Ofgem is investigating Moray Offshore Windfarm (East) over prices it has offered to reduce generation when there is limited capacity to export to the grid, known as a constraint.
In order to manage transmission constraints, system operator NESO uses the Balancing Mechanism (BM) to increase and decrease the amount of electricity produced by different generators.
Typically, when managing a transmission constraint, NESO will only have a limited number of options. This creates a risk that generators could exploit their position by charging NESO excessive prices to reduce their output, but they are prohibited from doing so.
The regulator says, “Since it began operating in the BM in September 2021, Moray East Offshore Windfarm has been regularly instructed by NESO to reduce its generation to manage transmission constraints. Its bid prices since then appear expensive relative to the expected marginal cost of reducing generation for this generator. Our investigation will assess whether these bid prices were excessive during periods of constraint”.
Ofgem added, “The opening of this investigation does not imply that we have made any findings about non-compliance by Moray Offshore Windfarm (East) Ltd.”