A UK energy minister on Thursday condemned the behavior of wind-farm operators who have routinely overestimated how much power they’ll generate — a practice that adds to consumers’ bills, according to electricity traders and market experts.
Andrew Bowie was responding to a Bloomberg News report that found dozens of the country’s wind farms, many run by some of Europe’s largest energy companies, have overstated their power generation in forecasts.
An analysis of 30 million market records indicates that such overestimation has cost bill payers tens of millions of pounds in additional costs since 2018.
“It is completely unacceptable to overcharge for people’s bills,” Bowie said. “British energy generators must operate at the highest standards.”
Later on Thursday, the UK energy regulator, known as Ofgem, said it had opened an investigation into the conduct of the wind farms.
The UK’s outdated electricity network can’t always handle all the power that wind farms produce.
When that happens, the National Grid Plc’s system operator often pays energy companies to switch off their turbines.
Payments for this “curtailment” are based on wind farms’ predictions of how much they’ll generate — and some operators exaggerate their forecasts, which boosts what they receive, according to nine traders, academics and market experts. Consumers ultimately pick up that tab.
“Ofgem’s wholesale markets oversight team are investigating the alleged behavior,” a spokesman for the regulator said in an emailed statement, adding that it had also asked the system operator to look into the matter. “We will continue to work to protect market integrity and consumers.”
Bloomberg analyzed records from 2018 through June 2023 to compare wind operators’ daily generation forecasts to their actual production when they weren’t curtailed.
Out of 121 wind farms in the analysis, 40 overstated their output by 10% or more on average, and 27 of those overestimated by at least 20%.
It’s impossible to determine precisely how much bill payers have had to pay due to such overstatements. But assuming a similar rate of overestimation during the times that those 40 farms were paid to stop generating, consumers would have overpaid an estimated £51 million ($65 million) since 2018.
UK regulations explicitly prohibit generators from “obtaining an excessive benefit” when they are paid to stop or reduce their output due to grid constraints. Other rules stipulate that firms must submit a “best estimate” of their generation plans and stick to it as closely as possible.
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