Ofgem Calls for Bids on Westermost Rough and Humber Gateway Transmission Assets

The UK’s Office of Gas and Electricity Markets (Ofgem) has called for Expression of Interest (EOI) for the grant of offshore transmission licences for the grid connection of Westermost Rough and Humber Gateway offshore wind farms.

According to a regulatory regime for offshore electricity transmission, developed by the UK’s Department of Energy and Climate Change (DECC) and Ofgem, offshore transmission licences can be granted following a competitive tender exercise run by Ofgem, with a successful bidder being appointed as an Offshore Transmission Owner (‘OFTO’).

Building on an already established regime for the awarding of offshore transmission licences in which approximately £2.5 billion of assets have been tendered for, Ofgem is now running a further tender competition.

Tender Round 3 (TR3) is the first competitive Tender Round for Generator Build projects under the enduring regime. A transmission licence is expected to be granted for each of the two projects. Initial transfer value of the Westermost Rough project is £199,500,000, and that of the Humber Gateway project amounts to £194,700,000. Deadline for Expressions of Interest is May 1, 2014.

Successful bidders in this tender will enter into a transfer agreement for the purchase of offshore transmission assets constructed by the developer in each case and then maintain and operate the assets in accordance with the offshore transmission licence and relevant industry codes, standards and agreements.

In addition to being granted the offshore transmission licence, successful bidders will be required to enter into a range of agreements including with the relevant generator, any relevant distribution network owner and the National Electricity Transmission System Operator.

Even though the tender process in relation to both projects will commence at the same time, each project will be the subject of separate agreements and documentation and the successful bidder for each project will be granted a separate offshore transmission licence.

Offshore WIND Staff, April 11, 2014; Image: ABB