Wind Farm Paid to Throw Away Half of Generated Power

Strategic Insights -

Scotland's Dorenell onshore wind farm, owned by France's state energy company EDF, was paid £68m in 2024 despite generating only 50% of its output due to grid congestion. The payments, designed to constrain the farm's output, were funded by households and businesses, with £40m coming from these constraint payments. The situation highlights the grid balancing costs that have contributed to the UK's soaring energy bills, with Ofgem attributing around £15 of a £35 increase to the energy price cap to these costs.

Key Takeaways:

  • The Dorenell onshore wind farm in Scotland, owned by EDF, had 50% of its output curtailed in 2024 due to grid congestion, with 591,164 megawatt hours (MWh) of power generated, but only 297,137 MWh exported.
  • The curtailment of wind power has increased by 8% since 2018, with 2908 MWh curtailed in the latest data.
  • The wind farm has a Contracts for Difference (CfD) agreement with an inflation-linked strike price of £82.50 per MWh in 2012 prices, worth about £112 per MWh in current prices.
  • Constraint payments, which amount to £40m for Dorenell, are funded by households and businesses and are a necessary part of the electricity system management.
  • By 2030, National Energy System Operator (Neso) predicts curtailment payments could reach nearly £4bn a year, with a potential surge to £8bn if grid upgrades are not completed on time.
  • Renewable subsidies incentivize wind farms to export power even when supplies are plentiful, as they are guaranteed a fixed price under the CfD scheme.
  • Energy consultant Ember found that an average price of £77 per MWh was paid to gas-fired power plants in 2024 compared to £227 per MWh for the electricity supplied by Dorenell, highlighting the "dishonesty" of claims that renewables would reduce energy bills.

Statistics:

  • £68m - Total payments to Dorenell onshore wind farm in 2024
  • £40m - Payments from constraint payments to Dorenell in 2024
  • 591,164 MWh - Total power generated by Dorenell in 2024
  • 297,137 MWh - Power exported by Dorenell in 2024
  • 294,027 MWh - Power curtailed by Dorenell in 2024 (49% of total output)
  • £82.50 per MWh (2012 prices) - Inflation-linked strike price for Dorenell's CfD agreement
  • £112 per MWh (current prices) - Value of Dorenell's CfD agreement
  • £77 per MWh - Average price paid to gas-fired power plants in 2024
  • £227 per MWh - Price paid to Dorenell for the electricity it supplied to the grid in 2024
  • £15 - Contribution of grid balancing costs to the £35 increase in the energy price cap

Sources:

  • [1] "£68m paid to Scottish wind farm that generated 50% less power than expected" by Matt Oliver, Industry Editor
  • [2] Ofgem report on energy price cap increase
  • [3] EDF's statement on constraint payments
  • [4] Ember energy consultancy report on gas-fired power prices in 2024
  • [5] National Energy System Operator (Neso) report on grid upgrades and curtailment payments