European Offshore Wind 2009 A description and analysis of the new - - PowerPoint PPT Presentation
European Offshore Wind 2009 A description and analysis of the new competitive regime for the provision of grid connections for UK offshore wind farms Overview Transmission Capital an introduction Financing Offshore Transmission
– a description – an offshore wind developer’s perspective – an OFTO bidder’s perspective
– a grid system planner’s perspective
projects now in construction:
– Greater Gabbard OWF – BritNed Interconnector – Robin Rigg OWF
projects now operational:
– Basslink Interconnector – Isle of Man Interconnector
providing project management and specialist technical expertise
Offshore wind farms (under construction) Submarine cable (in service or under construction) Round 3 wind farms (initial development recently completed) Onshore power stations (in service)
service in relation to transmission assets:
– Front end engineering and design – Environmental Impact Assessment – Stakeholder consultation – Land right acquisition – Crossing agreement negotiations – Sea-bed survey (and other site investigations as necessary) – Connection application and connection agreement negotiation – Liaison with TSO and onshore transmission companies – Advice on performance targets – Advice on regulatory transmission issues
working with specialist advisers to provide:
– Bid management – Development and Design – Technical and legal due diligence – Arranging debt finance – Procurement and construction management – Operational management – Insurance – Industry and stakeholder liaison – Health & safety compliance – Regulatory compliance
40GW by 2020
greater transmission capex
transmission market may be worth €15bn-€20bn
requirements, and benefits even more so
Installed European Offshore Wind Capacity (GW)
5 10 15 20 25 30 35 40 45 2006 2010 2015 2020 Delivering Offshore Wind Power in Europe, Offshore Wind Industry Group, EWEA, 2007
132kV or above without an offshore transmission licence
new offshore transmission owners (OFTOs) – TRANSITIONAL REGIME
OFTOs – ENDURING REGIME
Offshore Transmission Owner (OFTO) Onshore TO Generator Offshore Platform Connection to onshore network 132 kV Cable 33 kV Inter Array Cables Onshore Substation
OFTO
GBSO O&M Contract Ofgem Offshore Generator Crown Estate
Lease Sale and Purchase Agreement Transmission Licence Bid revenue stream Transmission Use of System Charges
Insurance Financing
Project Developer Size (MW)
1. Barrow Dong Energy / Centrica 90 Operating 2. Robin Rigg E.ON 180 Jul 09 3. Gunfleet Sands I & II Dong Energy 172 2009 4. Thanet Vattenfall 300 * 5. Greater Gabbard SSE / RWE Innogy 504 Mar 11 6. Ormonde Vattenfall 150 Nov 10 7. Walney I & II Dong Energy 360 * 8. Sheringham Shoal Statoil Hydro / Statkraft 315 Jun 10 Project Developer Size (MW) 9. London Array E.ON / Dong / Masdar 1000 10. Lincs Centrica 250 11. Gwynt y Mor RWE Innogy 750 12. Docking Shoal Centrica 500 13. Race Bank Centrica 500
Projects likely to qualify for First Transitional Tender (£1.15bn) Projects that may qualify for Final Transitional Tender (up to £1.5bn)
1 2 3 4 5 6 7 9 10 11 12 13 8
– Offshore wind developers don’t need to finance offshore transmission connection – Rate of return requirements will be less than for offshore wind farm – offshore wind developers will benefit (customer taking the risk of default of the offshore wind farm) – Energy production metered offshore
– No significant compensation if offshore transmission is unavailable – No significant compensation if offshore transmission is late
– When to seek appointment of the OFTO? – How many OFTOs for a large multi-site project?
– Credit risk minimal, 20-yr fixed revenue stream subject RPI indexation – Availability incentive/penalty (capped at 10% of annual revenue) – O&M and insurance costs, generally small and can be estimated and fixed – Most significant repair costs should be insured or under manufacturer’s warranties – Some cost items are pass-through
– A long time coming (regime first consulted on in 2004) – Complex, costly and lengthy tendering process
– Lack of clarity as to when committed financing required – Indeterminate timing gap between licence award and takeover of asset – Requirement for compliance with utilities contract regulation (OJEU) – Level playing field with respect to generator-affiliated OFTO bidders
– Offshore wind generators (for their own projects) – Existing onshore TOs – New entrants backed by infrastructure/pension funds
– Offshore wind generators (subject to unbundling) – Existing onshore TOs – New entrants - to the extent cut-their-teeth on the transitional rounds – New entrants - with offshore construction management experience
– Information to be published by TSO – Co-ordination by controlling body (landlord) – Co-operation between developers
– Connection application process requires individual treatment of offshore wind farms – Offshore wind developers incentivised to be selfish in some circumstances – Interconnection has to be merchant
processes
– Cross-border planning standards – Clear and certain mechanism for recovering costs of interconnection (including return on investment)
for investors
being devised
space