Households at risk of £12.7bn bill for switching off turbines on windy days

Telegraph

3 days ago

Households and businesses risk facing a £12.7bn-a-year bill to cover the cost of switching off wind turbines and solar farms under net zero plans.
The grid operator has warned that the cost of paying energy firms to shut down renewables could surge by more than fivefold by the end of the decade.
But it also said the Government could avoid the payments by abandoning its climate targets and prolonging the use of gas.
Critics said that the latest net zero costs would come as a 'slap in the face to hard-pressed consumers struggling to pay their energy bills'.
The payouts will be sparked by the huge expansion of intermittent renewable power sources under Mr Miliband's plan to decarbonise the energy grid.
When the wind blows strongly and the sun shines, turbines and solar farms produce more electricity in a short period than the network can cope with.
To stop the system being overwhelmed, potentially triggering widespread blackouts, the grid operator has to step in and tell firms to switch them off.
Energy companies are then handed payments, known as 'constraint costs', to compensate them for the electricity those sites would have generated.
Ministers said they would 'minimise' the increase in costs by fast-tracking new infrastructure such as pylons to connect offshore wind farms to the grid, despite opposition in areas where these are likely to be built.
It comes after Ed Miliband was forced to increase subsidies for new wind farms to 'eye-watering' levels to get developers to build them.
The Energy Secretary is already under pressure from No 10 over when his green electricity drive will deliver promised lower bills for households.
In a new report the National Energy System Operator (NESO) warned that such subsidies could increase by more than fivefold by the end of the decade.
It found that in the worst case scenario, compensation payouts could surge from £2.5bn a year at present to a high of £12.7bn a year in 2030.
That would occur if the Government fails to force through any major upgrades to the grid, such as new pylon routes, over the next five years.
In the report, the NESO said: 'Connection dates for new network build remain uncertain and changes to delivery timelines could significantly impact balancing costs, particularly around 2030.
'If no further network reinforcement takes place (current transmission network remains unchanged) constraint costs could peak at £12.7bn in 2030.'
The NESO also projected a surge in the total rebalancing costs – including constraint costs – that taxpayers will face to fund the switch to net zero.
If current policies work out, including 'strong consumer engagement' in reducing electricity usage, those total costs are still likely to rise by £8bn a year.
The operator found that the best case net zero compliant scenario involved a rapid switch to hydrogen, reducing the financial burden to just over £6bn.
But the cheapest option for households was a 'counterfactual' scenario in which Mr Miliband abandoned plans to phase out gas use and petrol cars.
In that instance the NESO calculated that total rebalancing costs would rise only slightly, to just over £3bn a year at the end of the decade.
The operator expects payouts to fall back after 2030, though only in the counterfactual scenario would they drop below current levels by 2035.
Mike Foster, the chief executive of the Energy and Utilities Alliance, said the report showed that ministers should be focussing on a switch to hydrogen.
He said: 'So-called constraint payments are a slap in the face to hard-pressed consumers struggling to pay their energy bills.
'The warning from the system operator, that they could reach £13bn by 2030, over £400 a year for the average bill, cannot be justified.
'What is worse, is all that surplus wind and solar power generation wasted could be used to produce green hydrogen – the holy grail in reaching net zero.'
Octopus Energy, one of the country's leading providers, said that taxpayers have already forked out £700m on constraint costs this year.
The business said that was already £250m more than at the same time last year, adding that the projected £8bn cost by 2030 was 'staggering'.
It had previously calculated that subsidies would hit the £6bn mark by the end of the decade, at a cost of £200 per household in the UK.
A spokesman for the net zero department said: 'These claims are fundamentally misleading, and wrongly assume that no network infrastructure will be built over the next five years.
'Through our clean power mission, we are working at pace to deliver the biggest upgrade in Great Britain's electricity network in decades, which will minimise constraint costs.'