business energy prices

THE FIRST OFFSHORE TRANSMISSION OPERATOR ANNOUNCED BY DECC AND OFGEM
Transmission Capital Partners* (TCP) has secured the first licence from energy regulator Ofgem to operate a high voltage link with an offshore wind farm in GB.

A newly created company, to be known as TC Robin Rigg OFTO Ltd, will now hold the Offshore Transmission Owner (OFTO) Licence. It will operate the £65 million link transporting renewable business electricity from the 180 MW Robin Rigg wind farm to the onshore grid for a period of 20 years. As part of the licence grant, the transmission link has transferred from the wind farm owner (E.on) to the OFTO.

The acquisition of the transmission assets is a result of competitive tendering for offshore links under the OFTO regime. It represents the first injection of the projected billions of pounds of new capital into the offshore wind industry arising from the new regime. Ofgem views this as being critical in ensuring sufficient investment is forthcoming to deliver the UK's energy infrastructure needs.

Alistair Buchanan, Ofgem's Chief Executive, said: "This milestone highlights how the offshore transmission regulatory regime has successfully attracted new entrants and fresh sources of investment in the GB transmission sector. This will go towards delivering some of the £200 billion worth of investment in energy infrastructure that Britain needs.

"Overall, the regime is expected to deliver investment of a total value of around £20 billion, while ensuring these links are built on time and provide good value for consumers' money."

Charles Hendry, Minister for Energy, said: "We must do all we can to ensure a safe, secure, low carbon and affordable energy mix for the future. Getting the infrastructure in place to support the move to low carbon is crucial. As we can see from the award of this landmark first licence, it is a real investment opportunity."

The offshore transmission regulatory regime has been developed by Government and Ofgem and was launched in 2009 to deliver high voltage links to offshore wind farms as cost effectively as possible. Licences for these regulated assets are granted through a competitive tendering process managed by Ofgem.

* a consortium comprising International Public Partnerships Ltd, Amber Infrastructure Group and Transmission Capital Ltd.

Today's news marks the success of the regime's first tender round for £1.1 billion of offshore transmission links to nine offshore wind farms. The tender attracted almost £4 billion of investment appetite and is expected to deliver savings of around £350 million. Ofgem expects to grant licences for the other eight links in the first round over the next year.

The second transitional round already has eight bidders competing for the first three projects to link over 1.4 GW of offshore wind, with the winners to be announced this summer. These projects are worth a further £1billion with billions more of investment opportunities to be tendered over the coming years.

8th March, 2011

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