Tuesday 26 March 2024

Probe launched into wind farms over alleged £100m overcharging

Probe launched into wind farms over alleged £100m overcharging

Ofgem has initiated an investigation into wind farm owners over alleged market manipulation.

They are accused of overcharging consumers by £100 million, with claims suggesting they artificially inflated compensation payments received for shutting down turbines on windy days when grid capacity wasn’t needed.

Analysts at the Renewable Energy Foundation (REF) provided evidence to Ofgem, indicating that wind farm companies might be inflating the price of “virtual energy” they never actually generated.

Ofgem has confirmed receiving the claims and commenced an investigation to determine if any rules were breached.

John Constable, director of REF, highlighted the potential impact on consumers, estimating the added cost to be £100 million in 2023 alone.

Mr Constable said: “Our evidence suggests that multiple wind farm operators have been charging over the odds to reduce their output on windy days, generating no energy but costing consumers a fortune.”

REF alleges that wind farm operators overcharged for constraint payments, which are payments given to generators for switching off assets when the national grid risks overload.

An Ofgem spokesperson told Energy Live News: “We do not agree with the Renewable Energy Foundation’s claim that wind farms can ‘name their price’ for turning down generation.

“We already have a robust set of rules in place which explicitly exist to prevent generators from abusing the energy market in such circumstances. We have required several generators to make multi-million-pound payments in the last year alone where those rules have been breached.

“Ofgem works with the Electricity System Operator (ESO) to look into alleged improper behaviour of wind farms and other generators.

“We’ll consider all the facts and if evidence of a breach of market rules is found we will not hesitate to act. We are also currently consulting on whether any changes are required to the licensing rules in this area.”

Written by

Dimitris Mavrokefalidis

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