Sunday, 10 December 2017

PSO Paradoxes

Recently, this blog reported the not very widely known or reported fact that the contribution of wind decreased last year by 6% despite building 20% more wind farms. This was because the capacity factor (actual output / maximum output) dropped to 27% in 2016. Or another way of saying this is that there was less wind blowing last year. 

At the same time, the PSO Levy, which pays wind farms the difference between the subsidized price and wholesale price, increased last year by 20% (some of that going to peat).  This is a bit of a paradox - wind farm installations increased by 20% but total wind output dropped by 6%, yet the subsidy for wind increased by 20%. 

If a farmer cut his herd or crop by 6%, would he receive more subsidies ? 

The answer is that the Energy Regulator estimates the PSO Levy a year in advance. For 2016, the wholesale price dropped much more than was estimated and so the PSO Levy had to increase to compensate for this large drop in market prices (called the R-factor). 

Another paradox is that the PSO is also paid to higher emitting peat generation at the same time as wind generation. So some, if not all, the CO2 savings from wind have been cancelled out by the use of peat generation instead of gas. PSO payments to peat are due to be phased out by 2019.  


  1. Wind Turbines loose up to 50% capacity factor every 6 years.So to keep output sorta stable you have to replace this lost output due to wind turbine ageing. In effect a significant amount of the annual capacity add is merely a replacement for lost real effective operational capacity. Name plate capacity is largely irrelevant. It is effective available operational capacity that is important. Therefore the PSO will continue to increase as rated capacity increases and output from that capacity will either remain static or decline. As commissioned plated capacity increases and output from that capacity does not increase at all or declines.

    1. Yes it is possible some of this loss in output is due to idle older capacity

  2. Slush fund for the great and good - it does not have to be logical, only lucrative!!

  3. There are other facts that could explain loss in output. Despite adding significant capacity. These are the use of less optimal sites and the loss in output due to over dense wind turbine commissioning. To have no loss in output due to wind wake larger wind turbines should be 15 times the hub diameter apart. Wind wake losses can be up to 40%. Another reason output could decline after significant capacity commissioning. Is if too many wind farms are commissioned in a specific region. Wind energy extraction by up wind wind farms can ultimately be close to 100%. Leaving significantly less and ultimately no wind energy to be converted into electricity by down wind wind farms. In these situations adding capacity will not result in increasing output.