Delivering 40GW of offshore wind: Offshore Transmission Network Review Consultation – Early Opportunities for increased co-ordination

United Kingdom


On 14 July 2021, Ofgem published a consultation (the “Consultation”), which will be the first in a series of consultations to be launched as part of the long awaited Offshore Transmission Network Review (the “OTNR”). Recognising that the current ‘radial’ or ‘point to point’ offshore connection would benefit from revision, the aim of the OTNR is  to bring about greater co-ordination in the design and delivery of offshore energy network infrastructure (our previous commentary on the OTNR can be found here), in support of the UK government’s wider ambitions to procure 40GW of offshore wind capacity by 2030, and reach net-zero carbon emissions by 2050.

The Consultation covers three key components of the OTNR as follows:

  1. Early opportunities –the objective of this area is to identify and facilitate opportunities for increased co-ordination in the near term, with a focus on “in-flight” projects;

  2. Pathway to 2030 – the objective of this workstream is to implement regulatory changes to drive co-ordination of offshore projects that are progressing through the current ScotWind and Crown Estate Leasing Round 4 and will connect before 2030;

  3. Multi-purpose interconnectors (“MPIs”) – the objective here is to make tactical changes to facilitate early opportunity MPIs and develop an enduring MPI regime for 2030 onwards.

In this first of three articles, we focus on Ofgem’s proposed changes to the Early Opportunities framework and comment on what this means for the stakeholders involved in these “in-flight” offshore wind projects as well as those to follow who may share the assets.

Proposed changes to the regulatory framework for early opportunities to increase offshore transmission network co-ordination

The Consultation notes that the aim of the Early Opportunities workstream is to facilitate greater co-ordination in the connection of offshore wind projects which are at an advanced stage of their development. For these projects, the Consultation wishes to identify ways to facilitate co-ordination for developers on an opt-in basis rather than enforcing co-ordination (which has been proposed for Pathway to 2030).

Following stakeholder feedback, Ofgem has identified six potential forms of co-ordination (referred to as “concepts” in the Consultation) for offshore wind projects that may be implemented by inflight projects. The Consultation explores how the Ofgem and the government could facilitate delivery of these concepts, either by leveraging flexibility within the existing regime or making changes to the overall regulatory framework. The six concepts (together with illustrations from the Consultation) are as follows:

1. Shared offshore transmission system

OTNR image 01[1]

Multiple generators use a single offshore transmission system allowing for a reduction in landing points and fewer offshore substations compared to the usual radial links.

2. Quasi bootstrap

OTNR image 02[2]

Under this system, the two offshore generators are not connected to a single common onshore substation. Instead, a circuit is installed between respective offshore substations to link the wind farms. This method would not reduce infrastructure or landing points but instead reinforces the onshore system by way of quasi-bootstrap.

3. Multi-purpose interconnectors (MPIs) (interconnector-led model)

OTNR image 03[3]

Offshore generators in the GB market are connected to the transmission infrastructure that is classified as an interconnector. The Consultation notes that this concept emphasises the reduction in landfall points required to connect a certain amount of generation and interconnection to the wider electricity system.

4. MPIs (OFTO-led model)

OTNR image 04[4]

Under this concept, an offshore generator would be connected to transmission infrastructure comprised of distinct elements that are classified differently: (a) as an interconnector; and (b) an offshore transmission system. As above, this concept emphasises the reduction in landfall points required to connect a certain amount of generation and interconnection to the wider system.

5. Connection to a Transmission-Owner owned bootstrap

OTNR image 05[5]

This concept involves an offshore generator being connected to a subsea electricity link (the onshore to onshore links being colloquially known as “bootstraps”) between two points in the onshore transmission system, which is owned by a TO. The aim of this concept is to reduce the landing points and infrastructure required to connect generation to shore.

6. Connection of electricity storage or a demand user to an offshore transmission system

OTNR image 06[6]

Under this concept, an electricity storage system or a demand customer such as an electrolyser is connected to the onshore or offshore elements of an offshore transmission system. This could allow for the electrification of oil and gas platforms, providing co-ordination also across energy vectors and not only for transmission infrastructure.

Barriers to implementation of the concepts

The Consultation acknowledges a number of barriers to implementing the six concepts set out above, the most significant being the management of anticipatory investment (“AI”) risk. AI is an investment in transmission infrastructure that goes beyond the immediate needs of a specific offshore wind developer’s project, reflecting the needs created by a likely future generation project or projects. A developer will seek certainty that such an AI will be recoverable and mitigate the inherent risk of ‘stranded assets’.

Ofgem has grappled with AI risk throughout the development of offshore wind assets and is currently a consideration within the OFTO cost assessment process. Ofgem also considers AI in other regulatory regimes such as RIIO-ET2. The Consultation draws a distinction between ‘AI’ for a known future project (e.g. an offshore wind farm with a seabed lease) and ‘highly AI’ for unknown potential project or potential projects. Factors acerbating the lack of co-ordination due to AI risk are primarily due to:

  1. competitive pressures of the Contracts for Difference (“CfD”) process which means that two projects may intend to co-ordinate and share assets, but one project may not secure a CfD and so unable to proceed and resulting in increased costs for the successful project; and

  2. Ofgem’s cost assessment process and cost recovery in the OFTO and interconnector regimes and how this cost is then recovered through the transmission networking charging regime. Currently, all AI risk continues to remain with the project developer.

