4C Offshore Empowering Intelligence

UK 12 OFTO's 2014/15 exceeds world beating £166 million revenue

4C Offshore | Chris Anderson
By: Chris Anderson 26/11/2015 4C
In the latest report published by OFGEM the 12 Offshore Transmission Owners(OFTO's) share of the revenue generated by the 12 associated Offshore Wind developments was £166 million.  It is estimated that offshore wind currently contributes to 5% of annual UK electricity requirements, with the UK generating more electricity from wind than any other country in the world.

To date, over £2 billion has been committed to the development of OFTOs. In the year 2014/15 the OFTOs enabled the transmission of over 9 TWh of electricity  (1 TWh can keep the UK National rail network moving for over three months). Of course the MWh output of the wind farms is subject to the availability of the offshore transmission assets, as well as operational factors such as wind conditions and turbine performance however the total system availability since the first licence grant to March 2015 is over 99%. Blue Transmissions London Array and Greater Gabbard OFTO Plc were by far the biggest returns with earnings of £37,573,000 and £26,003,000 respectively.  Blue Transmissions OFTO's in total earned £81,915,000 - almost half the overall total.  

As well as investment in the wind farms themselves, the growth in offshore wind power requires significant investment in a new offshore transmission network.  To facilitate this, the government, in collaboration with Ofgem, established a competitive, asset-based regulatory regime for the sector allowing private companies to take control of the assets required and manage them within government guidelines. In this way new offshore renewable generation projects are connected to Great Britain’s onshore electricity network.

The regime, launched in July 2009, awards licences to Offshore Transmission Owners (OFTOs) through a competitive tender. The licence entitles the OFTO to a 20 year revenue stream indexed to UK Retail Prices Index (RPI) inflation.

The first licence was granted in March 2011 and by 31 March 2015 there were 12 OFTOs in operation. Nine of the licences were granted under the offshore regime’s first competitive tender round, Transitional Tender Round 1 (TR1).

Three licences were granted under the second competitive tender round, Transitional Tender Round 2 (TR2). The OFGEM report details the revenue achieved by each.

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