‘Seismic’ auction in England Wales prompts delay in ScotWind Leasing

The decision, which will further delay the Scottish process, was taken with the support of Scottish Government Ministers.

The result of a new review of the option structure for ScotWind Leasing is expected to be completed by 24 March 2021. As a result, the deadline for applications to ScotWind Leasing “will now be later than 31 March 2021” and the updated closing date will be confirmed on completion of the review of the option structure.

On 8 February 2021, The Crown Estate announced six proposed new offshore wind projects in the waters around England and Wales, projects that together represent just under 8 GW of potential new offshore wind capacity.

But while welcoming the award of more lease areas for offshore wind, trade bodies said the way the auction process was organised resulted in too few sites being made available for developers to bid on, with the result that consumers could have to pay more in future.

They expressed particular concern about the use of an ‘option fee’ for sites, which will be paid annually until companies finalise their plans to build the new windfarms. This was the first time a bidding process with option fees has been used in the leasing process for offshore wind. It resulted in a number of extremely high bids, raising questions about costs and warnings that costs will be passed on to consumers.

In statement, Crown Estate Scotland said the review “will help ensure that the offshore wind leasing process attracts major green investment to Scotland by delivering long-term economic and net-zero benefits through a competitive and sustainable pipeline of projects.”

Crown Estate Scotland chair Amanda Bryan said, “The unprecedented outcome of The Crown Estate Round 4 process has, overnight, changed the market dynamics around offshore wind leasing, and could have significant implications for offshore wind development in Scotland. It is only right that we consider the implications of this new situation in relation to ScotWind Leasing.

“Our team will now work on the details of how these latest developments can be properly reflected in the ScotWind Leasing option structure, and we’ll ensure our registered applicants, and the wider sector, continue to be kept engaged and informed.”

Cabinet Secretary for Environment, Climate Change and Land Reform Roseanna Cunningham MSP said, “It is the Scottish Government’s responsibility to secure a fair price for seabed sites being leased for offshore wind developments around Scotland and to make sure that the people of Scotland benefit fully from decisions taken in relation to the Scottish Crown Estate.

“In light of the significant changes that we are now seeing in the wider UK offshore wind market, Ministers have agreed with Crown Estate Scotland that it would be sensible to review our leasing process in order to fully consider the implications of recent auction outcome announcement by The Crown Estate UK for sites around England and Wales.”

ScotWind Leasing was launched in June 2020 and is the first round of offshore wind leasing in Scottish waters for a decade.

Commenting on the delay announced by Crown Estate Scotland, RenewableUK deputy chief executive Melanie Onn said, “Offshore wind developers will be dismayed by this latest delay to ScotWind, coming just weeks after Crown Estate Scotland opened applications for new leases.

“Having spent over a year setting out the process for awarding these new leases and making clear to developers what is required from them, Crown Estate Scotland is now rewriting the rules at the 11th hour.

“Scotland has a unique opportunity to secure billions of pounds of investment in new renewable energy projects which will support thousands of jobs across the supply chain. Delays and U-turns are bad for investor confidence and for Scotland’s position as a world leader in offshore wind”.

Scottish Renewables chief executive Claire Mack said, “Developing an offshore windfarm does not begin and end with deploying turbines in the sea. Our members have already invested many thousands of hours, and many millions of pounds, preparing to bid into the ScotWind Leasing process. That process, which industry was first told would conclude in January 2020, is already 14 months overdue. Those companies will therefore be disappointed and intensely frustrated at this further delay, as well as at the possibility that the goalposts will be moved at such a late stage.

“It is vital now that the scope of this review is as focused as possible, and that any delay to the overall process is minimised in order to reduce uncertainty for industry.

“We have the potential to build a globally competitive offshore wind industry in Scotland, including a real chance to take the lead on the development of floating offshore wind. Scottish Renewables has previously warned that any legislative or regulatory changes which damage that goal – which is intrinsically linked to the achievement of our net-zero target – should be made with the utmost caution.

“Scotland is already disadvantaged by its tougher seabed conditions and the higher electricity transmission charges projects here face. If offshore wind is to deliver on its potential for job creation and economic development in Scotland it is imperative that the processes through which this low-cost, reliable technology is deployed are as straightforward and progress as rapidly as possible. We would urge Crown Estate Scotland and The Scottish Government to proceed quickly with that in mind.”