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

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 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

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

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 of 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

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

Co-ordination issues - 2 Project 2 Unsuitable Project 1 area for • Onshore connection points & grid capacity cables • Cable routing Unsuitable • area for Land rights & consent acquisition cables • Interconnectivity & standards Project 2 Unsuitable Project 1 area for cables Unsuitable area for cables

Co-ordination issues - 3 • Onshore connection points & grid capacity • Cable routing • Land rights & consent acquisition • Interconnectivity & standards OFTO 1 OFTO 2 TO OFTO 3

Co-ordination issues - 4 • Onshore connection points & grid capacity • Cable routing • Land rights & consent acquisition • Interconnectivity & standards OFTO 1 OFTO 2 OFTO 3

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

Contact details: Email: chris.veal@transmissioncapital.com Tel: 020 31787996 Mob: 07768 036613 Web: www.transmissioncapital.com

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

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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