Dorenell Windfarm Limited (DWL), operator of the 177MW Dorenell wind farm in Scotland, will have to pay over £5m over a breach to its operating licence.
Following a review by energy regulator Ofgem, DWL was found to have charged excessive prices to reduce output, pushing up costs for consumers.
The company has regularly been required to limit output due to grid constraints, which restrict the amount of power that can be moved from the wind farm’s location in the north of Scotland to demand centres further south.
Market rules prohibit generators from charging excessive prices in such circumstances, helping to keep consumer bills down.
The review found that DWL’s prices did not properly reflect the financial benefits of reducing its output related to avoided payments that otherwise would have been required by the UK government’s Contracts for Difference scheme.
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, Ofgem found.
DWL has accepted it breached one of its licence conditions, adding that at the time of submitting the bid prices, it had considered that it was compliant.
DWL will make a payment of £5.53 million into Ofgem’s Redress Fund, which takes payments from companies that have breached market rules and directs it into projects and schemes to support energy consumers in vulnerable situations.
A spokesperson for DWL said: “Dorenell Windfarm Limited takes compliance seriously and aims to comply with regulations at all times. DWL reviews its practices regularly and adapts as necessary. At all times throughout this review DWL has engaged actively with Ofgem and cooperated fully to resolve the issue.
“DWL accepts it made an unintentional breach of the Transmission Constraint Licence Condition (TCLC). As a result, DWL has changed its bid pricing policy to avoid any future breaches.”
DWL is 51% owned by EDF Renewables and 49% by Dalmore Capital.