Paying for wind we don't use: How effective is wind?

Mike Hickey, manager of the Dinorwig power station, explains how the system works

Related Stories

Deep inside an old slate quarry, near Bangor in North Wales, lies a possible solution to wind's problems.

It's a pumped storage plant - able to store excess electricity when the wind blows and release it when it stops.

The government's chief scientific adviser thinks we may need more of them to cope with rising wind supply.

Figures seen by the BBC suggest the National Grid spent more than £3m to compensate wind providers for energy that was not needed.

"The system works like a giant battery," says Mike Hickey, manager of the Dinorwig pumped storage plant.

When the wind blows and demand is light, it pumps water up the mountain into its reservoir.

Start Quote

In the UK, incentives for wind have been too high”

End Quote Dr Paolo Frankl IEA

As the wind falls, or demand rises, the price goes up - so Dinorwig's owners let the water flow back, generating power.

But schemes like this may only add to the cost of wind power.

Generous subsidies?

The UK government's ambition is to expand the current 1.3GW of offshore wind to a total of 33GW by 2020 at a cost of between £75bn and £100bn.

Some of this cost is passed on to bill payers.

An EU report into the European energy market looked at the effectiveness of subsidies across a range of countries.

It found subsidies for onshore wind in the UK in 2009 had been higher than for most other countries with large wind investments.

Picture of the damn at the top of Dinorwig pumped storage plant The reservoir above the Dinorwig pumped storage plant in Wales uses water as a giant battery

"The incentives that are paid in the UK for onshore wind and the average generation cost of wind, well, there is a big gap," said Dr Paolo Frankl, head of the renewable energy division at the IEA.

"In the UK, incentives for wind have been too high," he added.

There are also concerns over support for offshore wind.

In its most recent report, the Committee on Climate Change, which advises the government on wind power, suggested targets for offshore wind in 2020 could be relaxed to save money if other renewable sources were available.

"You would expect it to be more expensive and our analysis says it is significantly more expensive than onshore wind," said David Kennedy, the committee's chief executive.

Rising cost
A maintenance worker by a offshore wind turbine Maintenance is one factor pushing up the cost of offshore wind

Analysts had thought that the cost of installing wind turbines would naturally fall as the technology matured.

But a report last year by the UK Energy Resource Centre found the reverse. The cost of building an offshore wind farm has doubled between 2003 and 2008.

Part of the rise can be explained by a weaker pound and more expensive steel.

But the report also blamed supply chain shortages and planning delays, as well as uncertainty over policy.

The coalition government is looking at reforming planning law for wind farms - especially offshore.

The Green Investment Bank may make money for wind projects available more cheaply.

There are also wider benefits to the economy.

Bond Offshore Helicopters is one example. The firm currently services the oil and gas industry, but sees offshore wind as an opportunity to expand.

"The way the wind farm industry is going, we hope to be a major player in support of it," says ground operations manager Graham Wildgoose.

Changeable weather

The wind rarely blows all year, so turbines produce only a limited percentage of their total capacity.

Output from UK turbines

In the UK, wind turbines have typically produced at between 27% and 30% of their potential, in line with predictions.

However, in the last year there has been far less wind than normal and turbines have produced less electricity.

Research by the Renewable Energy Foundation, a charity which commissions research into the area and has been sceptical of wind power, found some onshore wind farms produced at less than 20% of their capacity.

Start Quote

These things would never have been built if it wasn't for the subsidy and now we're paying to chuck the stuff away”

End Quote John Constable Renewable Energy Foundation

The still weather meant wind's share of electricity supply only increased slightly in 2010 - to just 3.1%.

During a frosty, windless week in the depths of winter this year, the turbines almost stopped completely.

But later, on a warm, windy night in Scotland, there was plenty of wind available and relatively little demand.

Cost of uncertainty

During some of these nights the National Grid found it had too much electricity and was unable to move it south.

Figures produced by the Grid show that in May, it spent more than £2.6m paying wind providers not to produce electricity.

The Renewable Energy Foundation, which monitors the figures, says a further £1m was spent the previous month.

The money was used to compensate producers who were unable to sell electricity to the grid.

picture of the screens at the national grid Workers at the National Grid balance supply and demand

The lines between England and Scotland need reinforcing and are sometimes down for rebuilding work.

REF says the payments show wind power is being installed too quickly.

"These things would never have been built if it wasn't for subsidy and now we're paying to chuck the stuff away," said John Constable, director of policy.

New solutions

Currently, the actual amount of electricity wasted is very small, as the grid turns off coal rather than waste wind.

Start Quote

The economic analysis we've done suggests these costs are not prohibitive”

End Quote David Kennedy Committee on Climate Change

But as we increase the amount of wind power on the grid, the problems will increase.

