Research and analysis

Offshore Transmission Network Review: summary of outputs

Updated 27 July 2023

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Moving to delivery: foreword by Minister of State for Nuclear and Networks, Andrew Bowie

I’m incredibly pleased to see the conclusion of the Offshore Transmission Network Review (OTNR), marking our move from review to delivery. The OTNR is a fantastic example of the government working collaboratively with regulators, transmission operators, the Electricity System Operator (ESO), developers and trade bodies such as Renewables UK to deliver for consumers, industry, the environment, and communities. Our thanks go to all our partners for enabling this work and engaging so positively.

Through the Offshore Transmission Network Review, we have made significant progress in changing the way we deliver the transmission infrastructure needed to meet our ambitious 2030 and net zero goals. This ranges from the publication of the Holistic Network Design (HND) in July 2022, launching a fund of up to £100 million to support the development of coordinated options for well-developed projects, moving forward on multi-purpose interconnectors, and now the publication of recommendations and actions to deliver for a Future Framework for offshore wind and transmission deployment.

Delivering the OTNR has only been possible through good relationships between the government, regulators, TOs, ESO, developers and trade bodies such as Renewables UK. Our thanks to them for supporting this work. We continue to work in partnership to decarbonise the power sector by 2035.

As Minister of State for Nuclear and Networks, I’m proud to oversee the delivery of these outputs which speak to the breadth and depth of work undertaken by this review. This work and its ongoing implementation, delivering a coordinated and strategic approach to offshore wind connection is of vital importance, delivering on our promises of energy security, affordability, and sustainability for the whole of Great Britain.

Andrew Bowie MP
Minister of State for Nuclear and Networks

1. The Offshore Transmission Network Review: conception, objective and approach

The government expects annual electricity demand to increase from current levels by over 35% in 2035 and by over 70% in 2050. Offshore wind will play a key part in delivering this and will require significant additional transmission infrastructure both onshore and offshore to transport this energy to areas of demand.

The Offshore Transmission Network Review (OTNR) was launched in 2020, in response to growing concern that the developer led approach, where offshore wind projects connected individually to the grid on a radial (point-to-point) basis, would present a major barrier to realising our increased ambition of building 50GW in offshore wind capacity by 2030.

The OTNR has transformed the approach taken across the UK electricity sector to delivering connections for offshore wind projects and today has set out a bold new set of recommendations for a future framework to deliver the next generation of the UK’s world leading offshore wind power.

Some of the OTNR’s outputs include:

  • the Holistic Network Design – delivered by the Energy Systems Operator in July 2022
  • recommendations for a future framework to support our delivery of net zero through offshore wind generation, summer 2023
  • ground-breaking work on new technologies such as multi-purpose interconnection
  • significant changes to existing codes, standards and processes to put transmission delivery on the front foot while also protecting communities, environment and consumer costs
  • Accelerated Strategic Transmission Investment (ASTI) decisions through Ofgem
  • delivering retrospective coordination among well advanced projects
  • enabling regulatory change to standardise coordination for transmission infrastructure
  • launching a consultation on community benefits for network infrastructure

See the full list of outputs across the OTNR’s timeframe.

The review was led by the Department for Energy Security and Net Zero (DESNZ), formerly the Department for Business, Energy and Industrial Strategy (BEIS), with specific outputs and support from a range of government and industry bodies and an industry expert group.

2. Core outputs of the Offshore transmission network review

Delivering a holistic approach to network planning

The Holistic Network Design (HND) was published by the Electricity System Operator (ESO) in July 2022, with focus on moving offshore wind connections from a radial (point-to-point) approach for individual projects, to a more coordinated one which considers future projects and the sharing of infrastructure.  The first iteration of the HND offered a recommended onshore and offshore design for a network to enable the connection of 18 new offshore wind farms with a combined capacity of 23GW.

