Select Committee on Innovation, Universities, Science and Skills Written Evidence

Memorandum 78

Supplementary submission from Ofgem


  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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