Fresh impetus for UK offshore

The Crown Estate, which acts as manager of the seabed around the UK, is making four broad areas of seabed available to the market, within which potential developers will have the opportunity to bid for project sites.

Huub den Rooijen, director of Energy, Minerals and Infrastructure for the Crown Estate commented: “The UK is home to
the world’s largest offshore wind market, attracting global investment, meeting UK electricity needs, and playing a crucial role in the transition to a net zero economy. Leasing Round 4 is the next chapter in this remarkable transition, developed and refined through extensive engagement with the market and stakeholders, to deliver an attractive, fair, objective process, which helps to balance a range of interests in the marine environment.”

The Round 4 tender process, which commenced in October and will run until autumn 2020, consists of a three-stage tender, evaluating bidders’ capabilities and their proposed projects, before using option fees to determine award; a fair, objective and transparent process which reflects the maturing offshore wind market, and includes incentives for innovation, encouraging developers to incorporate technological innovations within their projects, to help pave the way for a sustainable deployment pipeline over the long term. Developers will also have the opportunity to propose hybrid projects, such as those which integrate offshore wind with interconnection or other energy generators.

Refinements

The launch follows over 18 months of engagement with the market and stakeholders through which The Crown Estate has developed and refined its proposals. These include:

• A geographically diverse pipeline – Round 4 projects will come forward across at least three bidding areas, with a maximum of 3.5 GW within any one area, helping to balance new capacity around the country.
• Extended 60 year lease terms – (up from 50) enough for two full project lifecycles, reflecting maturing offshore wind technology and operations.
• Low cost deployment – Round 4 focuses on water depths out to 60 metres, which are suitable for fixed foundation technology, and will come forward in areas of favourable development resource, helping to enable cost-competitive deployment.
• Harnessing the power of data – Round 4 lease agreements will require developers to collate and share project surveys and data, and participate in sector benchmarking schemes such as the System Performance and Reliability Trend Analysis project (known as SPARTA) – helping to build the evidence base in the sector, continue de-risking investment, and drive continued improvements in operational performance.

Available seabed bidding areas

The Crown Estate has undertaken extensive analysis of the technical resource and constraints on the seabed around England, Wales and Northern Ireland, to understand which areas are likely to offer the best resource for offshore wind development at the current time.

This evidence base has informed the seabed bidding areas it is making available to the market through Round 4, namely Dogger Bank, Eastern Regions, South East, and Northern Wales and Irish Sea. (Figure 1). Within these four areas, competent bidders will have the freedom to identify and propose their own project sites, supported and informed by the data and analysis we make available. This approach harnesses the expertise of developers and helps to ensure strong projects are awarded in the most suitable areas.

Of the 18 seabed regions initially identified, 10 have been excluded from the offer to market from Round 4, and a further 4 regions have been trimmed, through a two-stage regions refinement process.

Reasons for removal and refinement included the existence of defence ranges and exercise areas, visual sensitivity (where development would predominately or entirely be within 13 km of shore), overlap with shipping routes that contain traffic of more than 1000 ships per year, and/or overlap with areas where there would likely be major consenting risk due to cumulative environmental impacts, particularly in relation to ornithology.

Next steps

Following project award, The Crown Estate will undertake a plan level Habits Regulations Assessment, to assess the possible impact of the proposed sites on the relevant nature conservation sites of European importance.

In total, the Round 4 tender process is expected to take approximately 12 months, followed by the HRA also of about 12 months. Subject to the outcome of the HRA, new seabed rights could be awarded as early as 2021, with developers then progressing to seek planning consent for their own projects through the statutory planning process. Round 4 projects could become operational by the late 2020s.

In support of Round 4 leasing and beyond, The Crown Estate will invest in a programme of strategic enabling actions to help build high quality data and evidence, to advance the understanding of offshore wind deployment and the impact on the marine and on-shore environment, particularly around cumulative environmental impacts.

Projects awarded through Leasing Round 4 will join a robust pipeline of offshore wind in UK waters, with 9.3 GW already operational and 4.4 GW currently under construction. A further 20 GW of projects are in the development pipeline (ie consented, in planning, or pre-planning).

Including the 2.8 GW of extensions projects that passed the Habitats Regulations Assessment phase in August of this year, the UK is on track to deliver over 30 GW by 2030. That is a fourfold increase in the portfolio compared with today.