Ofgem has shortlisted four potential operators for its next OFTO (Offshore Transmission Owner) bidding round for three offshore transmission links worth an estimated £2billion.

In the most valuable OFTO tender round ever run by Ofgem, a fourth bidder has joined three others in the contest to own and operate up to three offshore wind farm transmission assets.

The newcomers Gravis Capital Partners lead a consortorium competing with already declared bidders EKITD Consortium, Diamond Transmission Partners and Transmission Capital Partners.

The four would-be OFTOs have successfully passed the first selection hurdle. This requires bidder to show they cab pay for and operate the OFTO systems now up for grabs in their tenth tender round.

All four bidders can now bid for the three offshore transmission assets of Dogger Bank A Offshore Wind Farm, Neart na Gaiothe Offshore Wind Farm and Moray Offshore Wind Farm (West), estimated to be worth around £2bn in total.

They will now go through to the final Invitation to Tender stage for each system. Once that stage is decided, Ofgem will appoint a preferred bidder for each link.

At stake for each project is a guaranteed revenue stream for up to 25 years under licence, subject to availability of the assets.

OFTO as a regime has operated since 2012, bringing in investment for 24 assets.  The next two years will see a surge in assets coming to market, as the government seeks to increase offshore wind capacity fivefold to 50GW by 2030.

Rebecca Barnett, Ofgem director of networks said: “As we bring greater numbers of larger OFTO assets to market we are seeing increasing interest from investors and new bidding consortia coming forward. This increasingly competitive field is great for consumers because the extra competitive pressure ultimately helps keep energy costs down.

“Many investors are looking for green, sustainable investments that offer a steady, index-linked income – this is exactly what OFTOs provide. With a stream of multibillion pound OFTO assets coming to market over the next few years there are many opportunities for more investors and consortia to come forward and get involved.”

In OFTO render round 8, decided in September, a consortium of Mitsubishi Corporation and HICL Infrastructure was selected as Ofgem’s in as the preferred bidder to own and operate the Hornsea Two OFTO asset until 2046.

At a final asset transfer value £1.14bn,  that OFTO serves the UK’s largest fully operational wind farm which will help power more than 1.4 million homes.

Ofgem is running a programme of engagement to familiarise potential new bidders with the OFTO process. For more information, contact tendercoordinator@ofgem.gov.uk

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