Utility Week

UTILITY WEEK | NOVEMBER 2021 | 21 Policy & Regulation bed leasing is combined with the competitive process for government support. This pro- cess grants successful bidders the exclusive right to apply for a permit to build and oper- ate a wind farm on the site for which the financial support was auctioned." There is no separate leasing auction and remuneration for seabed rights included in the permit fee, the price of which is deter- mined by statute. The permit also entitles the wind farm to be connected to the grid by the transmission system operator at a time and place set according to a unified plan for the deployment of offshore wind generation and network infrastructure. The government con- ducts preliminary site surveys and this infor- mation is provided to all bidders. "The Netherlands take a yet more central- ised approach, with construction permits for generation being granted alongside the sea- bed lease award and connection agreement. All wind farms are of a standard size (or multiple thereof), which enables the trans- mission owner to take a standard approach to offshore substations and cables, delivering economies of scale from the supply chain." BEIS outlines two potential approaches for the future of offshore wind develop- ment and planning in the UK, the first being retaining the current developer-led model but implementing incremental changes. This could include altering the methodol- ogy for calculating the costs of transmission assets and the approach to cost recovery so that generators could be reimbursed for con- structing larger assets that could be shared by other developers; amending the CfD scheme so that developers could submit joint or linked bids; and changing the connec- tions process to direct clusters of projects to shared connections points. The holistic approach The second approach would see the holistic design and delivery of network infrastruc- ture, building on Ofgem's proposals from its Pathway to 2030 project to coordinate the connection of projects that have won seabed leases this year or will do by 2022. BEIS says holistic network design would not necessitate the creation of a strategic plan for offshore wind deployment although it would help to reduce the risk of anticipa- tory investment. It also outlines an alternative version of the second approach in which the allocation of seabed leases and government support are combined into a single competitive process. The department says this would further reduce the risk of anticipatory investment: "A single competitive process would provide much greater certainty around the siting and timing of generation, enabling the transmis- sion to be designed with much less uncer- tainty. This would enable it to be moved earlier in the process, but with a reduced risk of under-utilised capacity. "It would also be possible to include the connection offer in this process, further reducing uncertainties for the generator." BEIS additionally sets out a number of potential options for the detailed design and delivery of offshore transmission infrastructure. Under the current arrangements, offshore transmission assets are designed and built by offshore wind developers, which factors these costs into their strike price bids in CfD auctions. Ofgem then holds tenders to appoint an independent Offshore Transmis- sion Owner (OFTO) to own and operate them. Although there is also an "OFTO-build" model, no developer has yet taken this route. BEIS suggests onshore transmission own- ers could take on some or all of these roles. The department says it is not yet possi- ble to identify a preferred approach from the options outlined in the consultation but it can draw some "high-level" conclusions. "Considering the challenges to deliver- ing coordinated transmission in an efficient manner without exposing the consumer to undue risk of anticipatory investment, we think strategic planning will be central to the delivery of the objectives of the review. "This is consistent with early stakeholder engagement calling for coordination to be considered at the very early stages of the offshore wind development process. How- ever, questions remain around the scope of any strategic planning and how roles and responsibilities would be determined. "We think the commercial barriers to competing projects working efficiently together are high and that a developer-led approach is unlikely to deliver the degree of coordination that would deliver the objec- tives for the review, even if supported by new incentives. "We therefore think there is likely to be greater benefit from continuing the holistic network design with coordinated delivery. This would build on the approach being developed for the Pathway to 2030, but there are likely to be some differences to reflect the different timescales." BEIS acknowledges that the shi™ to a more centralised approach to offshore plan- ning and development would represent a "very significant change". The deadline for responses to the consul- tation is 23 November 2021. Tom Grimwood, news editor

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