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Sources of income for wind turbines

One of the sources of income for wind turbines was the Feed in Tariff (FiT) scheme. This scheme was scrapped at the end of March 2019.

However, there are still several key sources of income for wind turbine projects that are significant and can make a project financially viable. They are:

Export value

This is payable for every kWh of electricity exported to the national grid. Exporting electricity means that it must pass outwards into the local electricity distribution network (what most people call ‘the grid’) through an export meter. An export meter looks the same as a normal import meter, but records the flow of electricity outwards from a site. Nowadays a single import/export meter is normally fitted.

To export all the energy produced by a wind turbine it would have to be directly connected to the grid with its own dedicated electrical supply and not first pass through the site distribution board (see more details below under ‘offset value’). Under this arrangement every kWh generated by the system would be exported, and the export rate would be paid.

The value of exported electricity can vary considerably and Renewables First have extensive expertise in negotiating the best value export price for electricity.

The exported electricity can be paid for by entering a Power Purchase Agreement, or by entering a contract with an electricity supplier as part of the Smart Export Guarantee scheme which is due to start in early 2020.

Typically, a value of 6.5 p/kWh can be obtained using a Power Purchase Agreement, or 5.5 p/kWh using the Smart Export Guarantee scheme, although the latter scheme has not yet started.

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Offset value

This is where the wind turbine connects into the site owner’s main distribution board. It is important to remember that electricity flows like water and will always follow the easiest route to the nearest load; this means that all of the site owner’s loads (i.e. lighting, sockets, machinery, air conditioners etc.) that connect to the same distribution board would be supplied firstly by the wind turbine, and only once all of these loads had been satisfied would any surplus energy from the wind turbine flow backwards through the incoming supply cables, either to the next nearest distribution board on the site, or out through the export meter to the grid.

Also, because the electricity produced by the wind turbine is fully grid-synchronised, it will mix seamlessly with grid-imported electricity. This means that if the wind turbine cannot supply all of the site’s loads, then all of the electricity from the wind turbine would go towards the loads and any deficit would be seamlessly imported from the grid.

Equally, if the wind turbine was supplying all of the local loads but then a reduction in the wind speed caused the output to suddenly drop, then the grid would instantly supply more to make up the deficit. From a consumers point of view the source of the electricity would be unknown; it could be from the wind turbine, the grid or a combination of both.

In the situation where the on-site loads far exceed what the wind turbine could ever produce, then all of the electricity generated by the wind turbine would be consumed on site. For example, if a wind turbine with a maximum power output of 500 kW was connected to a site that had a baseload (i.e. the minimum load 24/7) of 1 MW, then 100% of the energy generated by the wind turbine would be consumed on site. Financially this would be a good arrangement because the price paid for importing electricity from the grid is typically 12 p/kWh (varies between 8 – 16 p/kWh depending on the import tariff), so if the amount of import can be reduced, for every kWh it is reduced by the site owner saves 12 p. If you compare this saving of 12 p/kWh to an export price of 6.5 p/kWh, you can see that offsetting on-site loads is worth almost two times more than exporting the electricity.

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Combined offsetting and exporting

This is actually the most common arrangement and is basically the arrangement described above under ‘offset value’ except where the on-site loads are less than the power being produced by the wind turbine. Under this arrangement the onsite loads would be supplied first, then the excess power exported.

The value would be made up of the amount of energy offset at 12 p/kWh (or whatever your import electricity price is) plus the amount of energy exported for between 5.5 – 6.5 p/kWh. Obviously the actual value would depend on the relative proportions, but these can be estimated at a feasibility stage based on existing electricity bills and forecast energy production from the wind turbine.

Generally speaking it is best to offset imported electricity first, then export any remaining surplus to get the highest revenue from a wind turbine.

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