Offshore windfarm links tendering regime enters fifth round with projects worth £2 billion
Press release
Publication date
Industry sector
Offshore Transmission Network
On 10 October 2016 Ofgem will start the fifth tender round (TR5) for offshore transmission owners (OFTOs) where companies will bid to become owners of five transmission links to offshore wind farms. The five links have an estimated value of £2 billion in total and a generation capacity of 2.3 GW – making it the biggest tender round to date.
Ofgem, which runs the tender process, will choose the most competitive bids from companies to own and run links to the offshore sites over a 20-year period. The launch of the fifth round comes after Ofgem announced a shortlist of five bidders to own and run the £230 million transmission link for the Burbo Bank Extension offshore windfarm in the Bay of Liverpool earlier this month.
The five offshore windfarms for which transmission links are being tendered are Dudgeon, off Cromer in Norfolk; Galloper, off the East Coast of England; Race Bank in the northern reaches of The Wash off the Norfolk coast; Rampion near Sussex; and the Walney Extension in the Irish Sea.
Jonathan Brearley, senior partner, networks, Ofgem, said: “Since the launch of the OFTO regime, the first three tendering rounds have delivered £700 million in savings and have attracted over £3 billion in investment value. By providing the opportunity for investors to now participate in the tendering of over £2 billion of assets in the next round, it should ensure the delivery of further value for consumers and contribute to reducing the overall cost of offshore wind.”
The first three OFTO tender rounds have brought several new players into the transmission market in the UK. The OFTO regime also offers a range of organisations including UK life insurers and pension funds opportunities to invest in long term infrastructure.
Initial information regarding the projects can be found in our Tender Round 5 section, including the preliminary information memorandum for each project.
Notes to Editors
1. The Evaluation of OFTO Tender Round 2 and 3 benefits report published by Ofgem.
2. How are the savings made?
To win a tender, a bidder will need to produce the most robust and competitively priced tender revenue stream (TRS) that will recover their financing and operating costs. Because the licence to operate the link is secured for 20 years, it gives an OFTO a stable, long-term revenue. This lowers the financial risk they face meaning they can offer a more competitive TRS bid. Competition for owning these links will reduce costs for connecting wind farms, and for running Great Britain’s electricity grid as a whole. All consumers pay the cost of transporting electricity as part of their bill, so they share the benefit.
3. Ofgem and DECC launched the offshore transmission regime in 2009. It uses competitive tendering for licensing offshore electricity transmission systems.
4. See further information regarding the invitation to tender (ITT) stage for the fourth round.
About Ofgem
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Further information
For further press information contact:
Chris Lock 020 7901 7225
Joseph Moss 0207 901 7178
Out of hours 07766 511470