Ofgem opened the Offshore Hybrid Asset (OHA) pilot scheme (formerly MPI pilot scheme) in September 2022, with the aim of creating a regulatory framework to support the early development of OHAs connecting to GB. OHAs enable coordination of offshore wind and increase interconnection to GB in line with the Government’s ambitions.
Currently, point-to-point interconnectors are regulated via the cap and floor regime and an interconnector licence. As OHAs are a unique asset type with a differing risk profile to interconnectors, this called for the creation of both a new regulatory regime and licensing arrangements to allow for the pilot projects to develop. Since December 2022 we have been engaging with industry stakeholders through the Multi-Purpose Interconnectors Framework Discussion Group (MDFG) to develop a unique regime for OHAs.
These two consultations explain Ofgem’s proposals for the structure of a regulatory framework applicable to OHAs and invite feedback from all stakeholders.
The first consultation covers our proposals for licensing arrangements, the regulatory regime design, and charging arrangements for offshore wind farms connecting to an MPI.
The second consultation, conducted jointly with the Department for Energy Security and Net Zero, covers market arrangements for MPIs, in particular topics on bidding zone configuration (Home Market and Offshore Bidding Zone) and links with cross-border trading arrangements.
The eligible applicant projects will undergo a needs case assessment during this summer. A decision on the regulatory framework that will apply to successful projects will be released this autumn before a decision is made on which projects to award a regulatory regime in principle.
Both consultations are open from 2 June to 14 July 2023.