Dudgeon OFTO

The UK is one of the world's largest markets for offshore wind with over 10GW of installed capacity. The British Energy Security Strategy published in April 2022, saw a further increase in the Government's offshore wind target, to 50GW of offshore wind energy by 2030, up from c. 10GW in 2020. The UK continues to provide significant support for offshore wind, and we anticipate that the technology will play a key role in helping the UK meet net zero by 2050.

To support this increase in offshore renewable energy generation, the UK government identified that a new approach to developing transmission networks would be required and developed the offshore transmission regulatory regime. INPP recognised this opportunity and strategically positioned itself as one of the very few original consulting parties to Ofgem on the regime in 2009.

As the UK aims for an ambitious renewable energy future, INPP’s investment in the Dudgeon OFTO represents a strategic alignment with the country’s long-term vision, acting as an enabler of secure, scalable, and sustainable green electricity.

OFTOs offer favourable risk-adjusted returns together with an inflation-projected yield profile and direct environmental benefits.

• Risk-adjusted returns: Transmission license grants the OFTO an availability-based revenue stream with downside protection whereby potential deductions are capped at 10% of base revenue in any year
• Inflation-protected revenues: Revenue is 100% index-linked to the UK’s Retail Price Index (‘RPI’), or Consumer Price Index (‘CPI’) for future assets
• Regulatory backing: Revenues are contracted by a regulated subsidiary of National Grid, National Grid Electricity System Operator (‘NGESO’), which is protected by special energy administration rules under the Energy Act 2004, creating a ‘look through’ to UK government risk
• Cash flow stability: Protections provided through the OFTO’s transmission license provide compensation to downside scenarios for events outside the OFTO’s reasonable control, providing further certainty of cash flows
• Immediate yield: Operational and immediately yielding with no construction or refinancing risk. The operations and maintenance of the OFTO portfolio have been subcontracted to a set of specialist contractors incentivised to maximise availability
• Sustainability impact: Investment supports the UK transition towards a low carbon economy with the aim of achieving a decarbonised electricity system by 2035 and net zero by 2050