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Ofgem unveils preferred bidder for Hornsea 2 offshore transmission assets

By: Tom Russell 05/09/2022 Ofgem

General Substations Windfarms

Ofgem has announced its selection of Diamond Transmission Partners as the preferred bidder to own and operate the £1.2bn high voltage transmission connection link serving Hornsea 2 offshore wind farm.

Diamond Transmission Partners, a consortium comprising Mitsubishi Corporation and HICL Infrastructure plc, was selected by Ofgem following a competitive Offshore Transmission Owners (OFTOs) bidding process to own and operate the asset for the next 24 years.

Ørsted’s 165 turbine Hornsea 2 wind farm is located 89km from the Yorkshire coast and has a capacity of 1320MW. Its associated transmission assets, which connect to National Grid’s electricity transmission network at Killingholme, are the most valuable yet brought to market through Ofgem’s OFTO regime.

The initial estimated value of the transmission assets of £1.189bn is subject to Ofgem’s ongoing cost assessment process, with a final transfer value of the transmission assets being published as part of the licence grant process. This is a key element of the regulatory process and ensures that developers are not incurring additional unjustified costs for consumers by spending unnecessarily. When the final value of the assets has been agreed by Ofgem, the preferred bidder will pay the final amount to Ørsted, once they have been granted the assets OFTO licence by Ofgem.

Akshay Kaul, Ofgem Interim Director of Infrastructure and Security of Supply, said: “Connecting offshore wind farms such as Hornsea 2 to Great Britain’s electricity transmission network helps harness the power of North Sea wind to deliver renewable energy supplies to British consumers.

“The competitive OFTO regime helps ensure this is done at the least possible cost to consumers.”

The offshore regulatory regime was developed by BEIS (The Department for Business, Energy and Industrial Strategy formerly the Department of Energy and Climate Change) and Ofgem. It was launched in 2009. The regime is for licensing offshore electricity transmission and uses competitive tendering in an effort to lower costs and higher standards of transmission services for generators and ultimately, better value for consumers.

The OFTO regime also aims to provide investors a steady income in return for operation of the offshore grid infrastructure, connecting renewable energy produced by offshore wind farms to Great Britain’s electricity transmission network.

According to Ofgem, the OFTO regime has so far facilitated more than £7 billion of private investment in offshore transmission assets which have connected more than 10GW of offshore wind generation to Great Britain’s electricity transmission network.

Ofgem estimates that up to 13 OFTO assets, with a value of around £10bn will be tendered through the OFTO regime between 2023 and 2025. The next OFTO Tender Round, the tenth such event, is slated to begin early in 2023, and will comprise multiple OFTO assets.

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Ofgem unveils preferred bidder for Hornsea 2 offshore transmission assets

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