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Ofgem takes action after generator UK Capacity Reserve submitted inaccurate information as part of capacity auction

  • UKCR provided inaccurate information for 11 of its generating units
  • UKCR has been excluded from including these 11 generating units in capacity auction for next two years
  • Accurate information is vital to the proper functioning of the capacity auction and participants should exercise care over their submissions

Ofgem has found that UK Capacity Reserve (UKCR) submitted inaccurate information when applying to be part of last year’s capacity auction. As a result it has been excluded from submitting 11 of its generating units for capacity auctions for the next two years. UKCR has accepted Ofgem’s finding.

The Capacity Market is part of the Government’s reforms intended to ensure sufficient capacity on the system to provide a reliable electricity supply. National Grid will run an annual auction to decide which generators and providers of demand side response will be awarded a capacity agreement, in return for providing capacity at times of system stress. Companies had to submit applications for the first such auction last November and National Grid awarded the contracts in January.

UKCR submitted 96 of its generating units for prequalification to be part of that auction. Regulatory rules state that all information submitted must be accurate and that all units have obtained relevant planning consents. These rules are fundamental to ensuring the capacity market functions properly. 

Ofgem found that out of the 96 generating units UKCR submitted to be part of the auction, 11 were incorrectly stated as having obtained relevant planning consents at the time of its submission. As a result National Grid took steps to ensure these 11 generating units (which could have generated around 200MW) did not actively participate in the auction. UKCR has accepted it submitted incorrect declarations owing to the requirement for written planning consents to be obtained prior to the submission of declarations.

Notes to editors:

1.    Investigation

Find out more information in our Decision Statement

The generating units removed from UKCR’s bid amount to around 200mw. The total capacity put forward for National Grid’s auctions was around 60 GW.

2.    Capacity market and Ofgem’s role

The Capacity Market provides incentives for investment in the overall level of reliable capacity needed (both supply and demand side response) to ensure secure electricity supplies. Potential capacity providers can qualify to participate in a capacity auction where, if successful, they will be awarded a Capacity Agreement.

This agreement would give them the right to receive a regular payment in return for which they will guarantee to provide a level of additional supply at times of system stress; otherwise they will face a penalty.

National Grid is the Delivery Body for Electricity Market Reforms and administers and runs the auction process on behalf of DECC. Ofgem is responsible for enforcing compliance with the rules.

Please see National Grid’s balancing the energy network tools for more information. 

The government have produced an electricity market reforms document for information.

For further press information contact:

Lisa O’Brien:        020 7901 7426
Dafydd Wyn:         020 3263 9943

Out of hours media contact number:  07766 511470


Channel website: https://www.ofgem.gov.uk/

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