Ofgem Opens 3rd OFTO Tender Round for Two OWFs

February 28, 2014

On Wednesday, February 26, Ofgem launched 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. Ofgem has 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.”

Press release, February 28, 2014; Image: britned