The benefits of the HND include:

  • enabling the delivery of 50GW of offshore wind capacity by 2030, the HND provides the transmission needs case to connect 23GW of offshore wind projects in total. Considering environmental and community impacts up front, in a strategic manner, will help these projects to gain consent
  • avoiding and minimising community and environmental impacts compared with the previous radial approach. The strategic network design approach of the HND reduces the number of onshore connections and, where onshore connections are necessary, assessment of connection points has been made with consideration to community impacts up front
  • significant cost savings (currently estimated by ESO to be around £4.3 billion) through planning a coordinated network that optimises network infrastructure
  • balancing the needs of developers, consumers and communities by considering the OTNR’s Network Design Objectives of cost, deliverability and operability, environmental impacts, and community impacts on an equal footing

The HND follow up exercise is currently being prepared by the ESO and will provide recommended connections for an additional 24GW of offshore wind. This exercise will be finalised in 2023.

In time, the ESO will build on the approach delivered through the OTNR to deliver Centralised Strategic Network Planning (CSNP), which will take a whole system approach to designing the transmission network. Once established, we expect that the Future System Operator will take on responsibility for the CSNP.

Setting the direction through policy change and action

Interconnection and Multi-Purpose Interconnectors

The OTNR considered how to take a more strategic approach to windfarm development, including how best to facilitate Multi-Purpose Interconnectors (MPIs); assets that combine interconnection with direct connections to, and transmission of electricity generated by, offshore wind farms. MPIs help us achieve our net zero and energy security aims by more efficiently integrating renewable energy onto the grid and providing access to a diverse pool of generation.

We have launched an MPI Forum Discussion Group to engage with industry and regulatory stakeholders across 4 workstreams covering:

(1) the Contracts for Difference scheme
(2) licence conditions for MPIs
(3) the regulatory regime, charging and market arrangements for MPIs (4) operability of MPI assets

In June 2023 the joint DESNZ / Ofgem consultation on Market Arrangements for MPIs, and the Ofgem consultation on the Regulatory Framework for Offshore Hybrid Assets were launched to further progress this workstream.

Developing recommendations for a Future Framework

In 2021, we consulted on proposals for a new, more strategic end-to-end approach to how offshore wind and associated transmission infrastructure is developed and delivered. The Department has considered responses to the consultation and collaborated with OTNR delivery partners to develop 3 key recommendations for a Future Framework. The key recommendations are:

  • the department should work with project partners to develop a more strategic approach for the deployment of offshore wind and Multi-Purpose Interconnectors
  • adopt delivery models to maximise efficiency in terms of cost and risk
  • consider the timing of transmission design and delivery

Grant funding to support voluntary coordination

The Offshore Coordination Support Scheme (OCSS) was launched on 12 December 2022. This £100 million grant fund will enable successful projects at a late stage of development to voluntarily develop an alternative coordinated design to their radial proposal that could be put forward for planning application. Applications closed on 28 February 2023.

Accelerated Strategic Transmission Investment

In August 2022 Ofgem consulted on how they could support the accelerated delivery of the strategic electricity transmission network upgrades needed to meet the government’s 2030 renewable electricity generation ambitions. This document contains our decision to introduce a new Accelerated Strategic Transmission Investment (ASTI) framework. Ofgem published their decision on the Accelerated Strategic Transmission Investment (ASTI) framework in December 2022.

In this Ofgem set out the initial list of ASTI projects, their decision on exempting strategic projects from competition, the new process for assessing and funding ASTI projects and the range of measures Ofgem are introducing to protect consumers against additional risks that changing the process brings.

Delivering retrospective coordination among well advanced projects

Our work to deliver retrospective coordination will continue as we work to enable coordination through voluntary developer participation, facilitated by government, the Electricity System Operator (ESO) and Renewables UK. The OCSS Grant funding scheme will conclude with funding allocated by summer 2023. Following this, the ESO will undertake an independent study into transmission routes in East Anglia in light of the outcomes of the OCSS. After the study concludes and involved parties consider its outcomes and make any required changes, developers will follow the usual and required independent planning processes, with statutory obligations to consult communities.

Working with communities hosting infrastructure

Understanding and listening to the impact of transmission infrastructure on communities is vital; one of the 4 design principles of the HND revolves around the impact on local communities. We will work to develop guidance on community engagement expectations to ensure that infrastructure developers consider at the outset of their programmes how their projects can address the legitimate concerns of affected communities, regularly engaging with them throughout the pre-application phase and beyond.

