Ofgem will be running separate tender rounds for transitional and enduring projects.
The early rounds of tenders are being run under what is known as the ‘transitional’ regime, where transmission assets constructed by the offshore developer will be transferred to Offshore Transmission Owner (OFTO) identified through a tender process. Potential OFTOs bid to purchase the transmission assets from the developer and then finance and maintain the assets over a twenty year revenue stream period.
The first of these tenders commenced in July 2009 and the first offshore transmission licence was granted in March 2011. A second round of transitional tenders started in November 2010.
Under the enduring regime, offshore developers will have the flexibility to choose whether they or an OFTO design and construct transmission assets. Regardless of the party who constructs the offshore transmission assets, an OFTO will be responsible for the ongoing ownership and operation of the transmission assets.
Ofgem is running a consultation on the enduring regime from 16 December 2011 until 17 February 2012. To view the consultation document please see: Consultation on tender exercises under the enduring regime