The UK government has given an assurance that offshore wind farm developers will be entitled to compensation if leases (or agreements to lease) awarded to them are withdrawn by The Crown Estate.
A clause currently exists in The Crown Estate’s seabed leases which allows offshore wind projects to be terminated if oil and gas reserves are found in the area – with no compensation payable to the wind developer. The Oil and Gas Clause has been a major barrier to obtaining finance in the sector and has increased costs for offshore wind.
However, the Ministerial Statement on 12 July made by the secretary of state for Energy and Climate Change, Chris Huhne, offers reassurances that no offshore wind farm lease will be terminated or amended without appropriate compensation, and that his Department will work with the offshore wind and oil and gas industries to set out guidance on how to resolve conflicts. The compensation regime will be based on the existing compulsory onshore purchase arrangements, with the loss of future profits taken into account, as well as capital spend.
