September 2018 has seen the highest monthly payments to wind farms to stop generating since records began in 2010.
Due to levels of wind power in Scotland well in excess of local demand, and grid bottlenecks inhibiting transit within Scotland and export to England and Wales, the UK’s system operator, National Grid, is often left with no alternative but to constrain wind power off the Scottish network.
When wind farms are constrained off they lose the subsidy they would otherwise have received for that energy, and so ask National Grid for compensation. In effect they are paid to stop generating.
In fact, and probably because of their market power, they are able to ask for more in compensation than they lose in subsidy, meaning that they make more when not generating than when selling normally. This anomalous situation has cost the UK consumer £464m since 2010 when the practice began, with 2017 being a record year when costs to consumers rose to £108.25m.
Windfarm constraint payments so far in 2018 amount to £78.6m, with £28.4m of that total being paid in September alone, an all-time record for a single month.
Though a record in scale, this September’s constraint payments were typical, in that average Scottish onshore wind farm earnings were £72/MWh constrained off, with prices ranging from £63 to £118 per MWh. This represents a range of £13 to £73 per MWh in excess of the subsidy income forgone when wind farms are instructed to reduce output.
This excess compensation means that wind farms in Scotland earn more on average per unit generated, creating a perverse incentive for wind farms to be located in Scotland, and on the further side of grid constraints.
No one should be under any illusion of the scale of the problem. Whitelee and its Extension, near Glasgow, have taken £91.8m in constraints since 2010, making it the highest earner. The recipient of the second highest total of constraints is Clyde Wind Farm which has taken £59.3m since 2012, followed by Fallago Rig Wind Farm, at £30.7m since 2013.