Alkemy Capital. Regulatory News (ALK)

21 May 2015

OFGEM OPENS INVESTIGATIONS INTO FIVE GENERATORS' COMPLIANCE WITH CAPACITY MARKET RULES

Ofgem has opened investigations to see if five generators provided false or misleading information to National Grid about planning consents for some of their proposed generating units that took part in the December 2014 capacity auction. The companies being investigated are GF Power Peaking Ltd, Berangere Ltd, Adret Ltd, Alkane Energy UK and Power Balancing Service Ltd.

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.

The opening of these investigations does not imply that we have made any findings about non-compliance.

Notes to editors

1. Capacity market

All five companies were successful in National Grid's first capacity auction.

GF Power Peaking Ltd: Secured capacity agreements for all nine of its new build generators and an existing generator in the capacity auction. Two new builds secured 15 year capacity agreements with the rest securing 1 year agreements for 58 MW of generating capacity.

Berangere Ltd (formerly registered as GFE 2015 Ltd): Secured capacity agreements for all three of its new build generators in the capacity auction, securing 15 year contracts for 60 MW of generating capacity.

Adret Ltd (formerly registered as GFE 2017 Ltd): Secured capacity agreements for two out of three of its new build generators in the capacity auction, securing 15 year contracts for 37 MW of generating capacity.

Alkane Energy: Secured capacity agreements for nine of its ten new build generators in the Capacity Auction, securing 15 year contracts for 40 MW of generating capacity.

Power Balancing Services Ltd: Secured capacity agreements for four of its six generating units, securing 14 year contracts for 28 MW of generating capacity.

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.

More information on the government's electricity market reforms can be found here. https://www.gov.uk/government/policies/maintaining-uk-energy-security--2/supporting-pages/electricity-market-reform 

For further press information contact:

Kate Wilcox: 020 7901 7113

Lisa O'Brien: 020 7901 7426

Dafydd Wyn: 020 3263 9943

Out of hours media contact number: 07766 511470