WIREDGOV

• First new tender round for offshore transmission assets since December 2012
• £1.4bn of new transmission investment delivered by the regime to date
• Tender includes new features designed to yield further savings for consumers

Ofgem launched yesterday the third Offshore Transmission Owner (OFTO) tender round, for the high voltage transmission links of two offshore wind farms, Westermost Rough and Humber Gateway. They are situated in the North Sea off the coast of Yorkshire.

Worth almost £400m, Tender Round 3 (TR3) is the first new tender round to be run under the enduring regulatory regime, which includes new features designed to yield further savings for consumers. The competitive tender process will result in an OFTO being appointed for each project, with a licence granted to own and operate the transmission assets. In return both OFTOs will receive a guaranteed revenue stream for 20 years.

To make the tendering process simpler and quicker, Ofgem have looked at lessons learned from previous tender rounds and decided to combine the Pre-Qualification (PQ) and Qualification to Tender (QTT) stages into one Enhanced Pre-Qualification (EPQ) stage. We have also enhanced the incentives on OFTOs, which will help keep the cost of this transmission investment as low as possible for consumers.

The TR3 projects are being built by offshore generators, but the enduring regime also gives generators the choice of an OFTO designing and constructing the transmission assets (the OFTO build model).

Ofgem E-Serve’s Managing Director, Robert Hull, said: “The offshore transmission regime has already delivered £1.4bn of new investment into the UK transmission sector. Billions of pounds of further investment in offshore transmission will be needed to connect the 8-15GW pipeline of offshore wind power forecast by the Department of Energy and Climate Change (DECC).

“Tender Round 3 marks a key opportunity for new investors to compete in the offshore regime. Through the competitive tender process we run we will ensure that the transmission systems for the Humber Gateway and Westermost Rough projects will be delivered on time, while driving down costs for consumers.”

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 involved two tender rounds (Tender Round 1 and 2), which opened 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. Tender Round 3 falls 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 offshore transmission see the offshore section of our website LINK. For more information on the new features designed to keep the cost of transmission investment as low as possible for consumers, please see our recent consultation.

3. For more information on the pipeline of offshore wind power, see the DECC Renewable Energy Roadmap.

4. Westermost Rough offshore wind farm is owned by WMR Limited, part of DONG Energy A/S. Situated in the North Sea off the coast of Yorkshire, the wind farm has 35 wind turbines capable of producing 205 megawatts (MW) of electricity. The transmission system will include an offshore substation platform, offshore and onshore AC export cables and an onshore substation.

5. Humber Gateway offshore wind farm is owned by E.ON Climate & Renewables UK. Located off the Yorkshire coast, it will have 73 wind turbines capable of producing 220 MW. The transmission system will include an offshore substation platform, offshore and onshore AC export cables and an onshore substation.

For further press information contact:

Claudia Cimino: 020 3263 2722
Felicity Beverley: 020 7901 3858
Out of hours: 07766 511470