Crown Estate Scotland has raised the maximum option fees for its ScotWind offshore wind leasing round by ten-fold to £100,000/km².
The decision follows a review of the arrangements that was launched after the winners in the Crown Estate’s fourth offshore wind leasing round for England and Wales agreed to pay option fees initially worth £879 million per year for almost 8GW of capacity in its first competitive bidding process.
Applicants to ScotWind were previously set to enter bids at three pre-defined levels – £2,000/km², £6,000/km² or £10,000/km². Crown Estate Scotland said rights for up to 8,600 km² of seabed would be available but roughly 2,000 km² would be required to deliver 10GW of capacity. If rights were awarded for 2,000 km² of seabed, then the one-off option fees would therefore range from £4 million to £20 million.
However, Crown Estate Scotland has now increased the maximum fees to £100,000/km², bumping the top end of this range to £200 million. If rights were awarded for all 8,600 km² of seabed at the maximum rate, then the leasing round would bring in one-off fees of £860 million.
The corporation, which is owned by the Scottish government, said it has also made changes to the control provisions that apply to the resale of options and that the closing date for applications will be 16 July 2021.
Amanda Bryan, chair of Crown Estate Scotland, said: “This rapid review was undertaken to reflect the recent changes we have seen in the UK offshore wind market so that we could arrive at a pricing structure which properly reflects those changes.
“Throughout the development of ScotWind leasing we have sought to secure best value for communities and help place Scotland as a competitive destination for the investment needed to turn potential projects in to reality. This review achieves both of these goals.”
Scottish cabinet secretary for environment, climate change and land reform, Roseanna Cunningham, said: “ScotWind will support the continuing growth and expansion of this technology, harnessing this huge resource for our energy system and helping to unlock significant investment in the supply chain to create more green jobs across the sector, while seeking to achieve a fair value for Scotland’s assets.
“We know how keen the industry are to start developing and delivering projects, which is why I thank Crown Estate Scotland for undertaking this rapid review of pricing options and setting out their next steps in a timely manner which enables the developers to move forward.”
Rebecca Williams, head of policy and regulation at RenewableUK, commented: “Now that we have more details about how the leasing round will work, developers and investors will be able to plan the next steps in bidding for these sites. It’s vital that new leasing supports development of new offshore wind at the cost and scale needed to reach Scotland and the UK’s net zero emissions target”.
“ScotWind unlocks the potential for the UK to ramp up the deployment of more floating offshore projects. We are world leaders in this innovative technology and we can export it around the world”.