The Crown Estate has set out how developers will be required to recognise the critical role of ports when bidding to build new floating offshore wind farms in the Celtic Sea, and how it intends to drive social value through the auction process.
In an update, joined by the UK Government, The Crown Estate also set out the steps it is taking to help de-risk projects ahead of opening the leasing round to bidders, including addressing new spatial constraints that are the subject of an ongoing UK Government review.
Refining potential wind farm sites
In 2021, The Crown Estate first set out plans to explore viable options for a potential leasing opportunity for the first commercial-scale floating wind projects to be located in the Celtic Sea off the coast of Wales and the South West of England. To help de-risk the development process as far as possible and pave the way for a future leasing round, The Crown Estate has been taking a number of steps including supporting test and demonstration projects, investing in pre-consent surveys and carrying out upfront work on environmental assessments and grid design.
In addition, The Crown Estate has been engaging extensively with governments and stakeholders, and in May this year it updated developers that, through this engagement, it was clear that this area of seabed was subject to many competing demands, requiring further work by UK Government to resolve a number of spatial considerations and policy drivers. This work is ongoing, supported by The Crown Estate.
As a result of these new considerations, The Crown Estate has now adapted its approach to focus on delivering up to 4GW of floating wind capacity in four project sites located in two of the shortlisted search areas published in October 2022.
This would provide enough clean, renewable energy to power around four million homes, and The Crown Estate believes these sites offer an attractive investment opportunity for developers in a global market as a first phase of development in the Celtic Sea. This is thanks to the sites’ proximity to the shore and reduced complexity of future grid connections. Further engagement is planned over the summer to ensure there are no significant further considerations before proceeding to market later this year, in addition to keeping prospective developers informed about any other requirements arising from the ongoing work with UK Government.
Tender structure: integration ports and social value
Establishing new floating wind technology in the Celtic Sea is seen as an exciting opportunity to strengthen the UK’s energy security and support the transition away from fossil fuels, while also delivering economic benefits through investment in jobs, skills and infrastructure.
Bidders have therefore been informed that they will be required to set out a number of commitments as part of the tender process, including how they intend to reflect the important role of ports in the assembly and deployment of turbines. In particular, integration ports are expected to play a key role when it comes to the manufacture and storage of the numerous components required to deploy floating offshore wind, such as foundation assembly, cabling and placing the turbines on top of the floating foundations. There is broad consensus across the sector that these ports must be in relative proximity to project sites, so assembled turbines can be floated out to their final locations.
New aspects of the tender design will also require developers to set out more detail on how they plan to create lasting social and environmental value, with the introduction of questions linked to the UK Government’s social value model (SVM) focused on education, inclusion, environment and communities.
This will require prospective developers to think innovatively and constructively about how their proposed developments can provide wider benefits across the UK’s economic, social and environmental objectives; with the objective of creating a legacy of healthier, more resilient, more fair, vibrant and prosperous communities that will stretch beyond the lifetime of the leases.
A clear commitment to these aspects will be required in order for developers to progress to the later stages of the leasing process.
Greater transparency through the bidding process
The Crown Estate has also set out changes to the auction design to increase transparency and offer developers maximum opportunity to set the most appropriate prices. These changes represent an evolution of the process, taking into account a range of considerations and stakeholder feedback, and include steps to help share and reduce the risks developers face when developing new technology in a new location.
For example, rather than bidders submitting their best and final offer immediately to stand a chance of winning, The Crown Estate will adopt a ‘rising clock’ auction, which will see pricing movements published during the different rounds, allowing greater transparency for developers over whether other parties are still bidding for certain locations.
Gus Jaspert, Managing Director, Marine, said:
“Establishing floating wind in the Celtic Sea is a fantastic opportunity for the UK to build on its position at the forefront of the global offshore renewables market and lead the world in this new technology. This initial phase of up to 4GW of floating wind in the Celtic Sea has the potential to be among the world’s largest developments of its kind, and we are excited by the opportunity to bring social value to the fore while helping to power the country with clean electricity and stimulate growth and investment.
“It is also clear that there is a complex mix of competing demands on the seabed in the Celtic Sea, and we are supporting the UK Government as it works to resolve these. As managers of the seabed around England, Wales and Northern Ireland, we are able to work across the full range of users of the seabed to identify issues such as these, meaning we can take steps to help de-risk projects and secure a pathway to their delivery.
This is reflected in our updated approach to this leasing round, which also seeks to unlock the opportunities on offer to regions around the Celtic Sea and support a fast route to development. We look forward to working with our prospective customers as well as with wider stakeholder community and governments in Westminster and Wales as we prepare for this exciting leasing round to get underway later this year.”
Jessica Hooper, Renewable UK Cymru Director, said:
“The leasing round for the first commercial-scale floating wind farms in the Celtic Sea off the coast of Wales and South West England offers a once in a generation opportunity to build out a new pioneering industry both for the region and the whole of the UK.
This latest update by The Crown Estate lays solid foundations for the first positive steps to deliver trailblazing projects at scale and pace. We welcome the focus on driving social value, supporting the critical role of ports and increasing transparency through the auction process. We look forward to continuing the strong industry engagement needed to deliver the maximum investment for our ports and communities, while also emphasising the critical need for a future pipeline.
To truly capture the thousands of jobs and supply chain opportunities on offer, we must have a clear line of sight of a future leasing round beyond 4GW as soon as possible.”
Meanwhile, The Crown Estate continues to take steps to further accelerate and de-risk the deployment of floating offshore wind in the Celtic Sea, including a multi-million-pound series of technical and environmental surveys.
This summer the first specialist vessels will set sail, using towed and hull-mounted sensors to collate information on the properties of the seabed and sub-seabed. The investment in these studies by The Crown Estate is intended to accelerate the delivery of projects, making it easier for developers to take early decisions and manage risk, while supporting future project level Environmental Impact Assessments (EIAs) as part of the planning process.
In addition, the Crown Estate continues to work closely with National Grid ESO to ensure a timely and coordinated grid connection plan.
The Crown Estate is also working to deliver a Plan-Level Habitats Regulations Assessment ahead of the tender process to further reduce timelines and developer risk.
Final confirmation of the design of the tender and Project Development Areas is expected over the summer, ahead of the formal launch of the tender later this year.
For more information, visit: www.thecrownestate.co.uk/en-gb/what-we-do/on-the-seabed/floating-offshore-wind
