Alkane Energy’s (LON:ALK) recent contract to supply electricity at peak times has been thrown into doubt after Ofgem started an investigation into information supplied by the firm.
The Aim-listed power group is one of five companies being probed over alleged false and misleading data provided to National Grid during the first capacity auction last December.
The capacity mechanism arrangement is designed to ensure the UK does not suffer blackouts when demand peaks and puts the electricity grid under most stress.
In the auction and starting from 2018, Alkane won contracts to supply 101 megawatts (Mw) that included a 15 year contract for 40Mw of generating capacity.
Alkane will receive £19,400 each year for every Mw of power it makes available, equal to at least £14.4mln in revenues over 15 years.
In a statement today, it said: “Alkane does not believe it is in breach of the Capacity Market Rules and will fully cooperate with Ofgem's investigation.”
The other four companies being investigated are GF Power Peaking, Berangere, Adret, and Power Balancing Service.
Shares in Alkane fell 9% to 22.4p.