Britain’s energy regulator Ofgem has put out a call to prospective investors looking to bid for £7bn worth of offshore transmission assets set to be auctioned off in 2024 and 2025.
Around 10 Offshore Transmission Owner (OFTO) assets, comprising prebuilt transmission connections for offshore wind farms, and providing guaranteed returns for 25 years subject to availability targets being met, will be going under the hammer.
The OFTO regime has operated successfully for 11 years, having so far brought investment in for 24 assets, with several more going through the process.
The next two years will see a surge in OFTOs coming to market, reflective of the UK Government’s ambitious target of increasing offshore wind generation capacity fivefold to 50GW by 2030.
The regime ensures compliance with competition laws that mean the offshore wind farm developer may not own the associated transmission link once the wind farm is operational.
Its design means that the wind farm developer can build the transmission connection to its own specification, with full control over timescales, then be repaid the cost of the asset when it is auctioned off.
The developer can then recycle that capital into further developments.
To highlight the next investment bidding round, which is due to begin in early 2024, Ofgem hosted a conference on Tuesday 30 May at the Institute of Engineering and Technology in London.
The guest list included major names in investment banking and asset management, alongside Ministerial and energy industry representatives.
Akshay Kaul, Ofgem Interim Director, Infrastructure and Security of Supply Group, said: “OFTOs are an important part of a multi-billion-pound investment Ofgem is facilitating through its regulation of energy networks.
“Investors can also rest assured that Ofgem is ensuring through regulatory reform such as our ASTI (Accelerated Strategic Transmission Investment), Holistic Network Design (HND) and Connections reforms that the necessary onshore infrastructure will be in place.”
After the investment round opens, submitted bids will be assessed by Ofgem with offshore transmission licences granted to successful bidders, in a process that usually takes one to two years.