Energy regulator Ofgem today (December 14) announced a short list of six firms bidding to run transmission connections to nine offshore wind farm projects after the first OFTO tender process, writes Rachael Meredith.
The government introduced the Offshore Transmission Network Owners (OFTO) regime in 2009 as a new regulatory regime for licensing offshore electricity transmission, which uses competitive tendering to ensure the cable connections are delivered on time and at reasonable cost.
Ofgem is managing the present round of tenders, known as the Transitional regime, which is the first phase of a £15 billion programme to ensure links to offshore wind farms, which Ofgem claims could total 33GW by 2020, are built on time and cost effectively for consumers and generators.
The short listed firms are competing to own and operate transmission links with some of Britain’s first offshore wind farms, including Greater Gabbard and Sheringham Shoal.
In total, Ofgem claims that the links will connect up to 2,000 megawatts of renewable electricity.
Ofgem originally selected 13 firms to tender for the operation of £1.15 billion worth of offshore transmission links in September (see this NewEnergyFocus.com story) and has now narrowed the list down to six.
The short list of firms competing for transmission links to wind farms includes: Balfour Beatty Capital Ltd; DONG Energy Sales and Distribution A/S; Green Energy Transmission (a consortium of Equitix Ltd and AMP Capital Investors Ltd); Macquarie Capital Group Ltd ; National Grid Offshore Ltd; Transmission Capital Partners (a consortium of Transmission Capital, International Public Partnerships and Amber Infrastructure Group).
Strong competition
Ofgem claims that the first phase saw strong competition between new entrants and existing network companies, with some attractive offers from new entrants, putting the project on course to achieve the predicted £1 billion of savings to consumers from all phases of the programme.
Chief executive of Ofgem, Alistair Buchanan, said: “If Britain is to meet its climate change targets and secure energy supplies Ofgem’s Project Discovery estimates that up to £200 billion may need to be invested. Offshore wind will play a key role in delivering a better environment for consumers, so it is vital that the transmission links for offshore wind attract investors and are built as quickly and cost effectively as possible.
“The strong competition for the first round of transmission links demonstrates the value of attracting new entrants and shows that firms have confidence in the tendering process and are willing to make a substantial investment. This is vital if the £15 billion needed to connect the Government’s target of 33 gigawatts of offshore wind is to be raised in these difficult financial circumstances.”
At the end of October, the European Investment Bank announced that it was considering making over £300 million available for the first tender phase of the OFTO regime (see this NewEnergyFocus.com story).
Ofgem is set to announce which bidders have been successful in May 2010.
The companies will then take ownership of the transmission links once they are constructed and in return will receive a stable, regulated income for 20 years.
The nine offshore wind projects whose connections are up for tender are: Barrow (90MW) Greater Gabbard (504MW) Gunfleet Sands 1&2 (164MW) Ormonde (150MW) Robin Rigg (180MW) Sheringham Shoal (315MW) Thanet (300MW) Walney 1 (178MW) Walney 2 (183 MW)
Ofgem’s advisors on the first transitional tender round include global advisory company Ernst & Young, Royal Bank of Canada, energy consultants KEMA, global legal practitioners Herbert Smith and global insurance brokers Willis.