New figures show that competitive tendering is cutting the costs for connecting offshore wind farms to the UK high voltage grid by at least GBP 700 million. The main reasons the savings are being made are because when bidders have to compete against each other they will offer a better deal on financing and operating costs compared with monopoly network companies.
Also as they are bidding to operate the link for 20 years it gives them stable long term revenue. This lowers the financial risk they face meaning they can offer a more competitive bid. The tender regime is run by Ofgem, which chooses the most competitive bids made by firms to own and run links to offshore wind farms over a 20-year period. It was launched in 2009. The latest figures published by Ofgem are based on the first three tender rounds. The savings are accumulating in the 20 year period over which new owners will run the links. 15 tenders have now been completed and the first licence for a firm to run one of the links was granted in 2011. The fourth tender round will be officially launched next month where bidders will compete for the right to own and run the link to the Burbo Bank Extension, a 258MW wind farm in the Bay of Liverpool. Ofgem expects to launch a fifth tender round this autumn.