The Crown Estate has awarded seabed leasing rights to 8GW of new offshore wind generation as part of its fourth leasing round.
The six projects around England and Wales were selected through a competitive tender process and will now need to pass an environmental assessment before they are granted lease agreements. The Habitats Regulations Assessment process is expected to conclude in Spring 2022, allowing the projects to begin generating electricity by the end of this decade.
RWE secured leasing rights for two 1.5GW projects in the Dogger Bank bidding area off the coast of Yorkshire. A consortium comprising the oil giant BP and the German utility EnBW also won leasing rights for two 1.5GW projects – one near the Isle of Anglesey in North Wales and another near Barrow-in-Furness in Cumbria.
Meanwhile, a joint venture between the Green Investment Group and the French oil company Total secured rights for a 1.5GW windfarm off the coast of Lincolnshire near the Humber Estuary, whilst a joint venture between Spanish firm Cobra Instalaciones y Servicios and British company Flotation Energy won rights for a 480MW project off the coast of Lancashire near Blackpool.
Dan Labbad, chief executive of The Crown Estate, said: “Round 4 offers a major boost for the UK’s green economy and subject to environmental assessments, these projects have the potential to create new jobs and deliver green and affordable energy to millions more homes.
“With a net zero goal, some of the best offshore wind resources in the world, and clear commitment from government and industry to continue investing in the low carbon economy, the UK stands ready to play its part in addressing the global climate crisis.
“The task now is to work together across the sector, to coordinate the development we need offshore, in a way which is sensitive to the importance of biodiversity in our precious marine environment and brings new employment opportunities and growth to a range of communities across country.”
Energy minister Anne-Marie Trevelyan said: “The UK is a world leader in offshore wind energy, with the prime minister’s ten-point plan laying out a bold ambition to produce enough offshore wind to power every home in the UK.
“Energy delivered by the new offshore wind projects in The Crown Estate’s latest leasing round will help power seven million homes, driving forward our commitments to eliminate the UK’s contribution to carbon emissions by 2050, creating thousands of new jobs and ensuring Britain builds back greener.”
The annual option fees, which companies will pay for up to ten years until they finalise their plans, were for the first time determined through a competitive bidding process and will amount to £879 million in the first year. The Crown Estate, to which they are paid, has previously set fixed charges.
RenewableUK said the fees – initially equating to around £111m per gigawatt per year – represent a “very significant sum” for developers and noted for comparison that constructing a 1GW offshore windfarm typically requires an investment of roughly £2.5 billion.
“Offshore wind will be the backbone of our future electricity system and growing the pipeline of offshore wind projects is essential to ensure we have the capacity we need. These new sites can make a huge contribution to decarbonising our energy system and achieving net zero,” said the trade body’s deputy chief executive Melanie Onn.
“The result of this leasing round shows that while demand for new offshore wind projects has never been higher, too few sites were made available to meet this demand. Any auction run on that basis will inevitably lead to high fees like these, and our concern is that this could ultimately mean higher costs for developers and consumers.
“Going forward we need more clarity from the Crown Estate on the timing, size and speed of future leasing rounds. Sustainable competition and prices are vital for consumers, industry and the supply chain”.
RenewableUK said the 8GW of rights awarded in the fourth leasing round are significantly less than the 32GW secured in the third round held in 2010.