Wasted wind could add £300 to household energy bills by the end of the decade because of a glut of power from turbines, an energy supplier has warned.
So many turbines are being built without enough transmission capacity to get their power to consumers that wind farms are being paid to switch off to stop the grid being flooded with power, said Rachel Fletcher, the director of economics at Octopus Energy.
She told MPs that the current £1.5bn annual cost of paying wind plants to switch off could hit £10bn by 2030 – all of which would be added to bills.
She added that wind farm construction was significantly outpacing the corresponding expansion of the grid.
This failure means wind operators can claim compensation and also means the lost power is being replaced by paying gas power stations to fire up – a system known as constraint payments.
That added around £40 to £50 to the average annual bill to cover these constraint payments, Ms Fletcher said, but added that delays in the construction of transmission lines could see this rise to £300.
She said: “I think it’s our responsibility as industry participants and policymakers to get a system that’s efficient and delivers customers the cheapest electricity bills they can have, and I’m sorry to say that we’re failing on that right now.”
Most wind farm developers were given government guarantees on the price they would get for their power so they have to be paid – even if the power cannot be used.
These payments account for about a third of the total cost of constraint payments.
However the missing power then has to be replaced, usually meaning grid operators must ask gas power stations to switch on. The payments to those gas plants account for about two thirds of constraint costs.
Ms Fletcher also warned that constraint costs were just one of a multitude of extra charges to pay for green subsidies and expansion of the transmission network.
“We are creating a doom loop where, because we’re building this big system, and it’s high cost and the demand isn’t turning up, the unit cost just gets higher and higher for everybody – businesses and customers alike,” she said.
Claire Coutinho, the shadow energy secretary, said: “These are astonishing figures. The Government needs to open its eyes and stop seeing its job as simply writing endless cheques to wind developers, and prioritise making electricity cheap.”
The wind industry acknowledges the growing scale of the problem.
Barnaby Wharton, of wind industry trade body Renewable UK, said: “Everyone wants to see constraint payments minimised, so there’s an urgent need to build new grid capacity as fast as possible.”
The National Energy System Operator (Neso), which oversees the operation and future design of the transmission network, said it was relying on grid upgrades to cut future constraint costs.
A Neso spokesman said: “We will continue to operate the electricity system as efficiently as possible but keeping balancing costs down over the long term will depend on continued network expansion and reforms to the electricity market, which are outside Neso’s control.”
