WIREDGOV

• Over £1bn transmission investment secured through Offshore regime to date
• European Investment Bank confirms support, providing half of debt funding
• Cost of running link for consumers a quarter less than previous projects

Ofgem yesterday appointed Blue Transmission London Array Limited as owners of the high voltage transmission link to the London Array (Phase 1) offshore wind farm. Four bidders competed to own and operate the £459 million transmission link, driving down the final cost for consumers.

The licence grant marks a key milestone for the world’s largest offshore wind farm and the competitive Offshore regime. The regime has led to the cost of running the transmission link being a quarter less than the seven previously completed licence grants. It has also attracted more than £1 billion of investment to the new Offshore transmission sector. 

The Blue Transmission consortium comprising Barclays Infrastructure Funds Management Limited and a UK subsidiary of Mitsubishi Corporation will now maintain and operate the links for the next 20 years. Ofgem announced them as preferred bidders for the project in September 2012. Half of the debt funding for the purchase was provided by the European Investment Bank (EIB). 

Lord Mogg, Ofgem Chairman, said: "This is a significant milestone. With a value of £459 million, these are the highest value assets to have been tendered under the offshore regime to date, bringing the total value of new investment attracted into the sector to over £1 billion.

“This competitive approach is also benefitting energy consumers. Running this link will cost consumers a quarter less than previous projects.  

“I also welcome ongoing EU support through the European Investment Bank. Their financial support in terms of this project is a further endorsement of the competitive approach that is delivering offshore transmission investment.”

Jonathan Taylor, European Investment Bank Vice-President for the UK, said: “Investment in transmission projects is essential to link sources of renewable energy to the national grid. Today’s agreement brings total EIB support for the London Array scheme, the world’s largest offshore wind farm project, to more than £900 million and demonstrates the strength of the continued partnership with Ofgem. Over the last 5 years the European Investment Bank has provided more than £6 billion for long-term investment in the UK energy sector and is committed to supporting crucial energy investment across Europe.”

-ENDS-
 

Notes to editors

1.    The offshore regulatory regime, developed by DECC and Ofgem, was launched in 2009 and uses competitive tendering for licensing offshore electricity transmission. The regime is being delivered in two parts, transitional and enduring. The transitional regime involves two tender rounds, opening the way for transmission licencees to own and operate transmission assets for offshore renewable projects that have been or are being constructed by an offshore generator. Future tenders will fall under the enduring regime, which will enable Ofgem to run tenders for projects where:

• Offshore Transmission Owners (OFTOs), design, build, operate and maintain the transmission assets; or
• Generators build the transmission assets and then transfer them to OFTOs at construction completion.

2.    For more information on the Offshore regime please visit the Ofgem website

3.    The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.

4.    The annual revenue paid to Blue Transmission London Array Limited is a quarter less compared to completed projects in the first tender round when considered as a proportion of the capital value of the transmission assets. 

5.    The London Array (Phase 1) offshore wind farm is a joint venture owned by DONG Energy (50%), E.ON (30%) and Masdar (20%). Located in the outer Thames Estuary, it is currently the world’s largest offshore wind farm. It consists of 175 turbines, with an installed capacity of 630MW, which will provide enough power for nearly half a million homes a year.
 
6.    This transaction is the first to reach financial close and licence grant in Transitional Tender Round 2a of the Offshore Transmission regime. A total of eight OFTO licences have now been granted by Ofgem across the transitional tender rounds.

7.    Transitional Tender Round 2a comprises three projects – London Array, Lincs and Gwynt y Môr. Press statements on the appointment of preferred bidders for the Lincs and Gwynt y Môr projects are available here: 

• Lincs
• Gwynt y Môr

8.    Ofgem expect the first enduring tender round, Tender Round 3 (TR3), to launch later in 2013.

For further information contact:

Ofgem

Felicity Beverley: 020 7901 3858
Rory Edwards: 020 7901 7246
Out of hours: 07766 511 470

European Investment Bank

Richard Willis: +352 555 758, willis@eib.org
Website: www.eib.org/press - Press office: +352 4379 21000 – press@eib.org