http://www.telegraph.co.uk/financialservices/utilities/Business-energy/10655742/Wind-farms-paid-30m-to-shut-down-during-high-winds.html
In this article, it talks about how the National energy organization has decided to pay the wind farm to shut down during the high wind season. As the cables ,which transmit power from turbines to National Grid cannot cope with the amount of electricity has produced. There’s an excess of electricity and hence the energy minister agreed upon paying millions to make the turbines stop producing during the windy period.
The wind farms in this article seem to be in perfectly competitive because there is many of farms producing wind power and there is low barrier to entry. Another true fact is the cost for operating the wind power is quite low because raw material used is almost completely free which is the wind, it’s always there. But there is once paid cost which is building the farms and turbines might cost quite a lot but this fixed cost will eventually eliminated during the long run and it might create a little stronger barrier to entry. So as it mentions in the article there is both small firms and few large firms who set the price quite high comparing to the true expenses they faced.
But the money that the ministry has paid for those firms is from the household’s bill. So who is actually affected here? Yes, the households, they even have to pay higher for electricity even though there’s less of electricity produced in the real market. Hence, the ministry once again came to the concern that they should impose a regulation for the large firms to not charge high price ( because they do realize that the cost of producing is way cheaper than what they charge the customers) to the consumers’ expenses. And under this pressure of the government, it did work at the end; the total payment to the wind farmers has fallen eventually.
In this article, it talks about how the National energy organization has decided to pay the wind farm to shut down during the high wind season. As the cables ,which transmit power from turbines to National Grid cannot cope with the amount of electricity has produced. There’s an excess of electricity and hence the energy minister agreed upon paying millions to make the turbines stop producing during the windy period.
The wind farms in this article seem to be in perfectly competitive because there is many of farms producing wind power and there is low barrier to entry. Another true fact is the cost for operating the wind power is quite low because raw material used is almost completely free which is the wind, it’s always there. But there is once paid cost which is building the farms and turbines might cost quite a lot but this fixed cost will eventually eliminated during the long run and it might create a little stronger barrier to entry. So as it mentions in the article there is both small firms and few large firms who set the price quite high comparing to the true expenses they faced.
But the money that the ministry has paid for those firms is from the household’s bill. So who is actually affected here? Yes, the households, they even have to pay higher for electricity even though there’s less of electricity produced in the real market. Hence, the ministry once again came to the concern that they should impose a regulation for the large firms to not charge high price ( because they do realize that the cost of producing is way cheaper than what they charge the customers) to the consumers’ expenses. And under this pressure of the government, it did work at the end; the total payment to the wind farmers has fallen eventually.