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Ofgem Awards License for Grid Link to 1.2-GW Wind Farm

March 5, 2021
Ofgem’s regulatory framework secures £1.2 billion investment in grid link connecting the world's largest offshore wind farm.

Ofgem, Britain's independent energy regulator, has awarded a license for the grid link to the world's largest offshore wind farm after securing a record £1.2 billion (US$1.7 billion) investment. Diamond Transmission Partners, a consortium led by Mitsubishi Corp., the Japanese industrial group, was selected by Ofgem to own and operate the offshore transmission system linking the Hornsea One wind farm to the British mainland.

The Hornsea One wind farm consists of 174 7-MW wind turbines. The grid link for the 1.2-GW wind farm, located 120 km off the coast of Yorkshire, can deliver enough electricity to power more than one million homes. Ørsted, which built the Hornsea project, has built 12 offshore wind farms in Britain in total.

The U.K. government has set a target of 40 GW 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 licenses through this process, with a total of £5.7 billion (US$7.9 billion) being invested in grid links for 7.8 GW of offshore wind capacity. The first 15 licenses alone have delivered at least £700 million (US$967 million) in savings to consumers.

Rebecca Barnett, deputy director for commercial and assurance at Ofgem, said: "The record investment demonstrates the appetite of global investors to support the United Kingdom'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."

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