Memorandum 78
Supplementary submission from Ofgem
RENEWABLE ELECTRICITY
GENERATION
Ofgem (and BERR) have designed the offshore
transmission regime to cope with the significant expected increase
in offshore wind generation and with future offshore renewable
developments such as tidal energy.
In designing the a "point to point"
regime rather than one based around offshore networks, we have
taken account of the fact that offshore transmission is likely
to be triggered by the proposed generation capacity requiring
a connection to the onshore network. These generator connections
have not been designed with any redundancy because of the high
additional costs involved. They also comprise very specific technical
characteristics an example is several AC cables within defined
seabed leases that are obtained as part of the generator consenting
process. As such, following an extensive consultation process,
we and BERR concluded that a "point to point" approach
is the best way to launch the regime and most closely meets the
requirements of delivering what existing offshore developers will
require (removing much of the uncertainty about costs of transmission
for offshore renewable generation developers) at reasonable cost
to end customers.
As far as potential for future offshore transmission
network is concerned, this will be driven by the government's
generation and seabed consenting process triggering commitments
from developers that new major transmission connection investments
are required. While it is possible that this may involve some
offshore network interconnection, it is likely to be more economic
to have these interconnections onshore, given the very high cost
of offshore switching stations. However, the regime is designed
such to meet the required security standards at the lowest possible
cost, including an ability for coordination to be achieved across
projects. The potential for offshore interconnected networks will
be assessed as part of the tendering process.
In order that any future offshore developments
may be co-ordinated, the Government has designated National Grid
as the offshore system operator, which includes a responsibility
for producing planning statements, and undertaking coordination
activities, in the same way as it does onshore.
In this role, National Grid is expected to monitor
future demands for offshore network developments.
If it becomes clear that major new offshore
transmission trunk routes or hubs are required and would be economic,
then the offshore tendering regime can accommodate this, by identifying
an OFTO or OFTO's to make the investment. The regime is designed
so that new investments like these can be triggered under the
same arrangements as onshore (where National Grid asks transmission
owners to come forward with firm proposals to meet requirements
for further system capacity) and Transmission Owners ask Ofgem
for the money. The only difference to current onshore arrangements
is that ownership of these major new projects are tendered so
that simpler long term price controls can be put in place.
The building blocks have been put in place to
allow offshore networks to be built in a very similar way to the
developments that have successfully taken place onshore and allowed
flexibility for all types of generation to connect in different
locations (and by three different transmission owners). The system
operator role remains unchanged for coordination. The main change
is the selection of OFTO and award of long term price control
by competitive tender, which also provides benefits to offshore
renewable generators in that they have greater long term certainty
about the costs and terms of their transmission connections.
April 2008
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