Constraint payments likened to Post Office scandal

The ballooning level of payments renewables generators receive to constrain their output is a “landmine” which could explode like the Post Office scandal, the chair of Parliament’s energy committee has warned.

House of Commons energy security and net zero committee chair Angus MacNeil urged policy makers to defuse the looming challenges surrounding constraint payments.

The level of payments, dished out to mainly wind farm operators when the grid cannot absorb the electricity they generate, reached £210 million in 2022, according to the Policy Exchange thinktank’s new report Wasted Wind to Clean Hydrogen.

The report warns that this sum, which is recouped through customers’ bills, is set to rise five-fold by the end of this decade as the roll out of intermittent wind and solar generation grows.

Speaking at the launch of the report, MacNeil said that the issue is a potential “landmine” for future governments, adding: “Things get filed in the too difficult to do tray and then suddenly, there’s a surge.”

He added that constraint payment are similar to the Post Office sub-postmaster scandal in that it had been “bubbling for a number of years” before it exploded onto the public consciousness through ITV’s recent drama series.

He added: “[Constraint payment] will bubble up at some point because there’s a lot of money going for nothing.

“People are going to look at it and ask what they are getting for this money. There’s going to be a demand to do something: paying something for nothing isn’t going to wash.

“Giving money for nothing is really going to stick in the craw.”

MacNeil, who wrote the foreword to the report that recommends incentives for wind power generators to use their surplus power to produce green hydrogen with electrolysers, said the public would be happier with this approach than spending cash not to produce electricity.

“Let’s plan this through rather than have some knee jerk reaction,” he added.

“We know this is inevitably going to come down the line with the sums involved. There’s a moment now to plan,” he said, adding that there is “nothing worse” for politicians and investors than to find themselves in a position where things “shift quickly” beyond their control.

“You then find the sands are shifting very rapidly and you don’t know which way to go so use the time now.”