UK energy regulator Ofgem has taken action against another wind farm operator deemed to have reaped an unfair financial advantage out of the subsidised curtailment provisions that were designed to protect the transmission grid from overload.
EDF's Dorenell Windfarm (DWL) will be required to pay £5.5m ($7m) into an Ofgem Redress Fund after accepting that it had been acting in breach of one of its licence conditions at the 177MW array in Northern Scotland.
Ofgem found that DWL charged excessive prices at times when energy system operator (ESO) requested curtailments to keep the system balanced during periods of transmission constraint.
Ofgem said DWL had been regularly required to reduce its output since 2020 due to the physical limits of the transmission system that links the wind farm to demand centres further south.
But DWL’s own prices did not properly reflect the financial benefits of reducing its output under the UK government’s Contracts for Difference scheme, Ofgem found.
Ofgem said the operator had co-operated fully with the regulator’s enquiries and had acted quickly to correct what it described as an “unintentional” breach of energy market rules.
“Some of the assumptions used by DWL when setting its prices likely led to it recovering more than was necessary to cover the costs of reducing its output,” the regulator stated.
Market rules prohibit generators from charging excessive prices in such circumstances, helping to keep consumer bills down.
DWL joins a growing list of UK companies that have contributed to the Redress scheme since it was launched in 2018,
The fund, which are used to support energy consumers in vulnerable situations, passed the $100m mark last year.
Ofgem director for enforcement Cathryn Scott said: “This company has accepted its error and has agreed to make a significant payment to put it right. Customers – particularly those in vulnerable situations – will rightly benefit from over £5m as a direct result. We hope this sends a clear message that licence breaches will simply not be tolerated.”
This is the fourth action that Ofgem has taken against electricity generation companies since the start of 2023 in relation to breaches of licence conditions.
Investigation launched
Ofgem announced last month that it had asked ESO to investigate allegations that a substantial proportion of wind farm operators have systematically inflated their own daily production forecasts in order to overcharge the national grid operator for transmission constraint.
The move came after aBloomberg news report suggesting that about a third of wind farm operators have been over-estimating their daily output forecasts by more than 10%, effectively being paid to curtail electricity that they were never going to produce.
Daily output notifications lead to decisions about curtailment or, in the case of a shortfall, buying dispatchable electricity from gas-fired power stations.
Balancing mechanism payments for these curtailments underpin the subsidies that have helped foster the UK’s wind boom, with guaranteed prices per MWh over very long periods.
