£1 billion paid to windfarm companies to stop generating electricity is scandalous waste of money

Billion pound drag on renewables proves UK energy market is broken

Last week I wrote in these pages about the perennial problem that is fuel poverty. This is not a new problem but it often feels like the solutions get further away rather than closer. Clearly, some creativity is required.

This week brought two news stories which illustrate the frustrations people in the Northern Isles have about our place in energy generation for this country. The first was the completion of the Viking windfarm in Shetland, which is expected to provide enough power for 500,000 homes across the UK at peak capacity.

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The second was the revelation that energy company SSE has already claimed £2 million in “constraint payments” – when energy companies are paid to stop generating energy – for the windfarm as it sat idle this past summer.

If ever anything summed up just how broken our energy market is, this is it. In the part of the country with the highest level of fuel poverty, we are paying £2m to one of the “Big Six” energy firms not to use the windfarm they have just built.

Anger and injustice

A burning sense of anger and injustice may be all that many Shetlanders have to keep themselves warm this winter as Ofgem yet again increases the ironically named “cap” on consumer fuel bills. And that £2m payment is just the tip of the iceberg. 

Last year UK lost the better part of £1 billion – £920m to be more precise – in curtailment costs, created by having to shut down windfarms due to overcapacity and bottlenecking in the National Grid. One estimate by the Carbon Tracker think tank found that curtailment was already costing the average household £40 per year in 2023, and that this could more than triple by 2026.

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The logic behind constraint payments may be sound on a case-by-case basis – it’s better than overloading the entire grid – but it feels perverse that so much public money goes into paying for energy not to be produced, particularly for windfarm sites within sight of people crying out for cheaper power.

Access to fishing grounds cut off

For years, we have spoken about “community benefit” from local renewable energy developments. The reality for Shetland is that the SSE payment to the community is more or less the same as SSE were paid not to generate last month. When we are talking about communities with some of the highest energy needs in the country, that inequality of outcome simply will not cut it.

What happens today in onshore wind will happen for future offshore developments. We are already seeing our fishermen pushed out of their traditional fishing grounds to make way for the big corporates to develop there. It doesn’t have to be this way, but all the signs are that it will be.  The most recent ScotWind round of offshore leases, mismanaged by the SNP, was as close as it could be to being a cash giveaway.

The coming of renewables should be an opportunity for the communities that are expected and well placed to host them. That opportunity risks being squandered by regulators and ministers who have become immersed in the detail and bound by rules that they have made for themselves. This is the time for them to stop tinkering with process and focus on outcomes. 

Alistair Carmichael is the Scottish Liberal Democrat MP for Orkney and Shetland

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