Six new offshore wind projects off England and Wales are to move forward in what is described as a major vote of confidence in the UK’s green economy and net zero ambitions.
Oil and gas giants BP and Total were among the successful bidders in The Crown Estate’s Round 4 leasing process, a further sign of the major shift which is seeing fossil fuel firms diversity into renewables.
However, concerns have been raised that the high prices paid for the new seabed rights could drive up energy costs for consumers.
The six potential projects together represent just under 8 GW of potential new capacity with the potential to power seven million homes and will now progress to environmental assessment.
The Crown Estate said that the projects emerging from Round 4 could deliver a 21% increase in the nation’s offshore wind pipeline, a major contribution to supporting the UK Government’s target of delivering 40GW by 2030, and beyond.
The successful bidders have committed an initial investment of £879m in option fee deposits.
Round 4 was the first time a bidding process to set ‘option fees’ has been used in the leasing process. Previously the Crown Estate had set fixed annual option fees.
However, industry body RenewableUK said it was concerned over the level of fees being paid by developers. Deputy Chief Executive Melanie Onn said: “The result of this leasing round shows that while demand for new offshore wind projects has never been higher, too few sites were made available to meet this demand.
“Any auction run on that basis will inevitably lead to high fees like these, and our concern is that this could ultimately mean higher costs for developers and consumers.”
WindEurope Chief Executive Giles Dickson also criticised the mechanism.
“The last time the UK allocated seabed rights 10 years ago, it was for four times more capacity than what they’re auctioning now. Yet now they’re trying to build far more offshore wind. And there are more companies who want to build it. Plus it’s unclear when the next auction will take place. So there’s a price frenzy in the bidding – that’ll just get passed on to energy bills,” he said.