Renewable Energy Foundation

Over the Christmas period, high winds accompanying Storms Barbara and Conor combined with low demand for electricity to deliver a £7 million gift to the owners of wind farms in the form of constraint payments. Constraint payments occur when wind farms are paid not to generate, usually in periods when wind generation is surplus to demand. The bulk of these payments are made when wind generation cannot be used in Scotland, and there is insufficient grid capacity to export the energy to England. The cost of these payments is borne by electricity bill payers throughout the United Kingdom.

The peak payments over the current holiday season were made on Christmas Day, as summarised in the following table drawn from the REF datasets:

As regular users of the REF datasets will know, our EU Target Tracker is updated monthly and based on the government’s Renewable Energy Planning Database (REPD). This month’s update has just been released, and merits a general comment.

As a rule, the totals change little month on month, with the major trends only being visible over longer timescales. Focus on the short term and net changes is a mistake. It is only by studying the changes at the individual planning application level over 6 months or longer that we can see the major trends and the impacts of changes in government policy.

To that end, we have compared the detailed planning data released for April 2016 with that released this week for November 2016. We looked at how many new applications have been submitted in the last half year, how many abandoned, how many were granted or refused planning permission, how many appealed by the developers, and how many have begun construction and operation. Predictably, 80-90% of the activity involves onshore wind, solar photovoltaic and offshore wind.

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.

There are significant inconsistencies between the various sources of Government data on renewable energy deployment which undermine confidence in claims regarding progress towards 2020 targets and firm control of subsidy costs to the consumer. For example, the government’s Renewable Energy Planning Database (REPD) is the principal source for estimates of progress and probable future cost, but is inconsistent with five other data sources published by government, and also with estimates made by National Grid. What cannot be measured accurately cannot be managed adequately. Government needs to get a grip.

A reduction in the use of coal and a rise of gas for generating electricity has slashed the UK grid emissions factor to around 0.26 tonnes of CO₂ per MWh.  This has the economic consequence of increasing the subsidy cost of saving emissions through increased use of renewables.  It now costs around £169 to save a tonne of CO₂ through use of onshore wind, and £267 for offshore wind. This is 6-10 times the estimated cost of environmental damage caused by a tonne of emitted CO₂ and demonstrates how expensive and ineffective the UK renewables policy is in abating greenhouse gas emissions.

The unusually hot September weather, and a resulting higher demand from air-conditioning and refrigeration units, over the past week has contributed to very high wholesale electricity prices, with coal stations being the main beneficiary.

Coal appears to have been called upon because several gigawatts of gas generation were offline. Furthermore, generation from the UK’s 14 GW of wind turbines during the period was, as is likely during a hot spell, modest, ranging from a high of 4GW to less than 1 GW, or from 29% to less than 7% of its capacity.

The prices charged by the coal generators during this period were exceptionally high. West Burton coal-fired power station, owned by EdF, charged up to £1,237 per MWh for providing an extra 1.5 GWh of electricity on Wednesday 14th September. This is approximately 30 times the usual wholesale price. Ratcliffe-on-Soar coal-fired power station, owned by E.On, charged up to £1,484 per MWh for providing extra power, earning an extra £6 million for the day.

Windy bank holidays, when wind power output is high but demand is low, can force National Grid to make significant constraint payments to wind farms, plus related payments to conventional generators, to cope with the surplus, unusable electricity generated by wind farms, usually because the windfarms are located behind a grid bottleneck.

2016 has proved to be the most expensive Easter holiday period to date for wind farm constraint payments, with a total of £3.7 million being shared between 39 wind farms.

This note updates REF’s report of the 5th of May 2014 on progress towards the electricity component of the 2020 European Union Renewables Directive target for renewable energy. In that report we noted that significantly more renewable electricity capacity had been granted planning consent than was needed to generate the electricity component of the 2020 target (110 TWh).

The present study shows that over the last year DECC has not been successful in addressing the overheating of the sector and that there is now 49 GW of consented capacity (21.2 GW built, 28.1 GW under or awaiting construction) and that the overshoot has grown very significantly, from 5% to 34% (37.7 TWh).
Read more...

Attachments:

Progress Towards 2020 Renewables Target : 2015 Update

The Department of Energy and Climate Change (DECC) has today published the results of the first round of competition for Feed-in Tariffs with Contracts for Difference (FiTs CfDs, hereafter CfDs), a subsidy mechanism that will run alongside the Renewables Obligation (RO) until the latter closes to new entrants in early 2017, when CfDs will become the sole subsidy mechanism for large scale renewable electricity generators.

The Department of Energy and Climate Change has today published the tables of policy-induced price impacts that were the subject of REF's Freedom of Information request and DECC’s response.

These price impacts were deliberately omitted from the 2014 issue of Estimated Impacts of Energy and Climate Policies on Energy Prices and Bills, in spite of their obvious importance and the fact that they had appeared in all previous issues of Estimated Impacts, as discussed in a previous REF blog.

The price impact tables have been usefully released as a spreadsheet annex to the 2014 document titled Supplementary tables - Prices and Bills 2014.