Currently, each project is connected to shore with its own transmission link, designed and installed by the project developer, but then tendered off by regulator Ofgem to a special transmission operator.
This offshore transmission owner (OFTO) is then responsible for the operation and upkeep of the link. Developers like this regime as it allows them to design the cabling system that best suits the wind farm.
In some other North Sea markets, such as Germany, transmission links are the domain of the transmission system operators (TSOs) and connect several projects to one export system. This limits the number of cables making landfall on Germany’s comparatively short coastline and takes the cost and risk away from the developer, but also the control.
The UK is targeting 30GW of installed wind capacity by 2030 under its new sector deal, up from the 8.5GW currently operating. This would require, on average, 2GW of new capacity being added every year.
At RenewableUK’s Global Offshore Wind conference in late June, Jonathan Cole, managing director of Iberdrola’s global offshore business said the UK’s OFTO regime is now "unfit for purpose" and the growth of the country’s offshore sector needs a more holistic approach.
"The case-by-case, beach-by-beach system was fine when we were a small industry. But it doesn’t work when we get to 30GW," Cole told a room of delegates in London.
However, Barnaby Wharton, head of policy at trade body RenewableUK, said the current OFTO regime is be here to stay for now, but changes will be required. "Up to 2030, we’ll be dealing with the OFTO regime in some form. There’s no time to replace it fully," he said.
Meanwhile, Ofgem said in a statement: "We do not think the OFTO regime is ‘unfit for purpose’. The regime has delivered £0.7-1.2 billion (€0.78-1.36 billion) in savings for consumers in the first three tender rounds alone. The regime has also facilitated £3.2 billion of investment in offshore transmission since 2009."
Legislation
Part of the problem lies in the regime being enacted by law, so any new system would require legislation to pass through the Brexit quagmire that is currently the UK parliament.
"There are some regulatory changes we can make with Ofgem for small wins that would help projects in the late 2020s," Wharton said. But further change would need more engagement from the government.
So what could a new system look like? At the RenewableUK event, Cole argued OFTO was created when policymakers "could take or leave offshore wind", but now that offshore wind is "Plan A", a more joined-up approach is needed.
Need for cooperation
It should feature collaboration with the UK’s North Sea neighbours, Cole suggested, and consider a national grid that includes much more storage capacity, as well as the introduction of hydrogen in the energy mix.
The role of interconnectors is likely to have the biggest impact. If an offshore wind project can be "plugged in" to a cross-border link, then the transmission assets won’t be able to be sold off as they will already be owned by a third-party, likely the TSOs.
While there is no system currently operating that would work, Wharton said there are lots of ideas — such as Tennet’s hub and spoke concept — that could support the UK’s target and create a meshed network of projects. Tennet plans to build islands hosting substations in the middle of the North Sea, which can then link several wind projects and interconnections together.
The idea of a European supergrid has long been discussed. Ofgem said it "fully supports integrated or interconnected offshore grids where this delivers consumer benefit and makes more efficient use of assets".
"However, we would need to assess the detailed costs and benefits of any project, and consider the legal and licensing aspects, before giving approval. We considered the regulation of multiple-purpose projects (MPPs) and non-GB generation links as part of our integrated transmission planning and regulation review in 2015," it added.
"Following this review, National Grid is required to come up with proposals to us on how to develop the most efficient grid. If there are a number of offshore wind farms being developed in the same area, we expect National Grid to consider the benefits of coordinating how these wind farms’ transmission links are connected to the onshore grid," the regulator added.
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