Ofgem has opened prequalification for groups who want to enter a tender to own and operate the connection to the Seagreen offshore wind farm. Prequalification is open until 31 March and Ofgem is hoping that it will result in up to nine groups – companies or consortia – moving into the ‘invitation to tender’ phase.
The opportunity is offered under Ofgem’s ‘offshore transmission owner’ (OFTO) framework that uses a competitive process to award 25-year licences to own and operate the cables that connect offshore wind farms to the onshore grid, and associated facilities such as offshore substations. The regulator argues that the competitive process for awarding licences to operate the links reduces costs for consumers (and in any case EU rules require owners of transmission and generation assets to be legally separate, and offshore links have so far been built by the wind farm owners, so they have to be transferred). Ofgem has carried out 23 OFTO tenders to date, worth £6.4 billion and it said in 2014 and 2016 that the first tender round and the second and third tender rounds had resulted in savings for consumers of £200-400 million and £428-749 million, respectively. It is in the process of closing the last remaining project in Tender Round 6 (which saw links to Beatrice, Hornsea 1 and East Anglia ONE up for grabs) and continuing tender processes for two projects in Tender Round 7 (for links to Moray East and Triton Knoll) and one project in Tender Round 8 (Hornsea 2), which together have a total value of almost £2.5 billion.