Offshore wind farm fined $42m after regulator probes excessive power prices

Credit: Andrew Lee, Acting Editor-in-Chief, Recharge. Published 28 May 2024. rechargenews.com. ~~

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UK energy regulator Ofgem has fined an offshore wind farm £33.1m ($42.3m) for charging excessive prices while curtailing output to balance the grid.

Beatrice Offshore Windfarm Limited (BOWL), operator of the 588MW project of the same name off Scotland, will pay the money into the regulator’s redress fund for consumers after accepting it breached one of its licence conditions, Ofgem said.

The regulator said BOWL’s “prices did not properly reflect the financial benefits of reducing its output related to avoided payments that the company would otherwise have been required to make under the [UK] government’s Contracts for Difference scheme” and its “approach to setting the part of its prices that was not related to subsidy payments carried a risk of the company recovering more revenue than was necessary to cover the costs incurred as a result of curtailing its output”.

The project – 40% owned by utility SSE with another 25% held by China’s Red Rock Power – told the regulator “that in its view the breach was inadvertent and at the time of submitting the bid prices, it had considered that it was compliant”. Ofgem said the project owner co-operated fully with its probe.

BOWL becomes the latest UK player to face a penalty for stepping outside rules designed to prevent unfair financial advantage from curtailment provisions that are designed to protect the transmission grid from overload.

Ofgem said: “Electricity generators must put in place controls to ensure that their prices are set in a way that ensures that they do not obtain excessive benefits during the periods where they are required to reduce output due to the limitations of the transmission network. If they fail to do so, they should expect to face large penalties.”

Source: Andrew Lee, Acting Editor-in-Chief, Recharge. Published 28 May 2024. rechargenews.com.

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