Investigation into Moray Offshore Windfarm (East) Limited's compliance with the TCLC
Investigation
- Open
- Decision proposed
- Closed
- Publication date
- Industry sector
- Generation and Wholesale Market
- Licence type
- Electricity Generation Licence
Ofgem is investigating the compliance of Moray Offshore Windfarm (East) Ltd (the owner and operator of Moray East Offshore Windfarm) with the requirements of condition 20A of the Electricity Generation Standard Licence Conditions (known as the Transmission Constraint Licence Condition, or “TCLC”).
A transmission constraint is defined in the TCLC as any limit on the ability of the national electricity transmission system, or any part of it, to transmit the power supplied onto the system to the location where the demand for that power is situated. In order to manage transmission constraints, National Energy System Operator (“NESO”) routinely 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 alternatives available to it. This creates a risk that generators could exploit their position by charging NESO excessive prices to reduce their output. The TCLC prohibits them from doing so.
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.
The opening of this investigation does not imply that we have made any findings about non-compliance by Moray Offshore Windfarm (East) Ltd.