Research and analysis

Offshore Transmission Network Review: terms of reference

Updated 27 July 2023

Background

Energy Minister Kwasi Kwarteng has announced the scope of a review into the existing offshore transmission regime to address the barriers it presents to further significant deployment of offshore wind, with a view to achieving net zero ambitions.

The current approach to designing and building offshore transmission was developed when offshore wind was a nascent sector and industry expectations were as low as 10GW by 2030. It was designed to de-risk the delivery of offshore wind by leaving the project developers in control of building the associated transmission assets to bring the energy onshore. This approach has contributed to the maturing of the sector, the significant reduction in costs of offshore wind energy and has helped position the UK at the forefront of global offshore wind deployment.

However, in the context of increasingly ambitious targets for offshore wind, constructing individual point to point connections for each offshore wind farm may not provide the most efficient approach and could become a major barrier to delivery given the considerable environmental and local impacts, particularly from the associated onshore infrastructure required to connect to the national transmission network. Offshore wind is expected to play an important role in delivering net-zero emissions by 2050, and it is right that the framework for delivering offshore transmission connections is reviewed in the context of our increased ambition.

In their 2020 report to Parliament, the Committee on Climate Change called for government to ‘Develop a strategy to coordinate interconnectors and offshore networks for wind farms and their connections to the onshore network and bring forward any legislation necessary to enable coordination’.

The review, launched by Minister Kwasi Kwarteng at a round-table meeting of MPs and other interested stakeholders, will bring together the key stakeholders involved in the timing, siting, design and delivery of offshore wind to consider all aspects of the existing regime and how this influences the design and delivery of transmission infrastructure. Its terms of reference, as agreed with delivery partners and stakeholders in the sector, focus on identifying tactical near-term actions that can be taken and early opportunities for coordination for projects in the short- to medium-term, plus a longer-term strategic review to develop a new regime that can ensure a more coordinated approach for the future.

Fintan Slye, Executive Director of the Electricity System Operator said:

Assessing the most beneficial approach to offshore connections will be vital to offshore wind reaching its potential to facilitate net zero in a way that minimises the impact on consumers and coastal communities. We are very supportive of BEIS taking forward this important project, in which we look forward to playing our part. We are currently carrying out a project to assess the costs and benefits of different coordinated offshore network designs and the technology available to deliver them. We are also assessing whether changes could be made to the offshore connections regime to encourage more coordination and whether there is a role for us to remove some of the other barriers to a more coordinated approach, such as in technical and commercial network codes and standards.

John Robertson, Head of Energy & Infrastructure for Crown Estate Scotland, said:

A coordinated approach to the establishment of successful transmission connections is an important part of ensuring Scotland is well set up to benefit from the potential expansion of offshore wind. Our recently launched leasing round, ScotWind Leasing, has created a pathway for developers to invest in Scotland, but there are many other steps which need to happen in tandem with this to make the most of the opportunity and help us get to Net Zero. We look forward to working closely with other stakeholders to help progress this important work.

Jonathan Brearley, Chief Executive Officer for the Office of Gas and Electricity Markets (OFGEM), said

Ofgem is working to deliver a greener, fairer energy system for consumers. Our Decarbonisation Action Plan recognised that the UK’s 2030 offshore wind target requires a step-change in the way offshore generation and transmission is planned, developed and connected. This will help our world leading offshore wind sector to increase capacity and Britain achieve net zero whilst ensuring the cost to consumers is minimised. This is an exciting time for offshore wind and we welcome the strong collaboration and BEIS leadership these terms of reference formalise. We look forward to our continued work with BEIS and other partners on reviewing the offshore transmission regime so that it is fit for delivering net zero.

Huub den Rooijen, Director of Energy, Minerals and Infrastructure at The Crown Estate, said:

The huge potential of UK offshore wind can only be unlocked if it delivers for the economy, for the environment and for people and communities. As managers of the seabed around England, Wales and Northern Ireland, we recognise the need for a more coordinated approach to the transmission system, both offshore and onshore, and are committed to working with government and other strategic partners to help ensure the sustainable and responsible development of our nationally important wind resources.

Terms of reference

Objective

To ensure that the transmission connections for offshore wind generation are delivered in the most appropriate way, considering the increased ambition for offshore wind to achieve net zero. This will be done with a view to finding the appropriate balance between environmental, social and economic costs.

Approach

The review will be led by the Department for Business, Energy & Industrial Strategy (BEIS) with support from a range of government and Industry bodies and an industry expert group.

The review will be split into 2 main workstreams:

1. The medium-term workstream will seek to:

• identify and implement changes to the existing regime to facilitate coordination in the short-medium term
• assess the feasibility and costs/benefits of centrally delivered, enabling infrastructure to facilitate the connection of increased levels of offshore wind by 2030
• explore early opportunities for coordination through pathfinder projects, considering regulatory flexibility to allow developers to test innovative approaches
• focus primarily on projects expected to connect to the onshore network after 2025

1. The long-term workstream will seek to:

• conduct a holistic review of the current offshore transmission regime and design and implement a new enduring regime that enables and incentivises coordination while seeking to minimise environmental, social, and economic costs
• consider the role of multi-purpose hybrid interconnectors in meeting net zero through combining offshore wind connections with links to neighbouring markets and how the enduring offshore transmission regime can support the delivery of such projects
• focus on projects expected to connect to the onshore network after 2030

Reporting and external engagement

The review will provide regular updates for external stakeholders and will hold roundtables chaired by Minister Kwarteng to ensure progress of the review is communicated and that there is early and regular opportunity for challenge.

Outputs

We will publish an update by the end of the year, with a view to providing clarity for an enduring approach in 2021. Policy recommendations and proposed changes to the existing regime will be delivered through the usual consultation process.