The Consultation recognises that there may be a need to change policy to facilitate co-ordination and the amount of investment required to connect large projects in the future.

Ofgem wants to strike a balance between being “overly onerous” and “potentially exposing the consumer to risk it cannot control”[7] in its decision as to whether highly AI should be supported. Hence, it is emphasising the need to assess whether there is a reasonable expectation that a developer will connect to the network infrastructure. 

Consultation questions

For the concepts set out above and the projects covered within the Early Opportunities workstream, Ofgem is seeking views on the following options regarding AI risk:

  1. AI risk could be borne entirely by the consumer (this may increase stranding risk and moves the risk from those able to manage it);

  2. AI risk could be allocated either to the developer making the AI, or to the developer likely to benefit from it – i.e. it is allocated to the organisation able to manage it (however little co-ordination will have occurred in this scenario); and

  3. AI risk could be shared between the consumer and developer or developers.

Option 3 from above is the preferred risk allocation option as this aligns with Ofgem’s policy criterion of allocating risk to those best placed to manage it while increasing the likelihood of co-ordination that benefits consumers. This means that when the OFTO tender process is concluded, rather than being paid by the new OFTO, the developer could receive funds from 3 sources: (1) the OFTO (as part of the transfer value process); (2) other developers joining that asset (via a user commitment or similar) and (3) the consumer (via use of system charges). However, it is worth noting that Ofgem’s view is that the consumer’s input should be kept at a minimum, and the process of cost recovery would then be subject to several guidance, code and licence modifications, including:

  • Ofgem’s OFTO Cost Assessment Guidance;

  • Ofgem’s Interconnector Cost Assessment Guidance;

  • Industry Codes and Standards, e.g. the Security and Quality of Supply Standard, the Grid Code etc.;

  • The TNUoS, and CUSC; and

  • Licence conditions.


The current approach to designing and constructing offshore transmission networks was developed in the nascent stages of the offshore wind sector with “radial” or “point-to-point” connections, i.e. where each wind farm has its own dedicated offshore grid cable. Fast-forward 10 years and the sector has significantly matured and is set to expand significantly over the coming decade.

As we have previously commented, whether OTNR has caught-up to achieve the most efficient approach to deliver the increasingly ambitious offshore wind targets is now a question. However, it is clear that the current framework for connecting offshore wind farms to shore, which has played an important role in de-risking the delivery of offshore wind projects by allowing developers to manage their project’s route to market and secure financing, is now out of date.

As the number of offshore wind and other renewable infrastructure grows around the UK coastline, stakeholders are expressing concerns as to whether the UK, quite simply, has enough space in its waters to accommodate all the infrastructure required to deliver on its 40GW by 2030 ambition on the basis of the current radial point-to-point connections. In particular, a key challenge the industry is now managing is the environmental and physical impacts of offshore transmission infrastructure being deployed to support the construction of new offshore wind farms. It has become essential that offshore transmission and interconnection is co-ordinated between offshore wind assets which are within the same region. This could impact the entire regulatory framework in this area, including the OFTO regulations, industry codes, licences and network charging arrangements. Those in the Early Opportunities timeframe will be most keen to ensure the AI risks are allocated in an appropriate way.

Looking ahead, it seems Ofgem and government will incrementally be moving away from the developer-led (the ‘generator build’) model of offshore network development to a system that is more centrally planned and co-ordinated in order to ensure a greater level of ‘future-proofing’ for the sector. How this will be seen in an industry which has developed exponentially under the current regime, will depend on the outcome of consultations such as this.

The Consultation rightly identifies AI as a key road-block for many inflight offshore wind projects to enable co-ordination in transmission network infrastructure with other projects. Ofgem has continually sought to address AI risk throughout the development of the offshore wind sector and it will remain to be seen whether the proposed changes will sufficiently incentivise developers to take on this risk. Inflight projects that are addressed in the ‘Early Opportunities’ workstream are under no obligation to co-ordinate and will simply be encouraged by Ofgem and BEIS. However, grid connection strategy is usually addressed early on in the substantial development of an offshore wind project and therefore, this may be ‘too little, too late’ from the OTNR to put co-ordination concepts into regulatory practice.           

Next steps

The deadline for responses to the Consultation is 8 September 2021. Ofgem intends to hold structured engagement with stakeholders throughout the course of the consultation window and beyond. Minded-to proposals and decisions in respect of the Consultation are expected later this year. 

Looking ahead for the OTNR more widely, later in the year BEIS will publish a consultation on the enduring regime for projects connecting beyond 2030 (including MPIs) and further policy consultations will be issued in early 2022.

If you have any questions on the Consultation, or OTNR more broadly, please get in touch with any of the authors of this article, or your usual CMS contact.

[1] Source: fig. 4, para. 2.13 of the Consultation.

[2] Source: fig. 5, para. 2.14 of the Consultation.

[3] Source: fig. 6, para. 2.16 of the Consultation.

[4]Source: fig. 7, para. 2.17 of the Consultation.

[5] Source: fig. 8, para. 2.18 of the Consultation.

[6] Source: fig. 9, para. 2.19 of the Consultation.

[7] Para. 2.37 of the Consultation