What next for the OFTO market? Reflections from Ofgem's 2026 Conference

Attending Ofgem's OFTO Conference 2026 last week provided a valuable opportunity to take stock of how the offshore transmission market is evolving. Having supported the financing and delivery of offshore wind projects over many years, we were particularly interested to hear how the regulatory framework is adapting to support the next generation of transmission investment.

The scale of that challenge is significant. Around 60GW of offshore generation is now expected to progress through the pipeline, with government ambitions extending well beyond 2030. Alongside this, DESNZ highlighted that investment in electricity transmission is expected to increase from around £11 billion invested to date to approximately £30 billion by 2030. As offshore projects continue to grow in size and complexity, the way transmission assets are planned, financed and delivered is becoming just as important as the generation assets themselves.

Several themes stood out.

From individual projects to integrated systems

The OFTO model has played an important role in attracting private investment and delivering transmission infrastructure efficiently. However, as offshore wind projects become larger and more interconnected, the focus is increasingly moving beyond individual assets towards the wider electricity system.

The scale of individual projects illustrates why this evolution is necessary. Ørsted's Hornsea 3, for example, is expected to become the world's largest offshore wind farm, comprising 197 turbines with almost 3GW of generation capacity and an estimated value of £3.4 billion. Having worked on the earlier Hornsea projects, it is striking to see how rapidly both the scale of offshore wind and the associated transmission infrastructure have evolved over the past decade. Projects of this size inevitably require a different approach to transmission planning than the industry adopted when the OFTO regime was first established.

Delivering the UK's offshore wind ambitions will require greater coordination across projects, shared infrastructure where appropriate, and planning that considers long-term network requirements rather than individual developments in isolation. A more system-led approach has the potential to improve efficiency, reduce environmental impacts and make better use of available capital.

Earlier collaboration will be key

There is growing recognition that transmission considerations need to be brought into projects much earlier than has traditionally been the case.

Earlier involvement offers opportunities to optimise design, improve procurement strategies and reduce whole-life costs. Equally, it introduces new questions around risk allocation, commercial structures and incentives. As projects increase in scale and complexity, ensuring those risks are shared appropriately between developers, transmission owners and investors will be fundamental to successful delivery.

The discussion also reinforced the importance of considering the entire asset lifecycle from the outset. Design decisions made today will influence opportunities for life extension, repowering and eventual decommissioning decades into the future.

Confidence relies on a predictable pipeline

The OFTO market has attracted a wide range of long-term infrastructure investors over the past decade, demonstrating the strength of the regulatory model. Maintaining that confidence as projects become larger and more complex will depend on a transparent pipeline, proportionate procurement processes and continued regulatory certainty.

Visibility of future opportunities gives investors, lenders and the wider supply chain the confidence to commit capital, build capability and plan for the long term. As investment requirements continue to grow, predictability becomes just as important as the opportunities themselves.

CATO moves closer to reality

Alongside the continued evolution of the OFTO market, there are encouraging signs that the Competitively Appointed Transmission Owner (CATO) regime is gathering momentum.

The first tenders are anticipated from 2027, with early projects expected to focus on strategically important transmission infrastructure valued between approximately £400 million and £1.5 billion. If successfully implemented, CATO has the potential to broaden competition, attract new sources of infrastructure investment and encourage innovative approaches to delivering major network upgrades.

While the framework is still developing, it represents an important step in applying the principles of competitive delivery beyond offshore transmission and into the wider electricity network.

Looking ahead

For Amberside Advisors, these developments are particularly interesting because they reflect the changing nature of infrastructure investment itself. Through our work supporting offshore wind and transmission projects with financial modelling, valuation, due diligence and commercial advice, we've seen first-hand how the market has matured over the past decade. The next phase will demand those same robust commercial and financial foundations, but applied to projects of an entirely different scale and complexity.

The UK's energy transition depends not only on renewable generation but also on the transmission infrastructure that connects it to consumers. As the market evolves, the challenge is no longer proving that competitive transmission models can work. Instead, the focus is on ensuring they continue to evolve to support larger, more integrated infrastructure programmes while continuing to attract long-term investment and deliver value for consumers.