The government's chief scientific adviser on climate change, Professor David MacKay, says they are manageable.

"We will have to put in complimentary amounts of balancing services, which could be inter-connectors [with Europe], pumped storage, demand shifting [with smart grids] or mothballed gas power stations," he says.

The Dinorwig pumped storage plant was built in 1983 to act as a backup for nuclear power - new Dinorwigs could help balance wind.

Electric cars may also be used to store electricity and release it when the wind is low.

The independent Committee on Climate change says the measures are affordable.

A giant access tunnel inside the Dinorwig power plant Dinorwig has 16km of tunnels

"The economic analysis that we've done there suggests those costs are not prohibitive," says David Kennedy.

But research by energy consultants Poyry raised suggests investors may not be willing to pay for plants that only sell power when the wind isn't blowing.

"That would in turn lead to a lot of the system problems and potential blackouts that are so concerning consumers and their governments," says energy consultant James Cox.

The government is looking at changing how the energy market works in response to the worries.

Wind is clean and renewable, but it is proving far more complicated than many politicians may have imagined.

More on This Story

Related Stories

More Business stories


BBC Business Live

    Aston Martin

    Aston Martin has hired Nissan executive Andy Palmer as its new chief executive after nine months with no-one in the top job. Mr Palmer led Infiniti, a luxury Nissan brand.

    HELP TO BUY 10:59:

    The number of people who have benefited from the government's Help to Buy schemes has topped 48,000, according to official figures. But there was a slight drop in June in people taking advantage of the version which assists buyers of older properties. The help comes in two forms: an interest free loan for buyers of new properties and a mortgage guarantee for people purchasing "second hand" homes.

    BORIS ISLAND 10:44:

    BA comments on the end of Boris Island: "We've always said that there was no economic case for a Thames estuary airport so it's no surprise that the Davies Commission, after a thorough investigation, has ruled it out," it says, rather sniffily.


    European Union governments will consider putting new sanctions on Russia on Friday. Italy's foreign minister told the European Parliament the Commission was working on a tougher package of sanctions against Russia including defence, "dual use" goods and finance.

    EUROZONE RECOVERY Via Blog Robert Peston Economics editor

    The German and Italian economies are shrinking, and France is flat-lining, Robert says in his blog today. Unemployment remains hideously, intractably high - 11.5% for the eurozone as a whole. So, what does the future hold?

    THE POOND 10:01:
    Man with kilt, sporren and Scottish pound

    You'll have noted the small fall in the pound. This is a plausible enough reason - the growing threat of an independent Scotland. "A poll for the Sun and the Times newspapers showed support for the pro-independence "Yes" campaign had risen to 47%, a 4 point gain," notes Reuters. The "No" lead has narrowed from 22 points to just six now. Now, is this picture as inanely stereotypical as the earlier Swiss cheese one?

    BORIS ISLAND 09:45:

    OK, so what next for UK airport capacity? Having kyboshed Boris's island idea as too expensive and impractical, the commission has another year to pick from the remaining three options - two plans to expand Heathrow Airport and one to expand Gatwick Airport.

    MARKETS 09:20: BBC Radio 4

    An interesting nugget from BlackRock's investment boss Ewen Cameron Watt. He told Today the markets' current complacency will melt in the face of higher interest rates that everyone expects are on their way. He gives some striking figures: "A 1% rise in [UK] mortgage rates will add £800-900 to the average mortgage bill." And put a serious crimp in spending power.


    Europe's share markets have all opened modestly higher. The best gainer in the UK is Weir Group, which is up 3%. And the pound has fallen 0.25% against both the dollar and the euro. It is at $1.6568 and 1.2621 euros.

    • The FTSE 100 is up 20 at 6845
    • the Dax in Frankfurt is 68 higher at 9547
    • Paris's Cac 40 is 13 points higher at 4393
    SWISS ECONOMY 08:50:
    Big cheese

    No growth in Switzerland, reports the State Secretariat for Economics. A surprise: GDP was forecast to growth by about half a percent in the second quarter. Weaker exports and falling construction spending were the culprits. Yearly GDP growth was 0.6% - way under hopes of 1.7% growth. We will endeavour to find an even more fatuous picture before we pack up for the day. Might be hard.

    CHINA PROPERTY 08:34: Via Blog Linda Yueh Chief business correspondent

    The various steps that China is taking to stem house price rises seems to be working, but can the government manage an orderly slowdown in the property sector? Linda Yueh finds out here.

    BORIS ISLAND 08:19: Radio 5 live
    boris island

    Aviation expert David Bentley told Wake up to Money about one of the three remaining airport expansion options - that to expand Heathrow as a "hub", he says. A hub can mean base for airlines, or a major airport to change plane, as in a "hub and spoke system," he says. Whatever is decided, it will need to satisfy air travellers for the next 20 years or so, he adds.


