Ofgem’s tendering regime reduces cost of connecting offshore wind farms by at least £700m

New figures show that competitive tendering is cutting the costs for connecting offshore wind farms to the GB high voltage grid by at least £700m.

The tender regime is run by Ofgem, which chooses the most competitive bids made by firms to own and run links to offshore wind farms over a 20-year period. It was launched in 2009.

The latest figures published by Ofgem today have been produced by independent consultants. They are based on the first three tender rounds. The savings are accumulating in the 20 year period over which new owners will run the links. 15 tenders have now been completed and the first licence for a firm to run one of the links was granted in 2011.

The fourth tender round will be officially launched next month where bidders will compete for the right to own and run the link to the Burbo Bank Extension, a 258MW wind farm in the Bay of Liverpool. Ofgem expects to launch a fifth tender round this autumn.

Maxine Frerk, acting senior partner, networks, Ofgem, said: “When Ofgem and the Department for Energy and Climate Change launched the tender regime it was a world first. The figures published today show that competition is helping to deliver savings for consumers for connecting offshore wind. “

“The regime attracts new companies into Britain’s energy market and it has brought in £2.7bn investment so far. We expect a further £2bn of investment in the projects for tender rounds four and five. We want to continue to get the best deal for consumers from network regulation. So from next year we plan to open up high value upgrades to the onshore high voltage grid to competition.”