Ofgem Opens £3.5 Billion Hornsea 3 Offshore Grid Tender

Britain’s energy regulator Ofgem has opened a competition for the offshore transmission assets that will connect Hornsea 3 to the onshore grid, in a tender round the regulator expects to be its largest so far. According to Ofgem, the competition covers assets with an estimated value of about £3.5 billion and will allow investors to bid to own and operate the link for one of the world’s largest offshore wind farms now under construction.

The launch, announced on 21 October, starts Tender Round 14 under the Offshore Transmission Owner (OFTO) regime. Hornsea 3 is located more than 100 kilometres offshore in the North Sea, and Ofgem said the wind farm is due to be completed by the end of 2027.

What Ofgem has launched

According to Ofgem, Tender Round 14 is the latest competition in its OFTO framework, which is used to appoint owners for transmission assets serving offshore wind projects around Great Britain. For Hornsea 3, bidders will compete for the right to own and operate the transmission system that brings electricity from the offshore wind farm to Britain’s power grid.

Ofgem described this round as what is expected to be the biggest tender yet under the regime. The regulator put the estimated value of the Hornsea 3 transmission assets at around £3.5 billion.

The assets covered by the process are prebuilt transmission assets. Ofgem said these include cables as well as offshore and onshore substations. Under the regime, those assets are sold in parallel from the developer to the successful bidder, while Ofgem runs the competitive tender and grants the offshore transmission licence for the specific project.

Ofgem’s announcement is available here: https://www.ofgem.gov.uk/press-release/ofgem-launches-biggest-ever-ofto-tender-round-ps35-billion-hornsea-3-offshore-transmission-link.

The Hornsea 3 project in the tender

Ofgem said Hornsea 3 is one of the world’s biggest offshore wind farms and is being built in the North Sea more than 100 kilometres from shore. The regulator said the project is scheduled for completion by the end of 2027.

Once operating, Hornsea 3 is projected to be able to supply enough electricity to power 3.3 million UK homes, according to Ofgem. The tender now launched does not cover the wind farm generation assets themselves. It relates to the transmission infrastructure needed to move the electricity from the offshore project into the onshore network.

That distinction is central to how the OFTO framework works. The wind farm is developed and built separately, while the transmission system is transferred to a licensed offshore transmission owner selected through Ofgem’s competition.

How the OFTO regime works

According to Ofgem, successful bidders in the OFTO regime receive a long-term revenue stream linked to inflation in return for financing, operating and maintaining the offshore transmission assets. The regulator said that revenue stream can run for up to 25 years and is subject to the availability and performance of the assets.

In practice, that means investors are bidding for an operating role over infrastructure that has already been built, rather than for permission to develop the transmission system from the start. The assets include the export cables and the offshore and onshore substations that form the grid connection for the wind farm.

Ofgem said the competition is intended to identify transmission owners that are efficient and competitive, while maintaining service standards. The regulator also said the process is designed to keep costs down for consumers.

The OFTO model has been in place since 2009. Over that period, according to Ofgem, winning bidders have invested more than £10 billion in transmission links serving 28 offshore wind farms. Tender Round 14 therefore adds another project to a framework that Ofgem said has already been used repeatedly across Great Britain’s offshore wind sector.

Where this round sits in the wider rollout

Ofgem said the OFTO framework is part of the modernization of Great Britain’s energy system and supports the connection of offshore wind to homes and businesses. In the regulator’s description, the framework also helps meet growing electricity demand from transport, heating, industry and data centres.

The Hornsea 3 round also fits into a larger pipeline. Ofgem said it expects additional North Sea offshore transmission assets to come to market through the OFTO framework in the future.

For this tender, the next stage is the competitive process itself. Ofgem will assess bids submitted within Tender Round 14 and then award an offshore transmission licence to the selected bidder for the Hornsea 3 assets. At the same time, the transmission assets are sold from the project developer to the successful OFTO bidder, according to the regulator.

That sequence means the current announcement marks the opening of the competition rather than the final allocation. The immediate milestone is the start of bidding for ownership and operation of the Hornsea 3 offshore grid connection, with the wind farm itself due for completion by the end of 2027.

Key figures from the announcement

According to Ofgem, the Hornsea 3 tender round includes several headline figures:

• estimated transmission asset value: around £3.5 billion
• wind farm location: more than 100 kilometres offshore in the North Sea
• project timing: due for completion by the end of 2027
• projected reach: enough electricity to power 3.3 million UK homes
• OFTO track record since 2009: more than £10 billion invested across links for 28 offshore wind farms

Those figures describe both the scale of the Hornsea 3 transmission package and the longer-running structure Ofgem is using to allocate it. In this case, the regulator has opened a competition for the grid link that will carry power from one of the largest offshore wind farms under construction into Britain’s onshore electricity network.