Offshore wind leasing round brings forward 8GW but high option costs raise concerns

The Crown Estate has announced six proposed new offshore wind projects in the waters around England and Wales totalling nearly under 8GW, in a leasing round that saw bidders commit  £879M (£111M/GW/y) in option fee deposits. RenewableUK said thatin comparison, developing and constructing a 1GW offshore wind farm currently requires investment of c.£2.5B.

The projects will now progress to environmental assessment known as a Habitats Regulations Assessment (HRA).

Following the conclusion of the Round 4 process through the HRA, option fees will contribute to The Crown Estate’s annual profits, which are paid to the Treasury for the benefit of the nation.

In Dogger Bank, North East of Scarborough, RWE Renewables won two 1500MW leases.

In the Wash and the East Anglia region Green Investment Group and Total won a 1500MW lease.

Off the Northern Welsh Coast, North East of Anglesey a consortium of EnBW and BP won a 1500MW lease. The group also won a 1500MW lease off the coast of Barrow-In-Furness, West of Morecambe Bay.

Off the Lancashire Coast, Offshore Wind Limited, a Joint Venture between Cobra Instalaciones y Servicios, S.A. and Flotation Energy plc, could build around 480MW.

Round 4 projects will now progress to the next stage of the process known as a Plan-Level HRA. This process assesses the potential impacts of Round 4 on the UK national network of protected areas covering its most valuable species and habitats. The HRA process is expected to conclude in Spring 2022.

RenewableUK’s Deputy Chief Executive Melanie Onn said: “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”.