Ofgem proposes consumer contribution to offshore transmission investment

Consumers should contribute to the upfront costs of building the shared transmission infrastructure that will be required to connect new offshore windfarms to the power grid, Ofgem has proposed.

The results of the regulator’s year-long review into the offshore transmission network was published on Wednesday (14 July).

The review was commissioned by ministers from the Department for Business, Energy and Industrial Strategy (BEIS) following concerns that the nature of current arrangements for transmitting power from offshore wind farms is resulting in haphazard infrastructure development in coastal areas such as Norfolk.

The existing regime, which incentivises developers to hook up their windfarms to the grid via point- to-point connections, is sparking a backlash from coastal communities fed up with the new substations and transmission lines.

The review was designed to examine how onshore disruption can be minimised by greater co-ordination of this infrastructure so that it is more like the onshore network.

The current framework does not provide incentives to bring forward shared transmission infrastructure, the paper said: “Given the amount of investment likely to be needed to connect large volumes of offshore wind in future, this policy means the regulatory framework is unlikely to facilitate developers making the types of decision that will be required to ensure infrastructure is delivered in the appropriate manner in future.”

Ofgem’s consultation paper explored a variety of different models for windfarms to use common transmission infrastructure, such as routing cables to a shared substation that could be located either on or off shore

The regulator has proposed that the cost of anticipatory investment in this offshore transmission network should be shared between developers and consumers.

When its process for tendering new offshore transmission owners (OFTO) has concluded, Ofgem said the transmission developer should receive funds from a mix of sources, including both consumers and the developers of wind projects that are planning to use the connection.

However, the regulator said consumers’ contribution should be the “minimum required” to secure anticipatory investment.

In order to ensure value for money for consumers, any proposals for such investment should be subject to cost-benefit analyses. This should especially be the case for “quasi bootstrap” proposals, where a circuit connects more than one windfarm to separate substations onshore.

Ofgem said it expects charging arrangements for offshore transmission assets to be brought closer in line with those for the onshore network. It said they should be reviewed to enable the locational charges for different offshore users to better reflect the costs that they confer on the system, for example, through the location of their land connection.

Earlier this year, a high court judge overturned the decision by Alok Sharma to award planning permission for Vattenfall’s 1.8GW Norfolk Vanguard offshore wind project after ruling that the business and energy secretary had failed to justify his decision not to consider the cumulative impacts of the onshore transmission infrastructure it was expected to share with its sister project, Norfolk Boreas.