In addition, the government wants to ensure that communities are recognised for their vital role in hosting onshore transmission network infrastructure which supports the delivery of cheaper, more secure and low carbon energy generation in Great Britain. The government launched a consultation on community benefits for network infrastructure, which proposes to introduce voluntary guidance on the appropriate levels and forms of benefits to give communities the knowledge, power and flexibility to decide what benefits they want in consultation with the project developer.

Regulatory change to enable coordination

Anticipatory investment (AI)

Anticipatory investment is investment that goes beyond the immediate needs of the network, developing infrastructure that will support later connections of other offshore developments. In October 2022, Ofgem published their Decision on Anticipatory Investment and Implementation of Policy Changes. The key outcomes from this decision included:

  • Ofgem upholding their minded-to position on the allocation of AI risk between the consumer and later user(s) of shared transmission infrastructure
  • the introduction of an early-stage assessment process for well advanced projects pursuing coordination
  • and lastly, the extension of user commitment arrangements to the potential later user of AI funded offshore transmission infrastructure

Guidance from Ofgem on the early-stage assessment process is due to be published in Q1 2023 following industry engagement.

Codes and standards

The ESO is working closely across the industry via the OTNR Expert Advisory Codes and Standards subgroup to plan, develop and implement the changes that are needed are needed to the industry codes to allow more coordinated connection approaches for all projects.

Generator Commissioning Clause (GCC) and inter array systems

The Department for Energy Security and Net Zero is working closely with Ofgem to review the GCC framework for coordinated (non-radial) projects where 2 or more parties will be constructing and then utilising the transmission infrastructure and will be engaging with stakeholders in due course.

Enabling a consenting process focussed on coordination and scale

National Policy Statements

In the British Energy Security Strategy, we committed to accelerate network infrastructure to enable delivery of our 50GW offshore wind target by 2050. To accelerate the planning consent process for network infrastructure to meet 2030 targets, we are amending the energy National Policy Statements (NPSs) to ensure they reflect the strategic importance of network planning and support the needs case for infrastructure; revised NPSs will be produced and published following the conclusion of the NPS consultation.

Consenting and Nationally Significant Infrastructure Projects (NSIP) reform

In February 2023, the government published its Action Plan for NSIP reform, setting out measures to make the NSIP consenting process faster, better, greener, fairer and more resilient. The government will be consulting on proposed operational changes to the process, including a new fast track consenting route.

Leasing rounds designed with grid and coordination in mind (Celtic Sea)

Project partners are already delivering on some of the reforms, for example the ESO and The Crown Estate and Crown Estate Scotland have signed a memorandum of understanding agreeing to collaborate to consider grid connectivity in preparation for future leasing rounds. For the first time, the Celtic Sea leasing round is being progressed to align with the network planning.

3. Looking forward

The need for new infrastructure development, planned and delivered in a coordinated and considered manner underpins the priorities of DESNZ; a focus on the delivery of clean energy to the grid and ensuring the UK is on track to meet its legally binding net zero commitments are key aims. Similarly, the 4 core aims of the government as outlined in the Powering Up Britain Report of March 2023 focus on:

  1. Energy security: setting the UK on a path to greater energy independence.

  2. Consumer security: bringing bills down and keeping them affordable.

  3. Climate security: supporting industry to move away from expensive and dirty fossil fuels.

  4. Economic security: boosting growth and delivering high skilled jobs for the future.

The Electricity Networks Commissioner Nick Winser’s forthcoming recommendations will provide opportunities for government to deliver on the vision and actions of the OTNR as part of the national effort to meet our ambitious targets for energy decarbonisation for net zero, consumer bill reductions and energy security.

Appendices

OTNR terms of reference

The terms of reference for the OTNR outline the objectives, approach, core outputs and stakeholder involvement for the review. Read the terms of reference for the review.

List of OTNR outputs

Offshore Transmission Network Review organisations

-Crown Estate Scotland -Department for Energy Security and Net Zero -Welsh Government / Llywodraeth Cymru -Department for Environment, Food and Rural Affairs -Ministry of Housing, Communities and Local Government -The Crown Estate -HM Treasury -The Scottish Government / Riaghaltas na h-Alba -Ofgem -Marine Scotland -Marine Management Organisation - National Grid ESO

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