You're currently on the mobile-optimised view of this article.

Switch to the desktop view

£13m in secret payments to turn off Scottish wind farms

Published on 26 January 2012

ALMOST £13 million in secret compensation payments has been paid to Scottish wind farm operators to shut down over the past four months, a charity claimed yesterday.

Loading article content

The Renewable Energy Foundation, which was set up by television game show host Noel Edmonds and is seen as being anti-wind farm, published the figures for what it says is a clandestine system of payments to owners of the giant turbines to prevent the over-supply of electricity.

It called for energy regulator Ofgem to ensure greater transparency about who is being paid what to shut down windfarms.

The National Grid had paid £14.25m in "constraint payments" to operators as part of a balancing mechanism to steady the power running into the network. These figures are publicly accessible and appear on a database launched by the foundation yesterday.

However, the foundation says that since October, the company has operated an additional system not open to public scrutiny, for making constraint payments to wind farms it operates.

UK Energy Minister Charles Hendry said last week £12.1m had been paid in 2011 under the mechanism.

But the charity said that, in addition, the National Grid undertook a number of "forward energy trades" through the market in order to balance the system. "These are also classed as constraint payments and resulted in £12.7m being paid to wind farms," it added.

However, Mr Hendry had said the National Grid had made clear these were commercially confidential and could not provide details of which energy companies received them.

Dr John Constable, the foundation's director, said he was surprised by the size of the payments. He added: "The introduction of opaque trading arrangements to manage wind power is a very unwelcome step in the wrong direction and must be reversed without delay. It is time for the regulator, Ofgem, to do its job and step in to protect the consumer interest by ensuring the UK's electricity markets become more transparent not less."

The National Grid defended the secret system as one used for years with all types of energy generation.

It helped keep prices, to manage constraints and balance the electricity transmission system, as low as possible – to around 1% of customer bills.

A spokesman said: "As with similar contracts in other industries, these are commercially confidential, but we do disclose the total amounts paid."

Stan Blackley, chief executive of Friends of the Earth Scotland, said: "Wind farm operators are often portrayed as the main recipients of constraint payments, but figures from the UK Government show that in 2010-11 constraint payments to onshore wind farm operators in Scotland accounted for just 0.1% of the total £170m paid by National Grid, with much larger amounts being paid to coal, gas and nuclear energy generators."

An Ofgem spokesman said: "Ofgem is currently reviewing the rules around generator behaviour when transmission constraints are active."

He added: "National Grid takes actions to reduce constraints costs and the contracts which they enter into with generators to minimise these balancing costs are commercially sensitive."

Renewable Energy Foundation claims on its database the biggest recipient of constraint payments was Hadyard Hill wind farm in south Ayrshire which received £2,150,068 since 2010.

It is operated by Scottish & Southern Energy on land owned by former presiding officer of the Scottish Parliament Alex Ferguson. According to his declaration of interests last year, he estimated his rental income to be between £40,001 and £45,000 a year.

81223