The total cost of switching off wind farms to manage constraints on the power grid hit a record high of £507 million in 2021, according to analysis by LCP, up from £299 million the year before.
In a new report, the consultancy said the more than £200 million increase, which occurred despite 2020 holding the record for curtailment volumes, was the result of higher costs for turning up gas generation to replace the lost wind output.
The report commissioned by Drax said the electricity system operator (ESO) spent £141 million in 2021 to curtail 2.3TWh of wind generation.
This was added to £429 million of costs for turning up other generation to replace the curtailed wind, and offset by £78 million of reduced costs from payments to wind generators through the Contracts for Difference and Renewables Obligation schemes, to produce an overall figure for the year of £507 million.
LCP noted that a significant proportion of the costs for turning up alternative generation – more than £180 million – occurred during the month of November due to very high gas prices and scarcity pricing in a tight system.
The ESO spent £261 million to curtail 3.5TWh of wind generation in 2020, which the report described as an “anomalous year” due to significantly reduced demand during the spring and summer coronavirus lockdowns. Adding this to the £196 million the ESO spent turning up other generation and subtracting the reduced policy costs of £103 million gave an overall figure for the year of £299 million.
LCP said the vast majority of wind curtailment in both years – 96% in 2020 and 80% in 2021 – occurred in Scotland.
With the decrease between 2020 and 2021 resulting from the bounce back in demand following the coronavirus lockdowns and lower than usual wind output in 2021, the consultancy said curtailment volumes are likely to return to an upwards trajectory in future years as more renewable generation comes online. It said the persistence of high gas prices means overall curtailment costs are also expected rise again in 2022.
LCP said the issue can be addressed in a number of ways, with the main long-term solution being network reinforcement such as the high-voltage direct current “bootstraps” planned between Scotland and England to reduce constraints across the border. However, the report said the long lead times for network infrastructure and the pace renewable deployment mean other solutions are also needed.
These include both short- and long-duration storage, which can absorb excess renewable generation and return it to the grid when there it is less constrained, typically offsetting gas generation. The report said the latter is likely to be particularly helpful given that more half (58%) of consecutive periods of significant wind curtailment (more than 100MW) over 2020 and 2021 lasted for more than three hours.
It said wind curtailment could also be reduced through demand-side flexibility, additional demand sources such as green hydrogen electrolysers in constrained regions and interconnector exports.
LCP partner Chris Matson said: “Increasing the output from wind power is essential for the UK to achieve its climate targets and ensure energy security. And yet because investment in the infrastructure needed to support this expansion has not kept pace, wind curtailment is costing the consumer and the environment. Every pound spent on curtailing wind power is a pound wasted.”
Penny Small, group generation director at Drax, which is seeking to increase the capacity of its Cruachan pumped hydro storage facility in Scotland by 600MW to more than 1GW, said: “This report underlines the need for a new regulatory framework to encourage private investment in long-duration storage technologies.
“The UK is a world-leader in offshore wind, but for the country’s green energy ambitions to be realised we need the right energy storage infrastructure to support this vital technology, make the system secure and reduce costs.
“Drax’s plan to expand Cruachan will strengthen UK energy security, by enabling more homegrown renewable electricity to power British homes and businesses, reducing system costs and cutting carbon emissions.”
The company said the current lack of an appropriate support mechanism has left long-duration storage projects in “limbo” for a number of years, with no new pumped hydro storage projects being built in the UK since 1984.