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Energy minister Michael Fallon is threatening to clamp down on constraint payments to small windfarms, it has emerged.
National Grid pays generators of all kinds to switch off occasionally, where there are bottlenecks on the network, selecting the cheapest bids in the constrained area. However, windfarms have long been singled out for attention by pressure group the Renewable Energy Foundation.
As a result, a licence condition was imposed on larger windfarms to prohibit overcharging for the service.
In a letter to industry bodies Renewable UK, the Renewable Energy Association, Scottish Renewables and Energy UK, Fallon said wind generators exempt from the licence condition bid in prices “substantially higher” than licenced windfarms.
He urged the industry to show “restraint” in bidding and warned the government “stands ready” to extend the rules to all generators “should that prove necessary”.
Fallon targeted wind generators despite acknowledging in the letter that “most constraint payments relate to coal and gas generators”.
According to National Grid figures, wind generators took just 4 per cent of constraint payments in 2012/13. That is increasing due to the “connect and manage” policy to allow new windfarms to connect to the network in some cases before the transmission network is upgraded to handle their full output. The network operator is due to publish a full breakdown of constraint figures by generation type later this week.
A spokesperson from National Grid said constraint prices had come down over the last two years and more competition in the market would bring balancing costs down.
Maria McCaffery, chief executive of Renewable UK, said the industry had made “tremendous strides” in driving down bids. She added: “The minister does highlight in his letter the fact that most constraint payments go to coal and gas-fired power stations, helpfully dispelling the myth that this only applies to renewables, and wind, in particular.
“As the cost of using fossil fuels is so high – and importing gas is particularly expensive – we need to lessen our dependence on them by harnessing our own abundant, clean and totally sustainable resources.”
Michael Rieley, senior policy manager for Scottish Renewables, said: “While onshore wind is among the least likely of energy sources to receive constraint payments, it does not prevent us from doing more to reduce these costs even further.”
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