Ofgem has announced it has shortlisted its biggest field of bidders since 2019, who can all now compete to own and operate the offshore electricity transmission links for three major North Sea wind farms off Great Britain’s east coast.
A field of five bidders, including some regular bidders and some returning after a long absence, are vying to own and operate the transmission links which connect offshore wind farms East Anglia THREE, Inch Cape and Dogger Bank C into Great Britain’s power grid.
With a combined estimated value of £3.5billion, the pre-built connections – which consist of onshore and offshore cables, converter stations and substations – connect clean power generated by North Sea wind to the grid providing the ability to power millions of homes and boost Great Britain’s energy security.
The diverse and developing field of bidders underlines a growing investor interest in the OFTO regime as well as repeat interest from existing OFTO owners, already benefitting from a long-term inflation linked revenue stream under the terms of their OFTO licences.
Beatrice Filkin, Ofgem’s Director of Major Projects said:
'Recently, we’ve seen how geopolitical events can impact both energy security and investments.
'Ofgem’s OFTO regime not only helps boost British energy security but also offers investors a safe and steady asset for their portfolios.
'Through the OFTO regime, Ofgem is attracting vital investment into the UK to support growth and deliver a stable, secure energy system powered by clean electricity, while also ensuring consumers get a good deal.'
The five bidders will now be invited to submit their formal tenders ahead of Ofgem selecting a preferred bidder for each project, who will ultimately be issued with a transmission licence to operate one or more of the three OFTOs.
This is the 13th Ofgem- run tendering round. The process is designed to keep costs down for consumers while also providing attractive investment opportunities. Since its launch in 2009, the OFTO regime has seen winning bidders invest over £10billion in links connecting 28 offshore wind farms. As the race to achieve clean power intensifies, Ofgem anticipates bringing as much as £6billion of OFTO assets to market each year in the run up to 2030.
Later this year Ofgem plans to launch Tender Round 14. While the specific assets have not yet been confirmed, Ofgem encourages parties interested in participating in future OFTO competitions to get in touch for information and support.
Background
View Ofgem’s decision document.
The OFTO regime
Ofgem’s OFTO) regime underpins the government’s renewable energy targets by connecting homegrown offshore wind generation at least cost to consumers.
The competitive OFTO tender process ensures that offshore wind generators are partnered with responsible transmission owners that are the most efficient and competitive players in the market. This means lower costs and high standards of service for generators and, ultimately, consumers.
Source: Ofgem
