The UK energy regulator Ofgem has shortlisted six bidders to own and operate electricity transmission lines for nine offshore wind farms.
In total, the links, worth over GBP1 billion will connect up to 2,000MW of renewable electricity. Ofgem E-Serve, the regulator’s delivery arm, has made a decision on the shortlist of the firms for each of the first nine projects.
Ofgem said that this is the first phase of a GBP15 billion programme to ensure links to offshore wind farms are built on time and cost effectively for consumers and generators. The links could total 33GW by 2020. The winning bidders will be announced in May 2010.
The first phase has been characterised by competition between new entrants and existing network companies. The European Investment Bank is considering making over GBP300m available for the first tender phase.
The shortlisted companies include Balfour Beatty Capital, Dong Energy Sales and Distribution, Green Energy Transmission, Macquarie Capital Group, National Grid Offshore, and Capital Partners.
Alistair Buchanan, chief executive of Ofgem, said: “If Britain is to meet its climate change targets and secure energy supplies Ofgem’s Project Discovery estimates that up to GBP200 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 GBP15 billion needed to connect the government’s target of 33GW of offshore wind is to be raised in these difficult financial circumstances.”
The companies, which are successful in May 2010, will take ownership of the transmission links once they are constructed. They will then run the links and, in return, will receive a regulated income for 20 years.
This year, the government introduced 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.
The present round of tenders is known as the transitional regime and opens the way for transmission licensees to own and operate transmission assets for offshore renewable projects which have been or are being constructed.
A second transitional tender process is scheduled to begin next summer. Subsequent tenders will be known as the enduring regime for projects that will be identified as they meet certain preconditions set by Ofgem. Under the enduring regime, potential investors will be able to bid to design, build, finance and maintain the transmission.