By Paul Homewood
As requested, here is the transcript of John Tulloch’s letter to the Shetland Times:
Energy regulator Ofgem oversees UK energy supply arrangements. The Scottish wind farm constraint payments scandal is one of its many failures.
The inadequacy of cross-border grid connections was well known however Ofgem blithely sanctioned ever more Scottish wind farms.
Responses to their 2020 Viking Energy(VE)/grid link consultation, including my own, highlighted the issue:
“The Scotland-South inter-connectors have already proved inadequate with constraint payments currently at record levels,…….”.
“Adding to existing cross-border problems with new generation…..would seem ill-advised, begging the question, why invest in such remote areas, behind inadequate links?"
“Expert commentators have observed that developers are incentivised to build behind grid constraints, giving them market power to boost their income by entering high constraint bids, leading to higher income for being constrained off than for actually generating.”
Indeed, that is exactly what has happened. Some wind farms have made more money from being switched off than from generating and in less than six months operation VE is third in the UK constraint payments league table’. Table leader Seagreen offshore wind farm received £104 million for generating and £262 million for switching off, costing consumers 27p/unit(kWh) supplied (per Renewable Energy Foundation).
The 260km Shetland cable passes through busy shipping lanes, prolific international fishing grounds and stormy seas, and with the recent spate of subsea cable sabotage in the Baltic Sea, the risk of failures, already high, is increasing.
The project cost is over £1.5 billion and rising as frills like the battery park and underground cables from Gremista to Sullom Voe are added.
Clearly, installing renewable energy in remote locations is neither secure nor cheap, yet plans for vast offshore wind farms are advancing, with more to come onshore.
Ofgem, meanwhile, has asserted a “high degree of confidence” that a second subsea cable to Shetland will be needed.
Given the above, how on earth can that be justified?
Constraint payments are, of course, a small fraction of actual renewables costs. Contracts quote 2012 prices so add 40 per cent, future inflation-adjusted. Then add costs for conventional generation to stabilise the grid and provide cover for low wind, and installing transmission lines to southern England (SSE and Scottish Power, alone, plan to invest some £64 billion over the next 5-10 years).
Alex Armitage is right. Ofgem has failed UK consumers – dismally – and “a complete overhaul of the way the energy network is regulated” is desperately needed.
