Diamond Transmission Partners is to pay £1.175B for a 25-year licence to own and operate the transmission line connecting Hornsea One to the onshore network.
The company is a consortium comprising Mitsubishi Corporation and Japanese utility Chubu Electric Power.
Hornsea One wind farm is located 120km off the Yorkshire coast and consists of 174 7MW wind turbines. The developer of the windfarm and offshore transmission system is Ørsted and Global Infrastructure Partners.
The developer initially estimated the value of the transmission assets at £1.396B. Ofgem assessed the final project costs, and the final transfer value Diamond Transmission Partners will pay to the developers, at £1.175B.
Under Ofgem’s Offshore Transmission Owner (Ofto) framework, bidders compete to buy offshore wind farm connections 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.
Ofgem says this certainty allows bidders “to price very keenly, reducing the costs of offshore wind and saving consumers money”. It has awarded 21 licences through this process.
Companies are given credit for breakdowns that arise in the wind farm or due to issues beyond the cable itself in an ‘exceptional event’ process. However, some links have suffered technical issues, most frequently around cable breakdown, and that could damage their reputation as ‘low risk’ investments. In February rating agency Moody’s downgraded the Gwynt y Mor Oftto, saying that costs of cable repair would drain the group’s reserves.
Further reading
Moody’s downgrades Gwynt y Mor Ofto to Baa1, saying uncertain cable repair costs will drain reserves
From the archive: OFTO performance examined
Burbo extension connection transferred to OFTO for £193 million
Ofgem warns Oftos it may get stricter on 3rd party outages
Ofgem allows Ofto compensation after ‘exceptional’ cable outage at Walney 2
Ofgem rejects claim for compensation from two Oftos after cable defect outages