This is part of a joint Department of Energy and Climate Change (DECC) and Ofgem scheme to encourage investment in high voltage transmission links for the potential 50GW of new offshore wind generation.
The preferred and reserve bidders have been selected for seven of the nine projects to transmit 2GW of renewable power generated by the wind farms.
Ofgem said that strong competition has attracted almost GBP4bn of investment appetite for all nine transmission links worth around GBP1.1bn. The competitive approach has seen five consortia bid for the right to own and operate offshore transmission links in return for a 20-year regulated revenue stream.
Alistair Buchanan, chief executive of Ofgem, said: “Attracting almost GBP4bn of investment appetite in today’s capital markets, following the financial crisis, shows how an Ofgem-run competitive regime for regulated revenue streams can prove very effective at attracting investment.
“By ensuring companies have to compete for this regulated revenue stream, we have been able to keep costs to consumers and wind farm developers as low as possible, delivering forecast savings of GBP350m compared to equivalent onshore transmission costs.”
Ofgem will commence a second transitional round of tenders later this year for assets for around 2GW of capacity, with a potential asset value of around GBP1.8bn.
