Wind Farm Operators Set to Receive Millions More to Turn off their Turbines – with Consumers Footing the Bill

Energy customers will keep paying millions of pounds a year to wind farm operators to turn their machines off unless the UK urgently invests in developing energy storage, according to a new report released today.

Media reports in the past week have again raised public concerns about the  millions of pounds that are being spent in constraint payments from National Grid to wind farm operators – effectively paying them to turn off their generators as the electricity is deemed to be ‘wrong time’.

And today the Institution of Mechanical Engineers (UK) warns that consumers will continue to foot ever increasing bills for these payments unless the Government works with energy companies and industry to develop a clear road map for the development, demonstration and deployment of energy storage technologies in the UK.

Recent figures from the Renewable Energy Foundation (REF) claim that £8.7m in constraint payments were made to wind farms in March, part of the £13,749,814 already paid out this year. In 2013, wind farms received £32,707,351. 

Under existing market arrangements, if an energy company generating electricity is unable to supply its power to the grid because it is not required it is entitled to constraint payments.

In its new report Energy Storage: The missing link in the UK’s energy commitments, the Institution highlights energy storage technologies such as those based on Cryogenics – also known as ‘liquid air’ – flywheels, pumped heat and graphene super-capacitors as potential ways the UK can start making the best use of its renewable energy.

Dr Tim Fox, Head of Energy and Environment at the Institution of Mechanical Engineers, said:

“We know that energy bills are going to rise in future, but unless we invest in energy storage technology these constraint payments are set to become an unnecessary additional cost for the consumer.

“The issue of constraint payments has become a recurring concern of consumers, as they are effectively funding the non supply of electricity from a range of generation technologies, and the fact that millions are currently handed out to wind farms has highlighted a potential challenge for the future.

“At the moment constraint payments for renewable based electricity generation makes up a relatively small proportion of the total, but as the installed capacity of these technologies increases in the future the issue of such payments will likely become of growing public concern. Virtually any form of energy storage could help alleviate this problem, by allowing surplus generation from intermittent renewable sources to be stored by power providers until needed for use at a different time when demand exists.

“But the need is not just for electricity generation, which only makes up around 26% of UK energy demand, we also require storage for the bigger demands for heat and transport as they transition to renewable sources.

"The intermittency challenge of renewable sources arises from the fact that the wind does not always blow, the sun does not always shine and the waves are not always in motion at times when consumers demand electricity. Equally, the converse is also true, in that consumer demand for power can be low when renewable energy sources are highly active.”

On just one day in August 2013, £1.84m was paid to operators of 28 wind-farms in Scotland to turn off their turbines and not generate electricity.

Between 2011 and 2012, constraint payments from National Grid to wind farm operators totalled more than £34 million. This represented just over 10% of the total paid to all electricity generators in UK, despite wind power accounting for less than 5% of our energy production.

In the same period, more than £340 million was paid in constraint payments to all UK electricity generators – approximately £13 for every household.

This issue – dubbed ‘wrong time’ electricity generation - leads to technical challenges in balancing the UK’s energy needs.

The UK is committed to meet 15% of its overall energy demand from renewable sources by 2020, and faces a legally binding target to reduce GHG emissions by 80% relative to 1990 levels by 2050. In Scotland, the devolved administration has set itself the additional target to deliver the equivalent of 100% of the country’s gross electricity consumption from renewable-sourced generation by 2020.

The Institution of Mechanical Engineers encourages adoption of the following recommendations:

• Government needs to focus on heat and transport, as well as electricity. It is well understood that security of supply is crucial and that decarbonisation of the UK energy system desirable, but in contrast to past thinking it should not be confined to simply having sufficient electricity generating capacity to ‘keep the lights on’.
• Government must recognise that energy storage cannot be incentivised by conventional market mechanisms. It is unlikely that the nation’s long-term decarbonisation objectives will be met without significant deployment of energy storage capability, yet there are no firm plans in the UK that commit to significant levels of energy storage.
• The UK must reject its obsession with ‘cheapness’ in the energy sector. Despite current concern over rapidly increasing energy costs, and the reactive political promises that are unlikely to be fulfilled, it is evident that whatever form of energy is used in the UK, costs will have to continue to rise into the future.