Wednesday, 31 August 2011

Constrain this...

This short post is essentially a follow on from my post of 20/8/2011 entitled Money for nothing. It seems that the bad press generated by wind farm operators receiving cash for not actually producing electricity has piqued the national psyche. The Renewable Energy Foundation (which promotes sustainable development for the benefit of the public by means of energy conservation and the use of renewable energy) has been doing a little further digging into this and has produced some interesting research surrounding the whole process. A lot of the material for this post has been drawn from their research published on June 30th 2011. I will not repeat their content verbatim but will pick on a few relevant highlights.

There has been a total of £4.36 million in payments to Scottish wind farm operators for the non-production of electricity to date. The largest single recipient for these payments was SSE Renewables, in favour of the Hadyard Hill wind farm. The average amount received for non-production was £215 per MWh, nearly 4 times more than the individual operators would have received if they had been usefully generating electricity. Finally, the payments ranged from £300 per MWh to £150 per MWh and varied by site. I should point out that not all wind farms receive these constraint payments. The research published by the Renewable Energy Foundation really does make fascinating reading, and I encourage you to spend the necessary 10 minutes reading and digesting the implications.

I can see the need to encourage the National Grid to utilise energy generated from renewable sources as a priority and I can also see the need to apply some form of penalty when such energy cannot be used. However, I struggle to understand why the penalty should be so generously in favour of the operators or why there is such a massive variation in the amount paid per location. But, what I find truly abhorrent is that these constraint payments enable the operators, who are commercial organisations and which have probably already received significant public funds in the form of construction subsidies to effectively offset the effect of the unpredictability of the wind (and hence help offset their major risk) with a sort of insurance policy - funded by those who use electricity. It really does seem like these operators are having our cake - and eating it - twice over.

As we are now in the twilight of the summer months and are headed first into Autumn and then Winter, it will be interesting to see what happens. Will we see more constraint payments being claimed, or will these operators understand how poorly they are viewed in these austere times as a result of their greedy operating procedures? Time will tell.