Ofgem announces preferred bidder appointed for connection to the world’s biggest wind farm, Hornsea 2
Ofgem has today (Friday 2 September) announced its selection of Diamond Transmission Partners as the preferred bidder to own and operate the £1.2bn high voltage transmission connection link serving Hornsea 2 offshore wind farm.
Diamond Transmission Partners, a consortium comprising Mitsubishi Corporation and HICL Infrastructure plc, was selected by Ofgem following a competitive Offshore Transmission Owners (OFTOs) bidding process to own and operate the asset for the next 24 years.
Green energy developer Ørsted’s 165 turbine Hornsea 2 wind farm is located 89km from the Yorkshire coast and has a capacity of 1320MW. Its associated transmission assets, which connect to National Grid’s electricity transmission network at Killingholme, are the most valuable yet brought to market through Ofgem’s OFTO regime.
The initial estimated value of the transmission assets is £1.189bn. When the final value of the assets has been agreed by Ofgem, the preferred bidder will pay the final amount to Ørsted, once they have been granted the assets OFTO licence by Ofgem.
Akshay Kaul, Ofgem Interim Director of Infrastructure and Security of Supply, said:
“Connecting offshore wind farms such as Hornsea 2 to Great Britain’s electricity transmission network helps harness the power of North Sea wind to deliver renewable energy supplies to British consumers.
“The competitive OFTO regime helps ensure this is done at the least possible cost to consumers.”
Launched in 2009, the OFTO regime has so far secured more than £7 billion of private investment in offshore transmission assets which have connected more than 10GW of offshore wind generation to Great Britain’s electricity transmission network. Competitively tendering ownership and operation of these links through the OFTO regime continues to reduce the cost of connecting offshore wind, savings that are passed on through lower transmission costs on customer bills.
The OFTO regime offers global investors a steady income in return for reliable and safe operation of this vital infrastructure, connecting renewable energy produced by offshore wind farms to Great Britain’s electricity transmission network.
Ofgem estimates that up to 13 OFTO assets, with a value of around £10bn will be tendered through the OFTO regime between 2023 and 2025, helping deliver the UK Government’s target of having 40GW of offshore wind generation operational by the end of this decade.
Ofgem anticipates that the next OFTO Tender Round, the tenth such event, will begin early in 2023, and will comprise multiple OFTO assets.
Notes to editors
The reserve bidder for the Hornsea 2 project is Transmission Capital Partners. The reserve bidder may replace the preferred bidder if it fails to successfully complete the tender process.
The initial estimated value of the transmission assets of £1.189bn is subject to Ofgem’s ongoing cost assessment process, with a final transfer value of the transmission assets being published as part of the licence grant process. This is a key element of the regulatory process and ensures that developers are not incurring additional unjustified costs for consumers by spending unnecessarily.
The offshore regulatory regime was developed by BEIS (The Department for Business, Energy and Industrial Strategy formerly the Department of Energy and Climate Change) and Ofgem. It 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, better value for consumers.