    Australia's central bank kept its interest rate at a record low of 2.5% for a 12th consecutive policy meeting. The economy is growing sluggishly, initial data suggest.

    BORIS ISLAND Adam Parsons Business Correspondent

    tweets: Davies says Boris Island project would be "reckless" and unlikely to appeal to government "of any political colour"

    Redrow houses

    Redrow says a large number of its Help to Buy clients were first time buyers and over half were in the north of England. It says its order book is looking plump - up 85% on last year. Business Live has been debating Redrow's building style. Ease of upkeep of the wooden bits has excited debate.


    Housebuilder Redrow's results are here. The usual tale of rising prices and the government's Help to Buy scheme. Redrow reports a 13% increase in the average selling price to £239,500, record group revenues and record pre-tax profits (almost doubling). Help To Buy provided 35% of private completions.

    BORIS ISLAND 07:07:

    Sir Howard Davis, chairman of the commission, said it had come down against Boris's island airport plan because: "The economic disruption would be huge and there are environmental hurdles which it may prove impossible, or very time-consuming to surmount." Even the least-ambitious version of the scheme would cost £70-90bn."

    BORIS ISLAND 07:04:

    "The Airports Commission has today (2 September 2014) announced its decision not to add the inner Thames estuary airport proposal to its shortlist of options for providing new airport capacity by 2030. Following detailed further study into the feasibility of an inner Thames estuary airport the commission has concluded that the proposal has substantial disadvantages that collectively outweigh its potential benefits." A firm no, as expected.

    MARKETS 06:56: BBC Radio 4

    BlackRock is the world's largest asset manager with more than $4.5 trillion under management. Its investment boss Ewen Cameron Watt, discussing why markets are so steady in the face of so much global tension tells Today: "Volatility is exceptionally low by historical standards and there's too much money chasing too few assets."

    HSBC SHARES 06:42: Radio 5 live

    Ewen Cameron Watt, Chief Investment Strategist of the BlackRock Investment Institute, is now on 5 live talking about the news Neil Woodford, the fund manager, flogged his HSBC shares. "Neil bought HSBC because it was one of the few banks where he thought there was some dividend growth," he says. However, fines in the sector are likely to drain that prospect, he says. It's fines "more than anything that's sapping bank's willingness too lend, or ability to lend".

    MARKETS 06:27: BBC Radio 4

    Today is looking at why stock markets are at a 52-week high when the political situation around the world is so dire - there's the threat of war in Europe and conflict in the key oil producer Iraq. Ewen Cameron Watt, chief investment strategist at Investment Institute of giant asset manager BlackRock says: "At this stage in the summer months the thought that Russia might affect sending gas to Europe is not a worry. [Energy stocks] are about 90% of capacity."

    BANKING COMPLAINTS 06:12: Radio 5 live

    More from the Financial Ombudsman's Caroline Wayman. Fee-paying bank accounts are the cause of the increase in complaints about banking, she says. "People are getting in touch saying they didn't know they had a fee paying account or want one." People are "more aware but we see a lot of people who are reluctant to raise concerns," when coming forward to the service, she says. There are also more complaints about payday loans, but from a low starting point she says.

    BANKING COMPLAINTS 06:02: Radio 5 live

    Caroline Wayman, chief executive of the Financial Ombudsman Service is on Wake Up to Money talking about complaints about banks. Complaints about payment protection insurance have fallen by almost a third, but complaints about other things in banking are up: "Still a lot of people get in touch, more than 1,000 people a day," she says. "We've had to expand a lot."

    06:01: Howard Mustoe Business reporter

    Morning! Get in touch via email or via twitter @BBCBusiness

    06:00: Rebecca Marston Business reporter, BBC News

    Good morning and welcome to Tuesday's Business Live. Stick with us for the pick of the morning's news.



  • Arsene Wenger, Diego Costa, Danny Welbeck Ins and outs

    Who will be satisfied and who left with regrets after transfer window? BBC Sport

  • Women doing ice bucket challengeChill factor

    How much has the Ice Bucket Challenge achieved?

  • Women in front of Windows XP posterUpgrade angst

    Readers share their experiences of replacing their operating system

  • Members of staff at James Stevenson Flags hold a Union Jack and Saltire flag UK minus Scotland

    Does the rest of the UK care if the Scots become independent?

BBC © 2014 The BBC is not responsible for the content of external sites. Read more.

This page is best viewed in an up-to-date web browser with style sheets (CSS) enabled. While you will be able to view the content of this page in your current browser, you will not be able to get the full visual experience. Please consider upgrading your browser software or enabling style sheets (CSS) if you are able to do so.