Page type: primary-anchored (mirrors Electricity (Competitive Tenders for Offshore Transmission Licences) Regulations 2015, SI 2015/1555)

Offshore Transmission Owner (OFTO) Tender Regulations

The OFTO tender regime creates the competitive framework for awarding licences to own and operate offshore electricity transmission assets. Offshore wind developers must connect to the onshore grid via transmission assets. This SI governs the competition to select who owns and operates those assets for a 25-year revenue period.

Source file: sources/legislation/uk/si-2015-1555-ofto-tenders.md

Two models

Generator build (the dominant model): the offshore wind developer builds the transmission assets during construction, then transfers them to the winning OFTO bidder after commissioning. Ofgem calculates the economic and efficient cost of the assets (Reg. 4), and bidders compete on the annual revenue they need to own and maintain them.

OFTO build: a third-party OFTO designs, finances, and builds the transmission assets from scratch. Ofgem estimates preliminary works and construction costs (Reg. 6). This model has been used rarely.

Five-stage tender process (Reg. 13)

1. Pre-qualification (Regs. 14-15): Ofgem publishes documentation, bidders submit questionnaires, Ofgem determines qualifying bidders
2. Qualification to tender (Regs. 16-17): qualifying bidders sign confidentiality agreements, receive project data, further evaluation
3. Invitation to tender (Regs. 18-19): formal bids submitted (each constituting a licence application), Ofgem selects preferred bidder or proceeds to stage 4
4. Best and final offer (Reg. 20): selected bidders refine offers
5. Preferred bidder (Regs. 21-22): resolution of outstanding matters, developer supports asset transfer, Ofgem grants licence (Reg. 28)

Cost structure

Developers and bidders bear Ofgem's costs, not GB bill-payers directly (Regs. 5, 7, 10, 30). Developers must provide security approved by Ofgem (Reg. 10). If a bidder is disqualified, all payments and security are forfeited (Reg. 27).

Key provisions

• Exclusive route (Reg. 35): normal licence application procedures under EA 1989 ss.6A-6B are disapplied. The tender framework is the only route to an offshore transmission licence.
• Developer cooperation (Reg. 22): the developer must use reasonable endeavours to support the preferred bidder's resolution of matters and asset transfer.
• Information to bidders (Reg. 29): Ofgem must provide evaluation criteria, reasons, and results within 10 working days.

Cross-references

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Last updated: 2026-04-05