HomeIndustry SectorsBusiness and marketsUK seabed rights to be auctioned for offshore wind farms

UK seabed rights to be auctioned for offshore wind farms

Following a 10-year halt of wind power auctions, Crown Estate announced that it will be launching round 4 of offshore wind leases in the UK.

The business will auction seabed rights in UK sovereign waters around England and Wales to wind farm developers, with each 10-year lease licencing up to 7GW of generating capacity per site, in what is anticipated to be a hotly-contested auction.

According to The Guardian, the round is expected to generate approximately £20 billion in investments whilst amounting to a record in revenue payable to the crown, estimated to be hundreds of millions of pounds, with surplus revenues going to the UK treasury.

Mohit Prasad, project manager at GlobalData, a leading data and analytics company, said: “The Crown Estate, which acts as manager of the seabed in the UK has identified four broad areas of the seabed, which would be made available for offshore wind power development in the UK.

“Through round four of the auction, 7GW of new offshore wind capacity will be added in the UK. A maximum of 3.5GW of new capacity can be allocated to one area. Developers will be granted 60-year seabed permits under the auction with the permits being awarded in 2021 at the earliest and projects coming online in the late 2020s. The last major round of offshore wind licensing took place a decade ago where winners were announced in early 2010.”

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“The UK has installed 22GW of wind installations since 2018. Out of this around 8GW came from offshore wind installations. By 2030, the offshore wind installation is expected to rise up to 29.7GW contributing more than 58% to the country’s wind installations. Since 2018 offshore wind contributed around 8% to the country’s power mix. With the country’s plan to phase out all its coal-fired plants by 2025, the contribution of renewable energy in the generation mix is expected to increase. The offshore wind is expected to contribute around 20% to the country’s power mix by 2030.

Prasad continued: “With the country’s target to become zero carbon emissions by 2050 the focus on the development of renewable energy technologies is required. Post-Brexit, carbon tax will come into effect if the UK leaves the EU without an agreement. If the UK leaves without the deal then it would cease to participate in the EU emissions trading system (EU ETS).”

Prasad noted that this measure would introduce a tax on carbon dioxide emissions made by stationary installations. “So, the plant proponents might start looking for alternatives by having a generation fleet being powered by renewable energy technologies. The Big six companies – British Gas, EDF Energy, E.ON SE, npower, Scottish Power and SSE which hold more than 70% of the domestic supply market will have to realign their generation fleet. With the developers seeking to realign their generation fleet the auction can witness big developers bidding for the offshore wind projects.”

Whil Great Britain currently has approximately 8.5GW of offshore wind capacity, which amounts to 8% of the UK’s electricity needs, the government has promised to support the industry’s aspiration to grow capacity to 30GW by 2030.