Falk Renewables announced that its newest wind power station, Assell Valley Wind Farm in Ayrshire, had begun generating.
Two weeks later, on the 11th of November, Assell Valley wind farm had to reduce output on instruction from National Grid in order to cope with the on-going problem of Scottish wind farms generating surplus electricity which can neither be used in Scotland, because of low demand, nor exported to England because of the limited interconnector capacity between the two countries.
Assell Valley wind farm charged £76/MWh to reduce output, which is approximately twice the subsidy income foregone when the wind farm is constrained off. Further constraint bids from this wind farm were accepted on the 12th and 16th of November at the same price. At the time of this blog (21 November 2016) the total income from constraints to stop generating for this new wind farm amounted to just under £10,000.
Constraint payments to wind power began in 2010 with three wind farms, all in Scotland. There are now 51 wind farms receiving such payments, 15 offshore, some in English and Welsh waters, and 36 onshore, all in Scotland.
Constraint payments made to wind since that date amount to £266m, £90m of which was paid in 2015 and £70m so far in 2016.
These payments, and the corresponding payments to conventional generation to increase output south of the constraint in order to bring the electricity grid back into balance, are a significant part of the rapidly increasing cost of Balancing Services Use of System (BSUoS) costs, which have risen from about £300m a year in 2001/2 to more than £1bn a year at present. These costs are passed on to consumers in electricity bills.
The construction of additional grid infrastructure to address constraints is now well under way, notably the 2.2 GW Western Link from Scotland to Wales. While this will reduce constraint payments to wind in the short term, we can be certain that it will not remove them altogether because there have already been periods when more than 2.2 GW of Scottish onshore wind has had to be curtailed. Furthermore, there is at least 3 GW of further capacity scheduled to be built in the next few years. Thus, the Western Link is only a temporary, incomplete solution to the problem of electricity grid-lock in Scotland.
Furthermore, the interconnector is unlikely to reduce overall costs to consumers. The Western Link connection will cost about £1bn, a capital cost that implies an annual standing charge of between £50m and £100m on the consumer (roughly 5% to 10% of the CAPEX) for the life of the asset, which might be thirty years.
In conclusion, the speed with which a new wind farm such as Assell Valley was constrained off almost immediately after commissioning, shows that the overbuild of wind power in Scotland has now reached critical levels, levels that even very expensive grid expansion will struggle to address. The consumer is getting a very bad deal, and the further cost is added to what were already expensive emissions savings, well in excess of the Social Cost of Carbon.
UPDATE 22 November 2016
Since publication of this blog yesterday, we note that another new wind farm, Dersalloch, received constraint payments at £116 per MWh to reduce output for the first time on the 21st of November 2016. Dersalloch, a Scottish Power development of 23 turbines with an installed capacity 69 MW, is now substantially complete, but has not yet been formally opened. It is sited close to the already heavily constrained Hadyard Hill (130 MW) and Arecleoch (114 MW) wind farms, as well as to the Assel Valley wind farm, the subject of this blog.