Ofgem appoints preferred bidder for Humber Gateway offshore transmission assets
Press release
Publication date
Industry sector
Transmission Network
Today Ofgem has appointed Balfour Beatty Equitix Consortium as the preferred bidder to own and operate the offshore transmission link to the Humber Gateway windfarm for the next 20 years. This completes the procurement of Tender Round 3 offshore transmission owner (OFTO) projects.
Balfour Beatty Equitix Consortium, a consortium comprising Balfour Beatty Investments Limited and Equitix Limited, was selected by Ofgem through a competitive process in which bidders compete to become OFTOs. The tender exercise saw the lowest bids to date as a proportion of asset value demonstrating the value of using competition to drive down the costs of the networks for connecting offshore wind.
The Humber Gateway offshore wind farm, located in the North Sea approximately eight kilometres off the coast of East Yorkshire, comprises 73 wind turbines and has a total installed capacity of 220MW. The estimated value of the transmission assets is £173.3 million. The transmission assets for the project are currently owned and have been constructed by E.ON Climate and Renewables UK Humber Wind Ltd and will transfer to the OFTO at licence grant.
The Humber Gateway transmission assets are being tendered under Tender Round 3. Since the offshore transmission regime was set up by Ofgem and the Department of Energy and Climate Change (DECC) in 2009, it has delivered £2.6 billion of investment and led to significant savings for consumers. A further £350 million of investment will come through the completion of Tender Round 3. Beyond that, based on offshore wind projects that have already secured subsidy contracts from the Government and those aiming to deliver under the Renewables Obligation scheme, billions more of investment will be required in the coming years.
Notes to editors
1. The reserve bidder for the project is Transmission Capital Partners, a consortium of Transmission Capital Partners Limited Partnership and International Public Partnerships Limited.
2. The offshore regulatory regime was developed by DECC and Ofgem and was launched in 2009. The regime is for licensing offshore electricity transmission and uses competitive tendering to ensure lower costs and higher standards of transmission services for generators and, ultimately, consumers.
The regime is flexible, allowing Ofgem to run tenders for projects where:
- OFTOs design, build, operate and maintain the transmission assets; or
- Generators build the transmission assets and then transfer them to OFTOs at construction completion.
3. Further information concerning the estimated cost savings realised from applying the OFTO regime to Tender Round 1 can be found in a report commissioned from BDO/CEPA. Ofgem expect to undertake a similar assessment of Tender Round 2 in the coming months.
4. Ofgem currently expects the next tender round, Tender Round 4, to launch in the first half of 2016 with Tender Round 5 in 2017. Together they are expected to comprise up to six OFTO projects with a combined value of around £2 billion.
5. See the Official Public Notice for the appointment of Balfour Beatty Equitix Consortium as the preferred bidder to own and operate the link to the Humber Gateway windfarm.
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