National Grid’s Electricity System Operator (ESO) is asking for views on how competition in onshore competition might work. It wants input from those with a direct interest in the regime, such as design, construction or financing companies that might participate.
The ESO has been asked by Ofgem to develop proposals for the potential introduction of early model competition in onshore transmission. It wants to explore:
• How to identify which network needs should be competed
• What information particpants would require at different stages of the process in order to form bids
• How it should manage uncertainty and changing requirements post-tender
The scheme, also known as the Competitively Appointed Transmission Owner (CATO) regime, aims to drive innovation and consumer value through the introduction of competition to build, own and operate transmission assets.
Ofgem’s approach is based on the regulator’s ‘OFTO’ format in which companies bid for a licence to own and operate links to offshore wind farms. Developing competitive approaches have proved problematic. So far, offshore wind farms links have been constructed by the wind farm developer and auctioned once complete – referred to as ‘late-stage competition’. Ofgem originally intended that in later projects Oftos would be awarded via ‘early-stage competition’, including building the link. This was intended to promote innovation, but so far early-stage competition has not begun.
The CATO option would allow ‘high value, new, separable’ projects to be competitively tendered, but setting up the format has been delayed because it requires legislation. NOw Ofgem says, “We are currently considering alternative options to CATOs for introducing competition into the delivery of onshore electricity transmission. We will take forward further development of the CATO regime once there is greater clarity on the timing of enabling legislation.” Instead, Ofgem has been taking forward a ‘proxy competition’ option but it has not had
In developing a new model for competition, the ESO said it was keen for a new proposed model to be simple and accessible, saying that “developing a process that can maximise participation in the regime will help ensure the best solutions and achieve maximum consumer value”. It is seeking feedback on areas such as how tenders could be launched and how ongoing uncertainty is best managed.
Fintan Slye, director of UK System Operator, said: “We’re excited about what this could mean for both the industry and consumers. We believe that early competition has the potential to unlock significant consumer value and drive innovation in network development.”
The ESO is running a series of workshops for those who want to share their views on how proposals can be developed to maximise participation and also webinars for those who want to find out more about the overall project.