U.K. Wind Gets Less Aid Than Coal, Gas for Regulating Supply

Payments to stop U.K. wind farms overloading the grid accounted for 4 percent of the sum handed to all power suppliers while traditional generators such as coal-fired plants got most of the money.

Wind farms received 7.6 million pounds ($12.2 million) of the 170 million-pound cost including payments to generators to balance the country’s demand and supply in financial year 2012 to 2013, National Grid Plc data show. The money compensates generators including SSE Plc and Electricite de France SA for shutting down wind output in strong gusts and boosting production from gas and coal plants when supply is tight.

Aid to wind farms has come under fire from opponents of the energy source, who say consumers are being forced to pay for a technology that’s both inefficient and a blot on the British countryside. The cost of balancing power to the grid, of which constraint payments are a small share, adds 2 percent to household energy bills, the data show.

Constraint payments to wind farms declined from 34 million pounds in 2011-2012 when they amounted to 10 percent of overall payments, the data show. The National Grid said they couldn’t provide a breakdown of the other recipients, while most constraint costs relate to fossil-fuel generators, according to the Department of Energy & Climate Change.

“The number and relative value of constraint payments made to wind farms is small compared to the overall constraint payments,” National Grid said by e-mail in response to questions from Bloomberg News.

Payments also go to fossil-fuel plants, pumped storage and interconnectors. Conventional generators are sometimes required to pay National Grid when they reduce power supply, and the net figure for total constraint payments reflects those contributions.

High Gusts

“It’s important to set these payments in their proper context,” said Jennifer Webber, director of external affairs at industry group RenewableUK. “Maintaining a steady supply of electricity to ensure our homes are heated, and that the lights stay on, costs money as National Grid has to balance the supply constantly.”

During high gusts, National Grid may ask wind farms to stop output to prevent overloading the grid. It pays farms to compensate for lost revenue such as subsidies called renewable obligation certificates.

“Our argument is that the prices are often far in excess of the wind farm’s lost subsidy income,” said John Constable, director at the Renewable Energy Foundation, a sustainable development charity that is critical of U.K. wind-energy policy. Wind farms can “simply name their price” when asked to shut down, he said by phone.

‘Excessive Benefits’

National Grid’s overall constraint costs have risen as more renewables, promoted by Britain to reduce emissions, connected to networks before upgrades were finished, Chris Lock, a spokesman at regulator Ofgem said by e-mail.

The regulator can take action against generators that gain “excessive benefits,” he said. “We are watching the market very closely and if there are grounds to investigate the behavior of licensed generators, then we will.”

EDF received about 3 million pounds since April 29 to shut down its Fallago Rig wind farm in Scotland. The company said by e-mail all generators have agreements with National Grid that include instructions to decrease power.

SSE received 4.2 million pounds to switch off its Clyde venture this year, REF data show.

The Carraig Gheal plant operated by GreenPower (International) Ltd. of Scotland bid an average 198 pounds since July to shut off supply to the grid, about five times the onshore wind subsidy of 0.9 of a ROC per megawatt-hour, REF data show.

Rob Forrest, chief executive officer, said by e-mail the rate was set when construction wasn’t complete and turbines were being tested. Interrupting output when turbines are being commissioned or tested can hurt future operation. “Now that all the turbines have been taken over from the contractor and are under the full control of the owner the charge has been reduced,” he said. The current bid is 97 pounds.

                           2011-12         2012-12
Total Cost of Balancing    £928 million    £913 million
Total Cost of Constraints  £326 million    £170 million
Wind Constraints           £34 million     £7.6 million
Wind Constraints as
     % of Total            10%             4%
Balancing Costs as
     % of Household Bills  2%              2%

SOURCE: National Grid, figures as of Aug. 2013

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