Amazon’s Deal With Moray West Wind Farm Baffles Silly Telegraph Reporter
By Paul Homewood
h/t Ian Magness
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Sometimes I wonder where the Telegraph gets its naive reporters from!
When Amazon announced it was buying up half the output from one of Britain’s newest and biggest wind farms last week, it appeared like good news for Britain’s net zero ambitions.
The US giant committed to buying energy from Scotland’s Moray West wind farm before it was even built, bolstering its bid to power all operations with 100pc renewable energy by 2025.
However, amid the positivity, some industry sources claim Amazon and other global firms are embarking on an energy “power grab” that draws resources away from decarbonising Britain’s homes and businesses.
The tech company’s first Scottish wind farm, made up of 15 turbines on the Kintyre peninsula in Scotland, came online in 2021.
Moray West is the latest addition to its portfolio north of the border, where it is involved in 26 solar and renewable energy projects with a total capacity of around a gigawatt.
That is roughly the size of a large gas-fired power station and enough to power more than 600,000 UK homes.
This all means that Amazon’s operations, including both distribution and data centres, will become a lot greener.
Lindsay McQuade, director of energy at the company’s booming data centre division, Amazon Web Services (AWS), says: “Projects like Moray West will play a critical role in decarbonising Amazon’s operations and the UK grid, with this agreement demonstrating Amazon’s commitment to this ambition.”
Amazon is not alone in pursuing a corporate green energy strategy, as noted by Nathan Bennett, a director at trade body RenewableUK: “The market for renewable energy corporate power purchase agreements is growing at an extraordinary rate.
Steve Rastall, chief executive of IG CloudOps, which helps firms using cloud computing services such as those offered by Amazon, says the company’s business model is designed to maximise usage rather than to seek efficiencies.
“The more time customers spend using servers then the more income it generates for Amazon,” he says. “But that also means a lot more power is consumed and so generates more emissions.
“The biggest cost they face is from power consumption so the way to get around both these problems is by buying up the output from wind farms. It means they get a secure power supply at a guaranteed price.
“The problem is that the output from wind farms and other renewables is fuelling the growth of Amazon and its data centres rather than decarbonising UK homes and businesses.”
Amazon has multiple sites across the UK, including research centres in Cambridge, Edinburgh, Swansea and London, a corporate office in Manchester, data centres in London and more than 20 distribution centres.
When asked about its deal with Moray West, Amazon argues that the agreement will boost the entire wind industry – rather than just improving its own green credentials.
A spokesman says: “Corporate support of new renewable energy projects like Moray West and others helps open up the market for additional wind and solar farms, and accelerates the decarbonisation of electricity grids in the UK and around the world.”
https://www.telegraph.co.uk/business/2024/02/03/inside-amazon-green-energy-wind-power-grab-uk/
It is hard to know where to start with this juvenile story, which could have been written by a sixth former!
For starters, Amazon won’t be running their operation on wind power, and consequently won’t be drawing renewable resources away from homes and businesses. If they really wanted to go green, they would cut themselves off from the grid, and obtain their electricity direct from wind and solar farms.
What Mr Leake does not seem to have fathomed is that Moray’s wind power output will send the same amount to the grid, whether Amazon buy it or not. Instead he seems to accept Amazon’s claims that they will be cutting their carbon footprint.
As for Amazon’s brag that PPAs like theirs will “boost the wind industry”, it will do no such thing. Offshore wind farms will only being built if they are subsidised by CfDs. The new administrative strike price is over £100/MWh, well above market prices. I somehow doubt Amazon would be prepared to pay more than the market price, just to have “green energy”
For anybody unfamiliar with PPAs, Power Purchase Agreements, they are purely commercial arrangements. Moray, for example, will still send its power into the grid, but simply bills Amazon for it via an electricity supplier, who will add on all of the distribution costs, levies etc. Only licenced electricity suppliers are allowed to sell to the retail market, and they operate via a Sleeving Contract.
This is how the government describe the process:
In simple terms, the electricity supplier will buy the agreed volume from Moray, and sell it with add-ons to Amazon.
Amazon, of course, will get the REGOs, and be able to claim it is reducing its emissions.
What is interesting about this particular deal though is that Moray West has one of the few ultra low strike prices, £45.37/MWh:
https://cfd.lowcarboncontracts.uk/cfd-register/register/AR4-MRY-010/
It has always been though unlikely that Moray would take up their CfD option in due course, because such a low price is considered unviable.
The deal with Amazon is presumably at a much higher price, in which case they will have no incentive whatsoever to trigger their contract. And there is nothing the government can do to force them to.
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NOT A LOT OF PEOPLE KNOW THAT 
I think your analysis is rather hard on 6th formers!
Surely the biggest mistake in the article is :
“It means they get a secure power supply at a guaranteed price“
A secure power supply from a windfarm???!!!
The media are always coming out with propaganda like , ” will power 600.000 homes ” .
The actual fact is that the output from wind farms is less than 20% of its rating for more than half of the year .And for about 2 months has less than 10% of its rating .
So , not only a lot more expensive than the hidden real costs , but hopelessly inefficient as well because it often gives nothing when it is needed .
