Constraint payments for UK windfarms occasionally hit the headlines. At times when there is more wind electricity being generated than the UK grid can handle, wind producers are paid to disconnect from the grid. Renewables enthusiasts will argue this is a small price to pay for Green Electricity while sceptics are riled by the £53 million pounds paid to wealthy landowners in 2014 for not producing electricity.
This is a short post based on the excellent database maintained by the Renewable Energy Foundation (REF). REF also provides this guide to constraint payments. It strives to bring transparency to an opaque system of pricing and subsidy. From what I can gather, when a conventional generator disconnects it has to pay to do so but when a wind generator disconnects, it gets paid for doing so.
Figure 1 Annual constraint payments jumped in 2013. This is largely down to growth in wind capacity and grid bottlenecks. Of course one way to solve this waste of money is to throw more money at the problem. Costly grid expansion should see constraint payments fall in the years ahead.
Figure 2 In five years, cumulative constraint payments have grown to £154 million.
Figure 3 The amount of wind electricity constrained has grown more rapidly than the cost since the cost of constraint has fallen from £218 / MWh in 2011 to £74 / MWh in 2015. In 2014, 659 GWh of wind electricity was wasted. Enough to power 155,000 homes for a year, to use the metric preferred by the renewables industry. And we had to pay for that waste.
The size of the constraint payments need to be viewed in the context of the size of the UK electricity market. I’ve not found that easy to establish, but my best guess is of the order £2.5 billion (EBIT – earnings before interest and tax) per annum. Constraint payments of the order £50 million are 2% of earnings and a drop in the ocean of turnover. This is no doubt how the generators and regulator view the situation. The other side of the coin is to ask what society could have had for the £154 million paid out so far to generators for doing nothing?