Britain’s gas and power regulator has put up for bidding transmission links worth about £1.9 billion that will connect 3 gigawatts of offshore wind energy in the country’s windy coastlines.
The tender round is the second conducted by the Office of Gas and Electricity Markets and the Department of Energy and Climate Change for transmission projects. It will link six offshore wind projects to the mainland power grid.
Tenders for the first three projects – Gwynt-y-Mor, Lincs and London Array – started today. The winners will be announced in the summer of 2011. Tenders for Humber Gateway, Race Bank and West of Duddon Sands are expected to start in the spring of 2012 after they meet qualifying requirements.
Bidders will compete to own and operate transmission lines linking 2.8 GW of offshore wind farms for the next 20 years. The contest has been tight, with the first round announced in August this year attracting investments of about £4 billion.
“This looks set to continue for the second round and healthy competition will keep the costs of the links as low as possible and give generators confidence that the offshore regime is proving very attractive to investors and is bringing new players into the British transmission market,” Ofgem’s chief executive Alistair Buchanan said.
Both tenders form the first phase of a £15 billion program introduced by Ofgem and the energy department in 2009 to ensure the government’s target of economically connecting 33 GW of offshore wind to the grid by 2020.
Britain boasts having 40 percent of Europe’s wind energy and a long coastline, around11,000 kilometers, suitable for offshore wind development. But Charles Hendry, minister for energy, said it will only be possible to tap into such resources with the right investment and infrastructure in place.
Mr. Buchanan said the country needs to attract £200 billion of investment in its energy industry over the next 10 years, £20 billion of which will be for offshore transmission links alone.
“I hope the second round of tendering for owning and operating the links to offshore wind farms will be as successful as the first, where investment interest was four times the necessary level. This competition also means savings for generators and consumers, which I very much welcome,” he adds.
It is expected that some £350 million of savings will be made from the first round of tenders. Ofgem said that it sees no reason why this trend will not continue going forward with future rounds.