Tender process for seabed use made more transparent after warnings from energy firms

This article is more than 1 year old

This article is more than 1 year old

The Queen’s property manager has bowed to criticism over its plans for the biggest offshore wind auction in a decade by agreeing to fairer terms for renewable energy companies.

The Crown Estate, which holds the rights to seabeds around the British Isles, told windfarm developers on Thursday that it has “refined” its controversial plans for the upcoming tender to make it more affordable to develop renewable energy.

The crown stands to earn record sums from the offshore wind industry by auctioning off the seabed to major energy companies, but the plans were delayed by concerns that they amount to a “cash grab” for the royal coffers.

The crown’s change of tack comes after the Guardian revealed that the auction could raise hundreds of millions for the Queen while raising household energy bills.

The Queen’s estate broke with previous tender rounds by calling for companies to compete for a licence by submitting a sealed envelope bid, which it planned to use as the basis for a new, decade-long rent agreement too.

The energy companies warned that this would raise their costs, which would ultimately be passed on to households through higher wind power subsidies.

Announcing changes to the auction on Thursday, the Crown Estate said it would make the tender process more transparent by using daily bidding cycles. The change should allay industry fears of a “runaway auction”. It has also promised to scrap the hefty upfront payment in favour of annual payments over at least three years.

Jonny Boston, the Crown Estate’s business development manager, said: “Following extensive engagement with the market, we have now further refined our tender design, in light of the feedback received.

“Our goal has been to design a process that is attractive, accessible and fair, supports the sustainable development of the seabed and ultimately delivers a robust pipeline of new projects that will help the UK’s transition to a low carbon economy.”

The Crown Estate charges royalties equal to 2% of revenues for use of its seabeds, and collected £41m from existing leases last year. This sum is expected to balloon as the offshore wind sector grows at pace.

Currently the Queen’s seabeds generate about 8% of the country’s electricity, but that could increase to almost a third by 2030 under government targets.

Barnaby Wharton, of RenewableUK, an industry trade association, said the changes showed that the Crown Estate “has recognised a more transparent process is needed to avoid adding unnecessary costs”.

“That is welcome and should be the principle which guides the Crown Estate in implementing this new leasing process,” he said.

“It’s crucial that leasing for new offshore wind sites supports the right level of ambition to meet our net zero emissions target, while ensuring value for consumers.”