Decision on the Regulatory Framework for the Non-Standard Interconnectors of the Offshore Hybrid Asset pilot scheme


Ofgem opened the Offshore Hybrid Asset (OHA) pilot scheme (formerly the MPI pilot scheme) in September 2022, with the aim of creating a regulatory framework to support the early development of OHAs connecting to GB. OHAs enable coordination of offshore wind and increase interconnection to GB in line with the Government’s ambitions.

Point-to-point interconnectors are regulated via the cap and floor regime and an interconnector licence. As OHAs are a unique asset type with a differing risk profile to interconnectors, this called for the creation of both a new regulatory regime and adjustments to licensing arrangements to enable the OHA pilot scheme projects to develop. Since December 2022 we have been engaging with industry stakeholders through the Multi-Purpose Interconnectors Framework Discussion Group (MDFG) to develop a suitable regime for OHAs.

In June 2023, we published a consultation (the June 2023 Consultation) on the Regulatory Framework for Offshore Hybrid Assets (OHAs): Multi-Purpose Interconnectors (MPIs) and Non-Standard Interconnectors (NSIs). The purpose of the June 2023 Consultation is to enable the development of the OHA sector.  The first stage of this process is to provide the high-level regulatory regime only for the NSI projects participating in our OHA pilot scheme (the Pilot NSIs), which have been undergoing our Initial Project Assessment (IPA).

This decision document summarises the responses to the June 2023 Consultation relevant to the Pilot NSIs and provides our final decision for the high-level regulatory regime that could apply to the Pilot NSIs.

MPIs and any other future NSIs are outside the scope of this decision, pending further policy work by Ofgem and a decision by the Department for Energy Security and Net Zero (DESNZ) on, among other things, the eligibility for Contracts for Difference (CfD) of MPI-connected offshore wind farms (OWFs) and other market arrangements aspects of MPIs. Work is being progressed by DESNZ and by Ofgem on these matters and further information on the MPI regime will be published in due course.