Drax agrees to pay £6.1m for breaching generation licence

Ofgem has said Drax secured excessive Balancing Mechanism payments from National Grid ESO for its Cruachan power station

Big Zero Report 2022

Electricity generator Drax Pumped Storage has agreed to pay £6.1 million, after admitting it breached a condition of its generation licence in relation to its Scottish Cruachan pumped storage power station.

Ofgem said Drax secured excessive payments between 1st January 2019 and 31st July 2022 by submitting excessively expensive bids to turn down its generation in the Balancing Mechanism.

The company admitted to having breached its Generation Licence, specifically the Transmission Constraint Licence Condition.

If the grid is unable to flow electricity in the way required to meet the UK’s electricity needs, National Grid ESO take actions to increase and decrease the amount of electricity at different locations on the network.

This practice is known as “transmission constraint management” – situations which could cause transmission constraints might include transferring power from a particular area in which local generation exceeds demand to other areas where there is insufficient network capacity.

Cathryn Scott, Director of Enforcement and Emerging Issues at Ofgem, said: “This enforcement action sends a strong signal to all generators that they cannot obtain or seek to obtain excessive benefits during transmission constraint periods. If they do, we have the powers to intervene and we are ready to use them.”

A Drax spokesperson told ELN: “Drax takes its responsibilities under the terms of its Generation Licence very seriously and co-operated fully with Ofgem in order to resolve this issue relating to its operations at Cruachan pumped storage power station in Scotland.

“We have put measures in place that are designed to prevent this from happening again.”

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