UK Ofgem: Six Shortlisted For Offshore Power Links

Offshore wind power

U.K. energy regulator Ofgem has shortlisted six companies bidding to own and operate high voltage electricity transmission lines for nine British offshore wind farms

The winning bids for the first phase of links are worth more than GBP1 billion and will be announced in May 2010, Ofgem E-Serve--the regulator's delivery arm, which administers its environmental programs such as the Renewables Obligation and Climate Change Levy--said Monday.

The shortlisted companies are Balfour Beatty Capital Ltd.; DONG Energy Sales and Distribution A/S, a unit of Dong Energy A/S; Green Energy Transmission, a consortium of Equitix Ltd. and AMP Capital Investors Ltd.; Macquarie Capital Group Ltd., a unit of the Macquarie Group (MQBKY); National Grid Offshore Ltd., a unit of National Grid PLC (NGG); and Capital Partners, a consortium of Transmission Capital, International Public Partnerships and Amber Infrastructure Group.

The winners for the nine projects in the first phase of a GBP15 billion investment program will connect up to 2,000 megawatts of renewable electricity to the U.K. power grid. The program, which could link up to 33 gigawatts of offshore wind farms to the grid by 2020, is aimed at ensuring that transmission links are built in a timely and cost-efficient manner.

"If Britain is to meet its climate change targets and secure energy supplies, Ofgem's Project Discovery estimates that up to GBP200 billion may need to be invested," said Ofgem Chief Executive Alistair Buchanan in a statement. "Offshore wind will play a key role in delivering a better environment for consumers, so it is vital that the transmission links for offshore wind attract investors and are built as quickly and cost effectively as possible."

The first phase of the program attracted 13 interested parties, Ofgem said. A person familiar with the bidding process said competition was tough. Scottish and Southern Energy PLC (SSE.LN), one of the U.K.'s six largest integrated energy utilities, participated in the event but wasn't shortlisted, while National Grid was only shortlisted for two projects even though it has a long history of running the U.K.'s power grid and owns a substantial chunk of it, the person added.

The companies which are successful in May 2010 will take ownership of the transmission links once they are constructed. They will then run the links and in return will receive a stable, regulated income for 20 years.

The European Investment Bank is considering making over GBP300 million available for six out of the nine projects in the first tender phase.

The projects in the first phase of the transitional tender program include the 90MW Barrow project, the 504MW Great Gabbard project, the 164 Gunfleet Sands 1&2 projects, the 150MW Ormonde project, the 180MW Robin Rigg project, the 315MW Sheringham Shoal project, the 300MW Thanet project, the 178MW Walney 1 project, and the 183MW Walney 2 project.