Offshore windfarm licences undersold by 40 times
A new report on how ScotWind leases were grossly undervalued suggests that if the same approach had been taken as in England and Wales, “option fees for a single year” would have exceeded ScotWind’s, “despite representing a quarter of capacity”
Even worse, fees in England and Wales will be levied annually until a project receives full planning consent whereas in Scotland they are one-offs. This, says the report by Future Economics Scotland, means revenue “could be more than 40 times higher than raised from ScotWind”.
In another comparator, it states: “On a per MW basis … the New York Bight auction raised between 19 and 23 times more option fees than ScotWind”.
These vast discrepancies arose from Crown Estate Scotland – which operates as an arm of the Scottish Government – capping the fees at £100,000 per square kilometre, whereas the Crown Estate south of the border left it to the market.
Astonishingly, the Scottish leases were originally to be capped at £10,000 per square kilometre in which case only a one-off £75.5 million would have been raised compared to £755 million which finally materialised.
The “cap” was hastily adjusted after the Scottish Government saw what happened in England and Wales.
Crown Estate Scotland passed the money straight to the Scottish Government which has taken it into general expenditure without any direct payments to areas like the Western Isles which will be heavily impacted by infrastructure demands. Northland paid £20 million for its two project leases to the west and north of Lewis while Magnora paid £10 million.
The Scottish Government claimed to have secured higher supply chain content undertakings as part of the Scotwind licensing round.
However the report states: ”Incentives placed on developers to use Scottish supply chains were relatively weak…
"Moreover, financial penalties associated with falling short of supply chain commitments were very small and unlikely to shift corporate behaviour”.