Offshore tenders worth £1.9bn launched today

Ofgem today launched a fresh round of tenders worth around £1.9bn for six offshore wind farm projects. This is the second tender round in the offshore transmission regime, a joint […]

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By Kelvin Ross

Ofgem today launched a fresh round of tenders worth around £1.9bn for six offshore wind farm projects.

This is the second tender round in the offshore transmission regime, a joint policy initiative between DECC and Ofgem to encourage cost-effective investment in the network links between offshore wind farms and the mainland grid.

Companies will be competing for the right to own and operate the links to 2.8 GW of offshore installations for the next 20 years. So far, competition has been fierce, with almost £4bn of investment appetite chasing the £1.1bn of transmission links in the first tender round announced in August.

Energy Minister Charles Hendry said today: “We have 40% of Europe’s wind and we have 11,000 km of coastline. We ought to be using those resources for our future energy security, but to do this we need to get the investment in the infrastructure that will make this happen.

“I hope the second round of tendering for owning and operating the links to offshore wind farms will be as successful as the first, where investment interest was four times the necessary level. This competition also means savings for generators and consumers, which I very much welcome”.

Ofgem’s chief executive Alistair Buchanan said: “Britain needs to attract £200bn of investment in its energy industry over the next 10 years [and] £20bn will be for offshore transmission links.

“Therefore it is very encouraging that we have seen such strong competition for the first round of transmission links.

“This looks set to continue for the second round and healthy competition will keep the costs of the links as low as possible and give generators confidence that the offshore regime is proving very attractive to investors and is bringing new players into the UK transmission market.”

Tenders for the first three projects, Gwynt-y-Mor in the Irish Sea, Lincs and London Array, started today. Tenders for the other three, Humber Gateway, Race Bank and West of Duddon Sands, are expected to start in Spring 2012.