This is an extract from a recent press release dated January 19, 2023 “The Crown Estate seals landmark agreements for offshore wind energy to power 7 million homes” published on Crown Estate website
In a major milestone for the UK’s energy security and net zero commitments, The Crown Estate announced that it has signed Agreements for Lease for six offshore wind projects which could begin to generate green electricity by the end of the decade and have the potential to generate c.8GW of renewable electricity, enough for more than seven million homes.
Signing these agreements represents a significant moment in the UK’s response to climate change and energy security, and further bolsters the country’s thriving offshore wind industry, reinforcing its position as the second largest offshore wind energy generator in the world.
Three of the six projects are located off the North Wales, Cumbria and Lancashire coast, and three are located in the North Sea off the Yorkshire and Lincolnshire coast.
Following The Crown Estate’s final decision to proceed in August 2022, the agreements are the culmination of The Crown Estate’s Offshore Wind Leasing Round 4, adding further strength to the offshore wind sector’s track record in leading the UK’s net zero energy transition. Round 4 follows three previous leasing rounds by The Crown Estate which, along with investment in cutting-edge data and evidence and a commitment to increasing collaboration across sectors, has paved the way for the development of a world-class offshore wind market in the UK, with The Crown Estate having now awarded rights totalling 41GW.
With agreements signed, developers can now further progress their plans for the projects which have the potential to make a major contribution to delivering sustainable, renewable energy for the UK, as well as the Government’s target of 50GW of offshore wind capacity by 2030.
A pioneering approach to environmental habitats
The Crown Estate will now lead a pioneering programme of work to oversee the development of strategic environmental compensation plans for two protected sites, ensuring that the health of the natural marine environment remains at the centre of development plans.
This is in response to a rigorous assessment of the potential impacts of Offshore Leasing Round 4 on the most valuable environmental habitats in the UK (the Offshore Wind Leasing Round 4 plan-level Habitats Regulations Assessment), and a commitment to ensure that environmental compensatory measures are put in place to offset the predicted impacts on two protected sites (the Dogger Bank Special Area of Conservation and the Flamborough and Filey Coast Special Protection Area).
The Crown Estate will now establish a Steering Group for each of the protected sites, comprising government and statutory nature conservation bodies and the relevant project developers, which will drive the development of the detailed plans to ensure appropriate delivery of the commitments made by The Crown Estate through its plan-level HRA.
Offshore wind momentum
From the first leasing round in 2001, The Crown Estate has supported the development of a world-class offshore wind market, which has grown to become the largest source of renewable electricity in the UK, currently able to power approximately 41% of UK homes.
This continued momentum along with today’s announcement, has led to The Crown Estate awarding rights for 41GW of offshore wind capacity, almost 12GW of which is already operational.
Recognising the urgent need for green, home-grown energy provision, The Crown Estate is committed to unlocking opportunities for emerging and new technologies which can help shape a UK energy system fit for the future, in line with government policy. Key to this is bringing together a wide range of partners, experts, insights, data and evidence to build a holistic view of the seabed to inform how it can sustain a wide variety of industries and biodiversity for the long term. This includes:
- Through The Crown Estate’s formation of the Offshore Wind Evidence and Change programme – with £50million of investment by The Crown Estate – convening government bodies, the industry and key stakeholders from across the UK to gather and harness the data and evidence to propel forward the growth of UK offshore wind at pace, while maintaining clean, healthy, productive and biologically diverse seas
- Ambitious plans to deliver an initial 4GW of floating offshore wind energy capacity in the Celtic Sea by 2035. In addition to this, Crown Estate research has indicated the economic potential to accommodate up to an additional 20GW of floating offshore wind capacity by 2045.
- Looking ahead to how future leasing opportunities can support government policies on energy and climate change, with an intention to discuss future opportunities with the market later in the year
- Collaborating with the Department for Business, Energy and Industrial Strategy on the Offshore Transmission Network Review (OTNR) to ensure a more coordinated approach for transmission connections for offshore wind generation
- Contributing to the Floating Offshore Wind Task Force alongside RenewableUK, industry leaders, senior Government officials and other key stakeholders to ensure that the UK stays at the forefront of this cutting-edge offshore wind technology, creating thousands of new jobs and attracting billions in private investment
- Working with a wide range of stakeholders to support the development of carbon capture and hydrogen markets.
- Continuing to grow the Marine Data Exchange, the world’s largest database of offshore renewables survey data, research and evidence.
Unlocking value for the nation
The seabed is a valuable national asset and through Round 4, significant value has been secured for the benefit of the nation.
Under the Agreements for Lease, The Crown Estate receives an annual option fee from each project developer, until they are ready to enter into a lease for the seabed site. The option fee sum was determined by the project developers themselves through an open market process to ensure fair value for seabed rights was captured. Option fees will contribute toward The Crown Estate’s net revenue profit, 100% of which is paid to HM Treasury for the benefit of the nation.
The total commitment across all six projects is approximately £1bn per year, reflecting the confidence in the UK’s world leading offshore wind sector and Government’s commitment to grow the low carbon economy.
The term of the Agreement for Lease is for a maximum of ten years. Successful bidders have committed to at least three years of option payments by entering into the Agreement for Lease, and the option payments reduce as a project moves into a lease, or leases, and cease when a lease(s) for the maximum capacity/whole site is granted, at which point developers will move to paying rent.