National Grid’s ‘secret’ £12.7m payment to wind farms

National Grid paid energy firms £12.7million to turn off their wind turbines in the last three months of 2011, according to new figures revealed by Energy Minister Charles Hendry in […]

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By Vicky Ellis

National Grid paid energy firms £12.7million to turn off their wind turbines in the last three months of 2011, according to new figures revealed by Energy Minister Charles Hendry in Parliament. The National Grid will not reveal which energy firms were paid to make up this total.

Think tank Renewable Energy Foundation (REF) criticised the move as “opaque” and a “step in the wrong direction”.

Mr Hendry said a written statement to Parliament: “In 2011, constraint payments totalling £12.1 million were made to wind farms through the balancing mechanism. In addition, 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 £12.7 million being paid to windfarms.”

The news comes as REF publishes an online database which gives a detailed breakdown of all the wind farms ‘constrained’ in this way by the balancing mechanism, which National Grid operates.

It is calling on the industry regulator Ofgem to force National Grid to make this sort of information public in the “consumer interest”.

Dr John Constable, director of REF said: “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 that the UK’s electricity markets become more transparent not less.”

But when asked if it was trying to hide anything, a spokesperson for National Grid told ELN: “Absolutely not. We have contracts with generators and within that contract there’s a confidentiality agreement, just as there would be with contracts between suppliers and buyers in any other industry.

“Day ahead trades are another tool we have used for years with all types of generation. They help keep prices to manage constraints and balance the electricity transmission system as low as possible.”

Ofgem said it would review the rules on forward energy trades.

A spokesperson added: “Ofgem is currently reviewing the rules around generator behaviour when transmission constraints are active. In regards to forward energy trades, 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.”