Transmission Capital

Transmission for UK Offshore Wind

Transmission Capital Partners has consulted with Ofgem on the UK offshore transmission regime from its inception in 2008.

The key features of the OFTO regime are:

  • High value, low risk infrastructure assets
  • Assets comprise onshore and offshore substations and cables connecting mainland grid network to offshore substation
  • Operational asset - no construction risk
  • 20 year availability-based revenue stream – 100% inflation linked
  • Performance deductions capped at 10% of base fee in any year
  • No exposure (either revenue or penalties) to wind farm performance or credit
  • Compared to other project finance sectors, O&M risks are low with no lifecycle risks and highly proven technology
  • Ownership of asset: 40+ year life on major assets, likelihood of revenue extension beyond initial 20 year term
  • Favourable regulatory framework through Ofgem, the UK electricity and gas regulator
  • No pricing reviews and strong quasi-government revenue risk
  • Regulatory regime extends further than typical availability type projects, eg: PFI / PPP
  • OFTO protected from certain risks through income adjusting event and exceptional event clauses
  • National Audit Office affirm consumer savings realised by OFTO procurement versus conventional procurement. (Ofgem estimate c. 30% of asset value over the initial 20 year revenue stream.)

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