How windfarms charge you twice for the same electricity
Monday 10th October 2022 | Andrew Montford, GWPF
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. 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.
https://www.netzerowatch.com/how-windfarms-charge-you-twice-for-the-same-electricity/
