Ofgem Invites Bids for Transmission Licenses for Nine U.K. Offshore Windfarms

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Researched by Industrial Info Resources (Sugar Land, Texas)--Great Britain's energy-regulating body, the Office of Gas and Electricity Markets (Ofgem) (London), has opened the first of a series of tenders for offshore transmission licenses. The first round involves the connection of nine of the country's offshore windfarms to the national grid. The tender program has been developed for two categories of projects: transitional and enduring projects. Bids or requests to participate in the tender process are to be submitted by August 24, 2009.

Projects with transmission assets already set up or expected to be constructed soon, or projects that have already secured funds before the tender process began, are known as transitional projects. Enduring projects do not meet any of the criteria for transitional projects but require offshore transmission licenses to begin financing, designing, building and maintaining the concerned transmission asset.

The first tender, published on July 21, 2009, is for transitional projects that have a combined generation capacity of 2,065 megawatts (MW). The projects include:

• The 90-MW Barrow project being developed in East Cumbria by DONG Energy A/S (Copenhagen, Denmark) and Centrica plc (OTC:CPYYY) (Windsor, England)
• The 165-MW Gunfleet Sands 1 and 2, and the Walney 1 and Walney 2 projects, which are 183 MW and are being developed by DONG Energy in Essex and East Cumbria, respectively
• The 173-MW Robin Rigg project being developed by E.ON AG (OTC:EONGY) (Dusseldorf, Germany) in Robin Rigg, Dumfries and Galloway
• The 317-MW Sheringham Shoal project being developed in Norfolk by Scira Offshore Energy Limited (London)
• The 300-MW Thanet project being developed in Kent by Vattenfall AB (Stockholm, Sweden)
• The 504-MW Greater Gabbard project being developed in Suffolk by Airtricity (Dublin, Ireland), part of Scottish and Southern energy (LSE:SSE) (Perth, Scotland) and npower (Swindon, England), part of German energy giant RWE AG (OTC:RWEOY) (Essen)
• The 150-MW Ormonde project in East Cumbria being developed by Eclipse Energy Company Limited (Grantham, England) and owned by Vattenfall (for additional information on this project see July 24, 2009, new article - REpower Secures 150-Megawatt Ormonde Wind Turbine Contract)

Each project is expected to be granted a transmission license, and winners of the bid will become offshore transmission owners. Each winning bidder will enter into a transfer agreement with the windfarm developer under which the bidder will operate and maintain the assets in accordance with the industry's codes, licenses, standards and agreements. If the bidder and the developer are unable to agree to the terms, they can request Ofgem utilize the property transfer scheme and transfer the concerned offshore transmission assets.

The indicative project transfer values are about $60 million for Barrow, $77 million for Gunfleet Sands 1 and 2, $97 million for Robin Rigg, $143.7 million for Ormonde, $164 million for Walney 1, $172.5 million for Walney 2, $308.5 million for Sheringham Shoal, $312 million for Thanet, and $567.7 million for Greater Gabbard.

Among the U.K.'s plans to develop ways to bring down carbon emissions 34% to 1990 levels by 2020, development of offshore wind power is a key strategy. The government plans to have developed 33,000 MW of wind power by that time, both on land and offshore.

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