Ofgem Launches Its Largest-Ever OFTO Tender for Hornsea 3 Transmission at Around GBP 3.5 Billion

Ofgem launched what it expects to be its largest-ever tender round for the offshore transmission assets connecting Hornsea 3, one of the world's biggest wind farms, to Britain's power grid. Tender Round 14 in Ofgem's Offshore Transmission Owner (OFTO) framework launched on October 21. It has an estimated value of around GBP 3.5 billion.

Investors will compete to own and operate the transmission assets for Hornsea 3. Within a tender round, Ofgem assesses bids and grants offshore transmission licences to bidders for specific transmission assets connected to offshore wind farms around Great Britain. The transmission assets are sold from the developer to the successful bidder.

Successful bidders under the OFTO regime can receive an inflation-linked revenue stream for up to 25 years, subject to asset availability and performance. Ofgem says its competitive tender process is designed to keep costs down for consumers and to maintain high standards of performance.

Hornsea 3 is due for completion by the end of 2027. The project is projected to be able to power 3.3 million UK homes.

The OFTO regime launched in 2009. Since then, winning bidders have invested more than GBP 10 billion in links connecting 28 offshore wind farms. Ofgem anticipates more North Sea offshore transmission assets to come to market through the OFTO framework in the future.