Dozens of British wind farms run by some of Europe’s largest energy companies have routinely overestimated how much power they’ll produce, adding millions of pounds a year to consumers’ electricity bills, according to market records and interviews with power traders.
These extra costs are linked to a growing problem with Britain’s outdated electricity network: On blustery days, too much wind power risks overloading the system, and the grid operator must respond by paying some firms not to generate. This “curtailment” costs consumers hundreds of millions of pounds each year.
Read more from Power Plays, a series about the ways consumers lose on energy bills
Adding to that expense, some wind farm operators exaggerate how much energy they say they intend to produce, which boosts the payments they receive for turning off, according to nine people — traders, academics and market experts — most of whom agreed to discuss this controversial behavior only on condition of anonymity.
In effect, they said, the grid has paid some wind farms not to generate power that they wouldn’t have produced anyway.
Bloomberg News analyzed 30 million records from 2018 through June 2023 to compare wind operators’ daily forecasts of the energy they planned to generate 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%.
Electricite de France SA’s Fallago Rig wind farm near the Scottish border claimed that it would generate 27.1% more power than it did during the five-and-a-half-year period. Just a few miles away, Fred. Olsen Renewables’ Crystal Rig II wind farm said it would produce 35.5% more energy than it delivered. Ventient Energy, backed by JPMorgan Chase & Co.’s asset management arm, overstated the output at its Farr wind farm by 28.7%.
Spokespeople for EDF and Fred. Olsen said in statements that the firms take compliance with market regulations very seriously and work with third-party firms to provide forecasts. Natural Power, a consultant that provides forecasting services to both firms, said it always followed “industry best practice methodology.” Ventient and JPMorgan declined to comment.
It’s impossible to determine precisely how much bill payers have spent 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.
“The average error should be close to zero. They should be underpredicting as often as overpredicting.”
The data analysis by itself does not demonstrate that any individual company purposely exaggerated its output estimates, and wind can be difficult to predict. But forecasting models are increasingly accurate. Indeed, more than half of the wind farms delivered within 5% of what they predicted. What’s more, about a quarter of them understated their output.
“If you are systematically overpredicting by a large margin then that is suspicious,” said Jethro Browell, a senior lecturer at the University of Glasgow and an expert in energy forecasting. “The average error should be close to zero. They should be underpredicting as often as overpredicting.”
Overstatement has declined recently, but it remains significant. Between 2018 and August 2021, the 40 wind farms that overestimated the most did so by 20%, Bloomberg’s analysis found. From September 2021 through June 2023, those same operators overstated by 13%.
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.
Former UK Energy Secretary Jacob Rees-Mogg said he was shocked by the scale of the overestimation and called on the regulator, which is known as Ofgem, to act urgently. “I’d like to see Ofgem investigate to see if they can verify Bloomberg’s findings,” said Rees-Mogg, who remains a member of Parliament. “If they do, I’d like to see them pass a file to prosecutors to establish whether these firms are committing fraud. The government needs to push Ofgem to act.”
After this story was published on Thursday, an Ofgem spokesman told Bloomberg it had begun “investigating the alleged behavior.” The regulator has also asked National Grid Plc’s network operator to look into the matter, the spokesman said. “We will continue to work to protect market integrity and consumers.”
Any company found to be deliberately submitting inaccurate forecasts would face a substantial fine, Ofgem said in an earlier statement.
