- Ofgem’s regulatory framework secures £1.2 billion investment in grid link connecting the world’s largest offshore wind farm
- Framework provides revenue certainty to investors while saving consumers hundreds of millions of pounds on their energy bills
- Ofgem is helping to deliver government target of 40GW offshore wind by 2030 at the lowest cost to consumers
Ofgem has awarded a licence for the grid link to the world’s largest offshore wind farm after securing a record £1.2 billion investment.
Diamond Transmission Partners, a consortium led by Mitsubishi Corporation, the Japanese industrial group, was selected by Ofgem to own and operate the offshore transmission system linking Hornsea One to the British mainland.
The grid link for the 1.2GW wind farm off the coast of Yorkshire can deliver enough electricity to power more than one million homes.
The UK government has set a target of 40GW offshore wind capacity by 2030, almost quadruple the existing capacity, to help reach net zero emissions by 2050. New electricity grid links are needed to deliver this power to homes and businesses in Britain.
Under the regulatory framework, bidders compete to buy these links from the wind farm developer. In return the winning bidder receives a guaranteed level of income which is set by Ofgem for running the link for up to 25 years.
Providing certainty in this way allows bidders to price very keenly, reducing the costs of offshore wind and saving consumers money.
Ofgem has awarded 21 licences through this process, with a total of £5.7 billion being invested in grid links for 7.8GW of offshore wind capacity.
The first 15 licences alone have delivered at least £700 million in savings to consumers.
Ørsted, which built the Hornsea project, has built 12 offshore wind farms in Britain in total.
Rebecca Barnett, deputy director for commercial and assurance at Ofgem, said: “Today’s record investment demonstrates the appetite of global investors to support the UK’s transition to net zero emissions.
“Ofgem’s regulatory framework ensures that this investment can be attracted at the lowest possible cost, saving consumers hundreds of millions of pounds on their energy bills.”