Ofgem announces offshore wind connection short list

Several of Europe's largest energy and infrastructure firms were celebrating today after Ofgem announced a shortlist of thirteen bids for projects to build and run nine high-voltage transmission links to offshore wind farms.

The tenders – worth £1.15bn in total – will grant licences to build and run links to nine separate wind farms generating over 2,000MW of electricity. The successful bidders will own the links and charge energy firms to transmit electricity across them for a 20 year period under a regulated income.

The shortlist includes a number of high profile energy and construction firms, as well as several investment consortia. There are bids backed by ABN Amro, Balfour Beatty, DONG Energy, Equitix, ESB International, Imera, Macquarie Capital Group, National Grid, RWE Npower, and SSE Offshore Transmission, well as a consortium led by Frontier Power, another led by Transmission Capital, and one involving Stakraft and StatoilHydro.

One notable absentee was Warren Buffett's Mid-American Energy, which had been tipped by the Sunday Times to make the shortlist. A spokesperson for Ofgem said that, while the watchdog could not confirm whether Buffett was still involved in one of the other consortia, his company had not been selected to lead one of the bids.

Ofgem's chief executive Alistair Buchanan said the companies on the shortlist underlined the growing commercial interest in the UK's offshore wind energy sector. "Offshore generation has a crucial role to play if Britain is to meet its climate change targets," he said. "The quality of the firms selected for the tender round shows how strong the competition is to operate these offshore transmission links."

The Department of Energy and Climate Change estimates that in total £15bn will need to be invested in transmission links for offshore wind farms and further projects are expected to be put up for tender next summer depending on the progress of offshore wind projects.

Speaking to BusinessGreen.com, a spokesman for Ofgem said that the successful bidders will be announced next spring with construction then expected to begin immediately. All nine of the new wind farms will then begin transmitting electricity by 2011.

"When the tenders were announced there were some people saying there would not be the interest, but we have laid that concern to rest," he said. "The shortlist shows that we have a competitive market and that this approach will deliver the connections on time and at least cost to the consumer."