OFTOs and Round 3 Chris Veal When to initiate OFTO appointment - - PowerPoint PPT Presentation

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Feb 01, 2024 11 likes •111 views

OFTOs and Round 3 Chris Veal When to initiate OFTO appointment Options cover a spectrum but in general the OWF developer can: Seek for an early OFTO appointment Seek a late OFTO appointment (post-consents application) Would you

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OFTOs and Round 3

Chris Veal

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When to initiate OFTO appointment

Options cover a spectrum but in general the OWF developer can:

– Seek for an early OFTO appointment – Seek a late OFTO appointment (post-consents application)

Would you want to procure your round 3 offshore wind farm in the next 12 months on a fixed price basis?

Consequences of a late OFTO appointment is that the OWF developer will have to manage

the development of the OFTO assets – but this is what you will have done in the past

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Benefits and issues of late OFTO appointment

A late OFTO appointment significantly reduces development timeline (by between 6

months and 2 years)

A late OFTO appointment will allow all forms of financing to be used, not just balance sheet
A late OFTO appointment will lead to significantly lower priced OFTO bids (as less risk for

the OFTO)

Issues that will need to be addressed by Ofgem in enduring regime:

– Recovery of development costs – Risk of OFTO variant bids that do not meet project timescales

Issues that will need to be addressed by OWF developers in their OFTO strategies:

– Risk that few (and only the more expensive) OFTOs bid if development not done properly – Expertise and resourcing of OFTO asset development

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Zonal OFTOS versus project specific OFTOs

Zonal appointment means:

– Appointment of OFTO up to 10 years prior to construction – Without design, consents, land rights available

This will lead to fewer

bidders, more OFTO risk, higher priced bids

What are the benefits?
Co-ordinated development
f the OFTO assets

preferable (see later) but ...

Zonal grid connections will

be modular and can be procured individually

Source: National Grid/Econnect Round 3 Offshore Wind Farm Connection Study v 1.0

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Co-ordination issues - 1

Onshore connection points & grid capacity
Cable routing
Land rights & consent acquisition
Interconnectivity & standards

Source: National Grid/Econnect Round 3 Offshore Wind Farm Connection Study v 1.0

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Co-ordination issues - 2

Onshore connection points & grid capacity
Cable routing
Land rights & consent acquisition
Interconnectivity & standards

Project 1 Project 2 Project 1 Project 2 Unsuitable area for cables Unsuitable area for cables Unsuitable area for cables Unsuitable area for cables

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Co-ordination issues - 3

Onshore connection points & grid capacity
Cable routing
Land rights & consent acquisition
Interconnectivity & standards

OFTO 1 OFTO 2 OFTO 3 TO

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Co-ordination issues - 4

Onshore connection points & grid capacity
Cable routing
Land rights & consent acquisition
Interconnectivity & standards

OFTO 1 OFTO 2 OFTO 3

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Recommendations

Seek a late OFTO appointment
Develop the OFTO assets yourself
Be aware of different OFTO financing options and their requirements
Get help from an experienced prospective OFTO or other advisers if necessary
Ensure enduring process takes account of development costs, project timescales and

standards

Co-ordination for some zones/projects will be a key issue:

– Understand the issues – Co-operate where possible – Standardise requirements – Lobby for the key bodies (NETSO & others) to take responsibility – Respond to the enduring offshore transmission regime consultation on these issues

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