Wind Energy – Crown Estate Scotland
Crown Estate Scotland has announced the results of the world’s first leasing round designed to enable offshore wind energy to directly supply offshore oil and gas platforms.
INTOG (Innovation and Targeted Oil & Gas) leasing aims to attract investment in innovative offshore wind projects in Scottish waters, as well as help decarbonise North Sea operations.
The INTOG process allowed developers to apply for seabed rights to develop offshore wind projects that either reduce emissions from the North Sea oil and gas sector – by supplying renewable electricity directly to oil and gas infrastructure (TOG) – or consist of small-scale (IN) innovative projects of 100MW or less. This distinctive offshore wind leasing is different to any other previously carried out in the UK or in the world.
INTOG will also further stimulate innovation in Scotland’s offshore wind sector, create additional supply chain opportunity, assist companies to enter the renewable energy market, and support net-zero ambitions.
The successful applicants have now been offered initial agreements – called Exclusivity Agreements – that, if they accept the offers and proceed to sign them, enable them to start offshore wind development work while the Marine Scotland’s planning process for the INTOG Sectoral Marine Plan (INTOG SMP) is completed.
If a successful proposed project is in the final INTOG SMP, an option agreement will be offered. Projects will then go through planning, consenting, and financing stages. Responsibility for these next steps does not sit with Crown Estate Scotland, and projects will only progress to a full seabed lease once all these various planning stages have been completed.
Highlights include:
• 13 projects out of a total of 19 applications – five for IN and eight for TOG – have been offered Exclusivity Agreements.
• Once the Sectoral Marine Plan has been finalised and option agreements signed (expected 2024), around £262m in applicant fees will be secured. Once projects are operating, further revenues will be secured. All net revenues from Crown Estate Scotland go to Scottish Government for public spending.
• The area of seabed covered by the IN projects is just over 139km2 and by the TOG projects 1534km 2 (a maximum of 1900km2 was made available for TOG projects and 167km2 for IN through the Scottish Government’s Initial Plan Framework.)
• Crown Estate Scotland will offer a seabed lease of 50 years for TOG projects and 25 years for IN projects.
• Exclusivity Agreements will cover projects with a proposed capacity of up to 499MW for IN and 5GW for TOG.
Colin Palmer, Director of Marine at Crown Estate Scotland, said: “Today’s results for this very distinctive and targeted leasing round are extremely encouraging. INTOG provides a range of practical ways to support innovation, reduce North Sea carbon emissions, and encourage technical and commercial innovation in the offshore renewables market.”
“In addition to delivering economic and environmental benefits, INTOG will generate funds for the Scottish Government, from initial fees when option agreements are signed, to ongoing rent payments when the projects are constructed and move to operation. There are still significant challenges that need to be addressed to ensure INTOG’s many opportunities are realised fully, but today marks a real step forward.”
INTOG contract awards were determined on a largely open-auction basis and were judged on a mixture of price and quality.
Option agreements are expected to be offered in 2024. To secure an option agreement, developers must provide a Supply Chain Development Statement (SCDS). Information from these Statements will then be published.
