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Ofgem launches record offshore transmission tender for Hornsea 3

Ofgem launches record offshore transmission tender for Hornsea 3

Money Moves

Tender round 14 values the Hornsea 3 connection at about £3.5 billion, the biggest in the OFTO regime's history

Today: TR14 tender launched

Overview

Updated 1 hour ago

Ofgem, the UK energy regulator, launched its largest-ever offshore transmission tender on October 21, inviting investors to bid for the right to own and operate the infrastructure connecting Hornsea 3 to Britain's power grid. It is the 14th round under the offshore transmission owner (OFTO) regime and carries an estimated value of about £3.5 billion.

Since the regime began in 2009, winning bidders have invested over £10 billion across 28 wind farms. This single round is roughly a third of that total. The link it finances will serve a 2.9-gigawatt wind farm, one of the world's largest, projected to power 3.3 million UK homes.

The winning bidder buys the transmission assets from the developer, the Ørsted and Apollo venture Hornsea Project Three, and earns a regulated revenue stream of up to 25 years, indexed to inflation and tied to asset availability. Ofgem plans to name a preferred bidder by mid-January 2028.

Why it matters

Britain's biggest offshore wind link goes to the highest-bidding transmission owner. That choice shapes consumer electricity costs for up to 25 years.

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Key Indicators

£3.5bn
Estimated TR14 tender value
Ofgem's estimate for the Hornsea 3 transmission round.
3.3M
UK homes Hornsea 3 projected to power
The wind farm's expected supply reach once complete.
28
Offshore wind farms connected under OFTO since 2009
The regime's track record ahead of this round.
£10bn
Total winning OFTO bids since 2009
Cumulative investment by OFTO licensees before TR14.
96%
Hornsea 3 availability target
Adjusted project-specific target, with 98% max bonus and 76% max penalty.

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People Involved

Organizations Involved

Timeline

October 2026 January 2028

7 events Latest: Today
Tap a bar to jump to that date
  1. Preferred bidder named

    Upcoming Selection

    Ofgem scheduled to announce the preferred bidder for the Hornsea 3 assets.

  2. Invitation to Tender opens

    Upcoming Procedure

    The ITT stage launches for shortlisted bidders, with bids due in early October.

  3. Shortlist published

    Upcoming Selection

    Ofgem announces qualifying bidders, capped at eight.

  4. Pre-qualification bids due

    Upcoming Procedure

    Bidders must submit Enhanced Pre-Qualification responses by noon.

  5. Hornsea 3 completion target

    Upcoming Milestone

    Wind farm due for completion by the end of 2027.

  6. Bidder materials released

    Upcoming Procedure

    Information Memorandum and draft transfer agreement released to bidders under confidentiality agreements.

  7. TR14 tender launched

    Today Regulatory

    Ofgem launches Tender Round 14 for Hornsea 3 transmission assets, valued at about £3.5 billion.

Scenarios

1

Ofgem names preferred bidder for Hornsea 3 link

Likely Resolves by Q1 2028

Discussed by: Ofgem's official TR14 schedule; industry tracker reNEWS treats the January 2028 announcement as the baseline.

Ofgem concludes the enhanced pre-qualification in April 2027, runs the invitation to tender through summer, and names a winner in January 2028 as scheduled. This depends on the shortlisted bidders submitting compliant bids and the assessment running on time.

2

Tender timetable slips past current schedule

Possible Resolves by Q2 2028

Discussed by: Ofgem's own EPQ document, which already adjusted Hornsea 3's availability target to 96 percent, signalling project-specific negotiation still in progress.

Ofgem revises its dates, citing bidder withdrawals or extended assessment. Any push to the April 2027 shortlist date or the January 2028 award would confirm the delay.

3

Shortlist comes in under eight bidders

Possible Resolves by Apr 30, 2027

Discussed by: The EPQ document, which caps the shortlist at eight but does not guarantee that many.

Fewer than eight applicants qualify, because consortiums drop out or fail the enhanced pre-qualification criteria. Ofgem's April 2027 announcement settles the count.

Historical Context

2 moments from history that rhyme with this story — and how they unfolded.

2009

OFTO regime launch (2009)

Britain introduced the offshore transmission owner regime in 2009 to competitively tender ownership of cable and substation links from offshore wind farms. Before it, developers built and owned their own connections, leaving each wind farm with a de facto monopoly and little incentive to control costs.

Then

First rounds awarded transmission assets to financial and utility consortia, introducing long-term investors to offshore grid infrastructure.

Now

By 2026, winning bidders had invested over £10 billion across 28 wind farms, making TR14 the largest round yet.

Why this matters now

TR14 is the regime's biggest single test, with one round worth roughly a third of all OFTO investment to date.

1989–1990

UK utility privatization (late 1980s)

When Britain privatized its electricity and water utilities in the late 1980s, it created regulated monopolies holding long-term revenue rights in exchange for service obligations. Owners earn a guaranteed, inflation-linked return with performance conditions attached.

Then

Private capital flowed into infrastructure that had relied on public funding.

Now

The regulated-asset model became the template for UK infrastructure finance, including offshore transmission.

Why this matters now

The OFTO licence applies the same logic offshore: a 25-year inflation-linked revenue stream in exchange for building and operating transmission assets on time and to standard.

Sources

(7)