How windfarms charge you twice for the same electricity – Net Zero Watch

It turns out that ‘when a windfarm is constrained off or constrained down, it doesn’t actually have to switch off or switch down. It is free to divert power via a private wire to anyone who will pay for it.’ Someone with a big battery, for example.
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I recently noted that Moray East, a very large and very new windfarm situated off the Scottish coast, is spending a remarkable amount of time switched off – something like a quarter of the time, in fact, says Andrew Montford @ NZW.

As is widely known, windfarms can receive so-called constraint payments when the transmission grid doesn’t have the capacity to deliver power from windfarms (typically in the north, and often far offshore) to markets (in the south), so Moray East receiving such payments was not a surprise; only the scale of the payments was.

A constraint payment is worth around £60 per megawatt hour, which is around the fixed price at which Moray East contracted to sell power to the grid.

However, as noted elsewhere, Moray East has failed to take up that contract, and it is therefore able to sell its output into the open market at £200, £300 or even £400 per megawatt hour.

I’ve previously estimated that its costs appear to be somewhere north of £125 per megawatt hour, so it should be extremely profitable at the moment.

But it still doesn’t resolve the mystery of why investors went ahead and built the windfarm.

Their expectation of market prices would only have been something around £50 – the level it has been at for many years. So their best case scenario for their earnings would have been subsidised price they agreed with the grid – £57 at the time, although the annual uplift has now taken it up to £70-odd. Either way, still far below their costs.

How were Moray East’s developers hoping to make up the difference? The income had to come from somewhere. The revenue stream from selling power to customers appeared not to be the answer. Customers look after themselves.

But the amount of time Moray East is spending switched off got me thinking. The windfarm developers must have known that they would be constrained off a lot – they exhaustively analyse wind speeds, turbine design and the capacity of the grid to take their power. They must also know that the rate of payment for being constrained off was not that high.

I started to suspect that they had found a way to game the system to their advantage.

My suspicions were soon confirmed.

Continued here.