Aug 2 (Renewables Now) – The SSE Renewables business of British company SSE plc (LON: SSE) on Friday announced a sale agreement for offshore transmission equipment (OFTO) for the 588 MW Beatrice wind farm in Scottish waters, in line with the OFTO regime of the British energy regulator Ofgem. The alternative is to find a more comprehensive solution between OFTO and the insurance industry, where, for example, cable insurance risks are excluded from coverage by creating a mitigation portfolio product managed by a third party. Ofgem suggests that the insurance market could provide capacity, including a coordinated framework agreement on spare parts and repair with standby ship operators at agreed rates to mitigate the financial impact of a cable failure. Since December 2010, all developers who submit a connection request with 132 kV or more or who have already concluded such monitoring agreements are asked to confirm whether they will follow the generator-build or OFTO-build approach. All agreements published prior to December 2010 were designed on the basis that an OFTO would build the assets, so most (if not all) of these agreements are currently being revised to reflect the generator construction approach. The developers` obligations under these generator-build connection agreements put the developer in a new position of being a quasi-transfer owner (albeit without being a signatory to the STC), which has created new and interesting practical problems for the developer. As early as 2005, the Government began consulting on the design of a new offshore transportation regulatory system. The scheme was finally implemented in 2009, using the powers of the Secretary of State in the Energy Act 2004, through the enactment of the Electricity (Competitive Bidding for Offshore Transmission Licences) Regulations 2009 (SI 2009/1340) and through a series of amendments to the existing system of licences, codes and agreements governing the transfer of electricity on land. The purchase agreement between the Developer and OFTO (the « OFTO SPA ») is one of the key documents of an OFTO Transaction and defines the conditions under which the OFTO Assets are transferred from the Developer to OFTO. Referred to in Ofgem legislation and guidelines as a « transfer agreement », the OFTO SPA can be structured for a sale of assets or shares. For the first round of tenders (« TR1 »), Ofgem has published a model transfer agreement to be completed by qualified developers. Although it served as the basis for OFTO tr1 sales, it only took the form of guidelines for subsequent tenders, with Ofgem recognising that the parties to the transaction were better able to understand the particularities of each project and draft the relevant documents. Although Ofgem reviews the OFTO SPA as part of the OFTO tendering process, it does so primarily to ensure that there are no inconsistencies with the regulatory system and acknowledges that the OFTO SPA is « an issue on which the parties must agree commercially » ⁴.
Previously, the transfer of transfer assets took place under the transitional regime for assets concluded through an interim promoter and the successful bidder. Many promoters are considering the possibility of setting up from the outset a special purpose vehicle that owns all the relevant transport facilities (an OFTO VPS), which could also conclude all relevant contracts relating to these transport facilities. The main perceived benefits are as follows: Ofgem`s recent guidelines on the transfer agreement set out general principles that developers and bidders should take into account. While it does not dictate business positions, it does acknowledge some reasonable principles that developers would do well to observe:  www.wfw.com/articles/a-review-of-the-ofto-regime-yes-please/ It is clear that a modified approach will be needed to achieve decarbonization goals. ORES offers a more coordinated approach to offshore network infrastructure and the development of mesh networks deployed across national borders. It foresees that hybrid projects in which the offshore network infrastructure fulfils multiple objectives are a springboard in the development of mesh networks. Where additional investments are needed, the consultation will ask stakeholders to provide feedback on how these additional expenses will be paid. Options include: The transition phases were open to « qualified projects » that received the following items as of March 31, 2012 or showed Togem that they would receive: The transferred assets hold assets of GBP 437.9 million. They include two offshore transformer modules, the ground substation and export cables.
The current regulations are the Electricity (Competitive Bidding for Marine Transmission Licences) Regulations, 2015. These rules define the process to be followed by all parties involved in the tendering procedure. Ofgem`s consultation on the possibility of extending the regulatory revenue period runs until 13 April 2021. Another consultation on the final revenue source framework that Ofgem should use for longer regulatory revenue periods is expected to be published in November 2021. In recent years, stakeholders have pointed out that the insurance market has hardened and that full coverage may not be readily available. This can affect ofTO`s ability to provide comprehensive coverage in the event of a major outage during an extended period of regulatory revenue. • Delay these investments until a new TRS has been put in place for OFTO; The concept of generator construction has raised a practical question regarding the commissioning of power plants. Ofgem acknowledges that OFTO wishes to see the transmission facilities in operation before taking possession of them. However, section 4(1)(b) of the Electricity Act 1989 currently prohibits the transmission of electricity to all premises without a licence at any time, either before or after the completion of commissioning.
Given the expected scale of offshore electricity generation, a clear and supportive framework for coordinated offshore electricity infrastructure is needed. One of the main challenges for policymakers in the UK and the EU will be to minimise the impact of the uncertainty caused by regulatory reform and maintain the rate of expansion of offshore wind energy until 2030 and beyond. The company announced that it will invest approximately GBP 50 million (USD 69 .8m / EUR 58.7 million) in TC Beatrice OFTO Ltd. for 100% of the equity and subordinated debt. A number of banks and institutional investors will provide senior commitments at the project level. The continued increase in offshore wind power generation in the UK and the EU means that regulatory and infrastructure changes have become a priority. From a renewable energy perspective, offshore wind will play an important role in the UK`s and the EU`s decarbonisation strategies by 2050. UK Energy`s white paper reaffirms its goal of deploying 40 GW of offshore wind by 2030, including 1 GW of floating offshore wind, a quadrupling of current capacity. ORES estimates that the EU will need an increase in offshore wind capacity from 12 GW of installed capacity to at least 60 GW by 2030 and at least 1 GW of ocean energy. By 2050, significant capacity increases are expected to 300 GW and 75 GW for offshore wind in the EU and the UK respectively. OFTO are required to decommission transmission facilities as soon as possible after the end of the regulatory revenue period and are required under the Energy Act 2004 to submit decommissioning plans to the Ministry of Economy, Energy and Industrial Strategy for approval.
The OFTO must demonstrate that it has established a decommissioning reserve between the 10th year of the licence and the end of the regulatory revenue period. In June 2009, new regulations for transitional offshore transportation projects that were already under construction came into force. The full start of the offshore transport regime took place in June 2014, so the transfer. Ofgem always strives to remove barriers to network coordination and how best to facilitate investments in offshore infrastructure that have a wider advantage over the onshore or offshore system. In doing so, it identified three broad categories of potential anticipatory investment (AI) that may be needed. Whatever the reason, in this article we share some practical tips and ideas on a sale of OFTO SPA assets, based on WFW`s experience in advising on many OFTO transactions in various tenders, including (among others) Walney Extension, Race Bank, Galloper and Burbo Bank.. .