Page type: primary-anchored (mirrors Electricity (Competitive Tenders for Offshore Transmission Licences) Regulations 2015, SI 2015/1555)
Offshore Transmission Owner (OFTO) Tender Regulations
The Electricity (Competitive Tenders for Offshore Transmission Licences) Regulations 2015 create the competitive framework for awarding OFTO licences. Offshore wind developers connect to the onshore grid via transmission assets; this SI governs the competition to select who owns and operates those assets.
Primary source: ~/knowledge/sources/legislation/uk/si-2015-1555-ofto-tenders.md
Last updated: 2026-04-05
How the OFTO regime works
Offshore wind farms need high-voltage subsea cables and substations to connect to the onshore grid. Rather than letting generators own these assets (which would give them monopoly control over the connection), the OFTO regime requires competitive tenders. An independent company wins the right to own and operate the transmission assets, earning a regulated revenue stream.
Two project models
Generator build: The wind farm developer builds the transmission assets during construction, then transfers them to the winning OFTO after a competitive tender. Ofgem assesses the "economic and efficient costs" of those assets, which sets the baseline for the OFTO's allowed revenue.
OFTO build: The OFTO designs, finances, and builds the transmission assets from scratch. This model was introduced to allow competition at an earlier stage and give OFTOs incentives to build efficiently.
Five-stage tender (Parts 6-11)
- Pre-qualification: screen bidders for capability
- Qualification to tender: optional deeper assessment
- Invitation to tender: formal bid submission
- Best and final offer: optional refinement round
- Preferred bidder: resolution of transfer matters
Key obligations
Developers must pay Ofgem's tender costs upfront and provide security (Reg 10). They must use "reasonable endeavours" to support the preferred bidder, including transferring assets, contracts, and property rights (Reg 22).
Bidders who withdraw after becoming preferred or successful cannot re-enter (Reg 23). Disqualification for conflicts of interest, misrepresentation, or breach results in forfeiture of all payments and security (Reg 27).
Cost recovery (Part 17)
Ofgem recovers its full tender costs from participants. If costs exceed payments collected, the successful bidder pays the shortfall. If payments exceed costs, surplus is repaid. This ensures GB bill-payers do not directly fund Ofgem's tender administration.
Co-ordination licence (2024 amendment)
A 2024 amendment added the "co-ordination licence" (EA 1989 s.6(1)(da)), reflecting the transition from point-to-point radial offshore connections to a coordinated offshore grid. This links to the Offshore Transmission Network Review (OTNR) outcomes and the Energy Act 2023 provisions on offshore transmission coordination.
Cross-references
- Electricity Act 1989, ss.6C and 6D: enabling powers for competitive tenders
- Energy Act 2023: offshore transmission coordination provisions
- Offshore consent regulations: s.36 consent for the generating stations themselves