With the onset of COVID-19, the UK Government proposed time-bound exemptions for wind project generators in tender rounds 5 and 6 of the Offshore Transmission Owner (OFTO) regime. GlobalData anticipates that the exemption is likely to provide the developers of the projects that were impacted by the virus valuable time to execute the transfer process.
Somik Das, Senior Power Analyst at GlobalData, comments: “With the lockdown in-situ, there was a scarcity of working personnel. Now, because the lockdowns are gradually being lifted within the UK, movement is predicted to be restrained for some time. Conventional working practices are still impacted and uncertainties looming in the near term are expected to cumulatively delay any ownership transfers.”
The Beatrice project was nearest to the end of its commissioning period, with the date set for October this year. Social distancing norms in the UK have hindered the project’s transfer, and, although things are expected to be back to shape by the end of the year, the cloud of uncertainty still looms ahead. An extension to the timeline is anticipated to bring utmost relief to the current owner.
Das continues: “In this Build-Own-Operate-Transfer (BOOT) model, the new owners after the transfer might need to rework project finances to account for any potential delay. In addition, the average monthly electricity price had been on the decline since March, and, as economic activities resume and demand normalizes, electricity tariffs are likely to improve. This tariff increase will benefit the new owners by way of improved revenues.”
- Comments provided by Somik Das, Senior Power Analyst at GlobalData
- The government proposes a 12-month extension in the transfer of ownership of the 1.2GW Hornsea One Project to preferred OFTO bidder Diamond Transmission Corporation (DTC), 588MW Beatrice Project, and the 400.2MW Rampion project to Transmission Capital Partners. The transfer deadlines for Hornsea One, Beatrice, and Rampion projects are proposed to be extended to 14th January 2022, 2nd October 2021, and 27th November 2021, respectively.
- For new offshore wind projects in the UK, the generator builds the project and can own and operate the offshore transmission system for a maximum commissioning period of 18 months without possessing a transmission license.
- The proposal for granting an extension of the timeframe of ownership transfer, depends largely on the extent the wind project owners have been impacted by the crisis.
4,000 of the world’s largest companies, including over 70% of FTSE 100 and 60% of Fortune 100 companies, make more timely and better business decisions thanks to GlobalData’s unique data, expert analysis and innovative solutions, all in one platform. GlobalData’s mission is to help our clients decode the future to be more successful and innovative across a range of industries, including the healthcare, consumer, retail, financial, technology and professional services sectors.