The wind farm that’s paid £300m via your bills… to stop producing any power

Off the coast of Wick, a small town in Scotland’s far north, sits Moray East – one of Britain’s largest offshore wind farms. When it opened in 2021, it was hailed as a milestone in the UK’s transition to green energy, with promises that its turbines could meet 40 per cent of the electricity demand from Scotland’s homes. Five years on, the wind farm is failing to live up to those pledges. Its turbines have effectively been turned off almost 40 per cent of the time it has been in operation, including 60 per cent this year alone, according to analysis by Octopus Energy. Shorts This is because it’s generating more energy than the grid can currently handle, which comes at a significant cost to billpayers. Over the last five years, more than £321m has been spent paying Moray East’s operator to reduce its output – the most received by a single wind farm in the UK. Moray East is an example of a wider problem. Over £1.2bn has been spent by British billpayers this year to turn off wind farms and switch on gas plants instead – despite Government goals that nearly all UK electricity comes from clean energy sources by 2030. Around £200m of this £1.2bn consisted of payments to wind farms to turn off, while the rest was spent turning on gas-fired power stations. In a report released Friday, the National Audit Office said this cost could balloon to £7.8bn per year by 2030, costing households an additional £100 per year on their bills. “Decades of underinvestment in the grid has left us overexposed to fossil fuel markets and paying sky-high prices to turn gas plants on”, a Department for Energy Security and Net Zero spokesperson said. How we got here Britain’s transition to clean energy faces a geographical hurdle: the area where we generate the most wind power, the North of Scotland, is far from where we consume the most electricity. Moray East sits off the coast from Highland Council, the second most sparsely populated local authority in the country. Investment is needed to build up the transmission grid to move all the energy generated by the wind farm southward. Until this happens, wind farms are being paid millions of pounds per year to reduce their output. How much Moray East has been paid to turn off 2022: paid £66.32m to be curtailed 27.7 per cent 2023: paid £41.55m to be curtailed 23.9 per cent 2024: paid £91.14m to be curtailed 42.6 per cent 2025: paid £89.34m to be curtailed 51 per cent 2026 (up to 12 August): paid £24.19m to be curtailed 60.4 per cent Source: Analaysis of data from Elexon Insights by Octopus Energy The reason for these vast sums sent to wind farms – also known as “constraint payments” – stems from a 2010 Coalition Government policy called Connect and Manage. It allowed wind farms to connect to the grid before the network was upgraded to handle the amount of electricity they could generate, and get paid if they were producing more energy than it could take. The idea was that it would be better to occasionally pay wind farms to turn off than to delay the building of new turbines altogether. At the time, the Government estimated the cost to be minimal, predicting an additional 20p on an annual household bill in the decade up to 2020. “The idea was the grid would keep up,” explained Jack Pardoe, head of policy at Octopus Energy, which has lobbied the Government to introduce regional pricing to reduce the need to turn off wind farms. Regional pricing could encourage energy-intensive businesses, such as data centres, to relocate near wind farms, using more power where it is generated, Octopus argues. But the Government has said that introducing such a system could drive up bills in parts of the country where energy production is scarce. Wind farms are generating more energy than the grid can support (Photo: Moray East) ‘The sewage of the energy system’ Over the last 15 years, upgrades to the grid have failed to keep pace with the number of wind farms being built. In its report, the National Audit Office cited a decision taken by the 2015 Conservative Government to introduce a “market-led” approach to upgrading the grid. This system saw private network operators tasked with putting forward investment cases for infrastructure upgrades, instead of the National Grid and Government, as it was before. However, there was no overarching agreement on how much investment was needed in the grid, which led to the regulator Ofgem failing to sign off on investments that would have reduced the reliance on the constraint payments to wind farms, the report found. “Rising constraint costs underline the need to deliver network upgrades as quickly and efficiently as possible,” an Ofgem spokesperson said. Adam Bell, who worked as a senior Government advisor on energy policy through the 2010s, said the situation with wind farm constraint payments is “very much like what happened in the water sector.” He said there was “such political pressure” at the time to keep the cost of utilities low that Ofgem “felt unable” to approve the investments, which are ultimately funded through energy bills. Bell said the problem of constraint payments are similar to the issue of sewage spills, which have been blamed on failures from water companies and the regulator Ofwat to properly invest in infrastructure. Exploiting the system? Despite the grid constraints, the Government’s process for awarding new wind farm contracts has inadvertently favoured projects in Scotland by focussing primarily on areas that can generate the most electricity without taking into consideration the cost of transporting that energy. Other wind farms responsible for the high level of curtailment payments this year include neighbouring Moray West (£27m), Seagreen (£18m) and Neart na Gaoithe (£9m) – all of which are off the Scottish coast. Government wind farm contracts have inadvertently favoured Scotland due to its location (Photo: Jane Barlow/Getty) Meanwhile, Ofgem is investigating whether some wind farm operators in Scotland, including Moray East, have been exploiting the system and overcharging for turning off their turbines. Wind farm operators submit bids to the National Energy System Operator (NESO), setting out how much they want to be paid to reduce their production when there is not enough capacity on the network. These bids can be changed every half-hour. Ofgem’s investigation into Moray East, which was announced last April, is ongoing. Ocean Winds, which owns Moray East Windfarm, declined to comment.