But nobody should expect the media to tell the truth , when the whole idea is to bankrupt the economy .https://www.forbes.com/sites/larrybell/2013/01/22/the-u-n-s-global-warming-war-on-capitalism-an-important-history-lesson-2/
It says a lot when 26 unreliable projects barely match ONE sensible reliable and cheaper power station. But then a consequence of the climate change disease is to take mankind backwards even if it is not the intention.
Gezza….’…even if it is not the intention’. I have to say that I most sincerely believe that it IS the intention. We are being suckered by Green BS as a vehicle for reducing the (political) power of the West as well as reducing its electrical power.
The Moray East wind farm website claims to be providing “secure and reliable energy” at £57.50/MWhr :
https://www.morayeast.com/
Not only is £57.50/MWhr incorrect because it is the 2012 strike price which is now £74.49/MWhr at 2023 prices but Moray East has deferred its CfD and is selling today at market rates which the Renewable Energy Foundation say amounts to £234/MWhr!
https://www.ref.org.uk/ref-blog/377-moray-east-windfarm-the-benefits-of-deferring-cfd-uptake-a-remote-location
Plus of course, no windfarm can provide “secure and reliable” energy.
The web page is dated 2024 at the bottom.
John, if the idiot reporter was told that the electrical supply was ‘secure’ by anyone in the company providing the windfarm then the company needs to be taken to court for misleading selling. It’s about time a case was made against these shysters so that they would never be able to claim secure output – or an output that would serve x,000 homes!! There is no such metric.
Market prices are now a lot lower than £234/MWh. Typically well under £100/MWh. Moray East is however making a lot of its income from curtailment payments. If you add up the MOWEO bits here (scroll down for individual wind farm data) for 2023, you’ll see they got £41.56m in 2023.
https://renewables-map.robinhawkes.com/curtailment
They also seem to have large sections out for maintenance, with available capacity little more than half the 1.2GW notional total.
it is quite often the case that curtailment pays more than the market price. Since Moray East has no ROC or CFD it benefits from just undercutting wind farms that do get ROCs when it bids to curtail.
Even worse Moray East is consistently constrained off the grid due to inadequate transmission system which isn’t going to be remedied until end of decade. So Moray West is connecting in within the same constraint zone so likely to be in same situation. So Amazon can greenwash over this but a lot of the time their energy is likely to have come from fossil fuels!
Hardly anyone understands the disconnect between actual electricity generation supply to the grid and the financial contracts bought by end use customers. Its been like this since 1991 and the ‘pool’, with slight revisions. Back in 1991 the end customer could contract directly with the generator and pay the system UoS costs separately, BOC being the first one to do a deal via the Scottish interconnector. Now the ‘customer’ has the incentive to pay more for its ‘green tickets’ to satisfy corporate ESG targets. It is this later consideration that attracts Amazon. ESG corporate targets will drive a lot of totally uneconomic ‘green’ generation and transmission decisions. Its another case of ‘rentiers’ making money on the back of increased prices for the general consumer.
Can someone explain for me – almost all electricity is drawn from the grid. The grid is a mixture of generation types – so no consumer can say they use 100% green energy (Unless they have their own wind farm or course)
Moray West supplies the grid’s “pool” of energy and the grid supplies Amazon and this is billed by the power supplier.
Moray West can’t guarantee either amount or continuity of output so can’t guarantee Amazon’s supply. The grid buys the Moray West power and the supplier commits to buy from the grid based on Amazon’s guarantee to buy an agreed amount of electricity from them – electricity they say is from Moray West but we know that is false as all electricity is mixed in the grid’s “pool”.
Is this not just a complex smokescreen of virtuous PR?
I would really like to see a diagram that explains this.
The 100% renewables is a lie underpinned by REGOs. They all do it and note the small print on TV ads referring to this and is why the ASA can’t act if you complain that they are lying, which in a normal world they are. Shell Energy – sadly now Octopus but no changeover yet – even produces a supply breakdown which clearly shows that the UK does not have enough renewables to be able to supply just Shell customers let alone everyone else who now makes the same claim. I suppose once the bullshit is spread around everywhere it doesn’t really matter as nobody as far as I know charges you extra for 100% renewable anymore.
Your physical grid supply will depend on how the power flows in the grid, and where you are. If you live in the North of Scotland there will be plenty of surplus generation on windy days and so your supply will come from wind farms plus some hydro that is used to help stabilise the wind output. Further South that surplus supply will be supplemented by e.g. nuclear output from Torness if you live in Edinburgh, and the Scottish surplus will feed on to England, adding in supply of hydro from the North Sea Link to Norway, mixing in more wind and nuclear from Hartlepool and biomass from Drax to feed the East Midlands.
