Ofgem has, at last, opened an investigation into the potential overcharging of consumers by Moray East offshore wind farm for reducing output during times of grid constraint.
In 2023, REF highlighted this issue and followed up by complaining to Ofgem in October 2023 saying that in the 2 years to 30 September 2023 ‘We estimate that Moray East was paid approximately £100 million by the Electricity System Operator (ESO) for these actions, making it by a long margin the most expensive site used to manage constraints, comprising 60% of the total constraint costs to the consumer for all generator types for the period.” We showed that Moray East was charging £66 per MWh to reduce output even though no subsidy was being forgone.
In March 2024 we published a comprehensive report on what we believe is routine overcharging for constraints by wind farms and we estimated that this exceeded £100 million in 2023. We provided Ofgem with the data that underpinned our calculations in May 2024. This was covered by the Telegraph.
Following recent falls in bid prices used for constraint payments, we recalculated the potential over-charging by the 26 ‘unsubsidised’ wind farms which included Moray East for the period of two and a half years that it deferred taking up its CfD. Our estimate of the total overcharged by this set of wind farms came to £340 million.
While Ofgem is to be commended for starting an investigation into Moray East offshore windfarm, it is disturbing that it has apparently taken nearly two years for an investigation into this single wind farm to commence. Our data suggests that almost all of the 123 wind farms which have received constraint payments have been overcharging the consumer and that Ofgem needs to develop a more serious strategy for reclaiming these payments and returning them to the consumer very much more promptly.