Ofgem confirms delivery models for shared offshore transmission

Ofgem has confirmed the delivery models for shared offshore transmission infrastructure needed to achieve the government’s target of deploying 50GW of offshore wind by 2030.

The regulator said these assets will either be built by generators themselves before an offshore transmission owner (OFTO) is appointed to operate them, or an OFTO will be appointed to both build and operate the assets.

In its first minded-to decision in May last year, Ofgem initially proposed to utilise only the first of these two models, referred to as the “very late competition – generator build” model.

However, based on feedback to the proposals, the regulator revised its position in December to allow generators to opt for the second “late competition – OFTO” model as well.

Ofgem said the second model will ease co-ordination pressure on developers, reducing the need to set up joint ventures and governance structures, and will be particularly helpful in instances where there is no obvious lead party. It said this model will also ease pressure on developers’ finances by freeing up cashflow earlier in the process and reduce the need for commercial rivals to share sensitive information.

The regulator’s latest decision concerns non-radial offshore transmission infrastructure included in the Pathway to 2030 workstream of its joint Offshore Transmission Network Review with government. The workstream largely covers projects from the Crown Estate’s fourth offshore wind leasing round and Crown Estate Scotland’s ScotWind leasing round.

Ofgem has also confirmed its revised minded-to decision to apply the anticipatory investment principles developed as part of the Early Opportunities workstream to the Pathway to 2030 projects.

Under these principles, anticipatory investment made by the initial users of assets to enable them to be shared with later users will be underwritten by consumers until the later users either begin paying transmission charges or fail to connect.

Ofgem said it intends to develop the delivery models for Pathway to 2030 projects over the next year and will publish draft guidance on the early-stage assessment process in Q2 2023.

The Offshore Transmission Network Review was launched by the government and Ofgem in an effort to move away from individual point-to-point connections between windfarms and the onshore transmission network towards the coordinated delivery of shared infrastructure.

The review has a total of four workstreams: Early Opportunities for short-terms reforms; Pathway to 2030 for medium-term reforms to help achieve the government’s end-of-the-decade offshore wind target; Future Frameworks for enduring arrangements; and a dedicated workstream for Multi-Purpose Interconnectors linked to windfarms.