Tracing through can get complicated at times, but National Grid do provide regional estimates based on their power flow forecasts here
https://www.carbonintensity.org.uk/#regional
The grid doesn’t trade in most of the electricity. It only gets involved in grid balancing. Most is sold by generators either to traders or to retailers in bilateral contracts that are registered for clearing with Elexon. There are balancing charges and credits when metered supply or offtake doesn’t match the contracted quantity. The clearing process doesn’t consider physical supply routes beyond imposing standardised grid loss assumptions on metered quantities. A trader who buys from a generator and sells to a retailer is assumed to be supplied the contracted volume, and provided the sale contract is for the same volume has no net volume exposure. However, the retailer will be exposed on the difference between the deemed sum of its customer meter readings (adjusted up by deemed distribution losses) and its total purchase contracts, and likewise the generator is exposed to the difference between the sum of its sale contracts and what it generates.
At the overall level, since every sale is also an equal purchase, the total of all sales by generators will equal the total of all purchases by retailers, assuming traders in the middle square their positions. If the total contracted volume by Gate Closure (an hour ahead) doesn’t match actual demand, then the Grid steps in via the balancing mechanism to buy additional power or to get some generators to agree to reduce output which may involve curtailment payments or payments that reflect savings in fuel used. Likewise if there is an unexpected variation in output because the wind changes or an interconnector or generator suffers a trip, the Grid steps in to adjust supply.
The Grid also has to ensure that its transmission lines can handle delivering power to users, and also will be resilient should there be a trip somewhere in the system. The simple numerical balance in the Elexon settlement process is augmented by the need to adjust the pattern of generation geographically to reduce the risk of transmission overload which would lead to trips in supply and probable blackouts. Most frequently that means curtailing wind from Scotland, and increasing either gas generation or interconnector supply in England.
You are therefore correct that there is really no link between electricity contracts and physical supply (except in the case of direct supply via private wires) outside the Balancing Mechanism. Each contract is just a part of an overall picture, although the physical supply pattern follows Kirchoff’s Laws rather than the laws of contract.
I also see the need for the force of argument to be backed up by a diagram.
Such a diagram would be in graphic form:
The vertical axis to show the strength of power output as a percentage . A horizontal line at the head ( at 100%) shows the power required to meet the needs of the households that the turbine farm purports to serve . These outputs to meet “In the Real Worlds” % points above.
The horizontal axis at the base to show time – perhaps over one year..
The diagram to be sent in as a draft to the operator of the farm supplying 600,000 homes with a request to verify within a certain time. Once verified or the time has expired the graph to be circulated generally to the media especially the BBC and., of course Sky News Australia.
Once the nonsense of claimed outputs is shown as a picture — not text — the statistics issued by the wind farm operator industry will be all too evident as approaching a massive fraud on the tax payers.
Of course if the claimed output at 100% were only estimates then why did the govt. etc have enough confidence in the outcome to underwrite the whole nonsense . Answer: because the end users had no choice but to pay whatever was required from Treasury (taxpayers’) funds or through the domestic meters.
There is no explanation available. A whole host of electricity suppliers (my own E-ON included) claim they supply their customers with “100% renewable” electricity.
This is a downright lie for anyone who gets their electricity from the National Grid, which, over an average year, sources almost half its generation from natural gas.
When E-ON started repeating this lie in press and TV adverts I raised a complaint with the Advertising Standards Authority. That was more than a year ago and I’ve had no response from them and the lieing adverts continue.
I suppose I shouldn’t be surprised!
For starters, Amazon won’t be running their operation on wind power
Amen.
Gamecock has run data centers. Not only do you need grid connection, you need TWO connections, in case something happens.
I love the example of Apple’s Data Center in Maiden, NC.
Look at it on Google Earth.
35°35’16.52″ N 81°15’44.72″ W
Nice solar farm out there on east side, right? Apple claims they run the center on 100% renewable energy (as they claim for all their data centers).
Now, for the fun part. Look to the west side of the facility. Two massive substations connected to TWO different high tension lines. [This is a proper data center supply.]
The solar farm isn’t even connected to the data center. It’s output lines go south.
Here is another view of the site to back up your point.
https://openinframap.org/#13.34/35.58908/-81.25035
Thanks, Ray. That’s dramatic. In fact, it makes me think that the power lines are why the center was located there in the first place.
My tyre gauge broke Friday. Amazon dropped a new one on my front porch Saturday.
Why should Gamecock care where they get their electricity from?
Whom is Bezos trying to trick? Where in Amazon’s business model does this fit?
Rich man preening for Klaus.
Go here and expand the top several executives:
Amazon.com, Inc. – Officers and directors (aboutamazon.com)
Jeff B. has a lot on his mind — there is a lady friend too — so he likely won’t know much about these facilities.
Paul, thanks for the analysis and explanation. It’s a pity some journalists don’t seem to understand how this stuff works.
It’s a pity some journalists don’t seem to understand how this stuff works.
Does anybody?
It’s not as if tracking the individual electrons can be used to trace “the source” of the energy for alternating current in a grid supply.
I hope I’ve correctly remembered basic principles there, although it was a few decades ago…
Electrons don’t flow. They bump. It’s progressive nudging.
^^ My limited and possibly flawed recollection is that there is electron flow for DC but not AC, although most of the UK grid is AC so no electron flow.
My limited and possibly flawed recollection is that there is no ‘flow.’ An electron doesn’t go zipping along in the wire. Rather an electron bumps an electron off an adjacent atom, hence moves no further than one atom.