Offshore transmission policy design

February 2014 saw the launch of Tender Round 3 (TR3). This marked a key milestone for the Offshore Transmission regime as it is the first tender round to be run under the enduring regime.

The early rounds of tenders were run under what is known as the ‘transitional’ regime, where transmission assets constructed by the offshore developer are transferred to the Offshore Transmission Owner (OFTO) who was identified through a competitive 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 began 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 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.

Given the scale and complexity of enduring projects, it is necessary to ensure that the regime which underpins it is fit for purpose and meets the needs of developers, OFTOs and consumers. This includes developing onshore and offshore transmission networks in a strategic and coordinated manner. Our Coordination Policy means offshore and onshore development will need to be considered together when looking at network development needs, in order to deliver the most economic and efficient overarching design.