Out-Law News | 09 Aug 2019 | 4:03 pm | 2 min. read
Interested developers can now contact Crown Estate Scotland for "near-final" ScotWind Leasing documentation including draft application and offer forms, draft guidance notes and a draft option agreement and lease. The documents will be finalised before the leasing programme begins. ScotWind Leasing is currently scheduled to launch in October 2019, once Marine Scotland's draft Sectoral Marine Plan for Offshore Wind (SMP) is available.
Crown Estate Scotland is seeking feedback on the draft documents, which will enable it to "fine-tune" the application and offer processes. It intends to publish some of the questions received with answers in an anonymised form on its website next month, at which point it will also provide an update on the timing of the launch.
There are risks associated with the bid process commencing before Marine Scotland has issued its final Sectoral Marine Plan.
John Robertson, Crown Estate Scotland's head of energy and infrastructure, said that the draft documents "will enable developers to start their preparations so that they are in a position to submit suitable applications when the time comes".
"Today makes an important step towards an offshore wind leasing process which will attract investment to Scotland to help reduce climate change emissions and enable wider socio-economic benefits for communities," he said.
Crown Estate Scotland is the public body which manages seabed leasing off the coast of Scotland on behalf of the Scottish ministers. It intends to lease portions of the seabed for offshore wind projects in areas identified as suitable by Marine Scotland in the SMP. Applications must be for offshore wind projects of a "scale and nature" which is compatible with the SMP, but Crown Estate Scotland does not intend to impose any additional limits on site boundary, size or type of technology to be deployed.
Applicants will be selected based on multiple criteria including capability, experience and financial resources, in order to establish the likelihood of a project proceeding successfully. Applications must include a financial bid reflecting the applicant's valuation of its intended project, based on pre-defined levels to be set by Crown Estate Scotland. The successful applicant will be required to pay an option fee based on the size of the area requested, estimated by Crown Estate Scotland as being in the region of £5 million for a commercial scale project. In the event of competing bids by equally qualified bidders, the site will be awarded to the one with the highest applicant valuation.
Crown Estate Scotland anticipates that the first leasing round will run for six months, beginning in October 2019 and running until February-April 2020 on the current timetable. Awards would then be made between May 2020 and July 2020.
Renewable energy expert Alan Cook of Pinsent Masons, the law firm behind Out-Law, said: "There are risks associated with the bid process commencing before Marine Scotland has issued its final SMP, as this could identify areas which are different from those set out in the draft SMP, which will be the basis for initial bid submissions".
"The clearing arrangement which forms part of Crown Estate Scotland's leasing process is intended to mitigate the impact which changes between the draft SMP and the final SMP might have on bidders, but it will remain important for bidders to be confident that the areas in respect of which they are submitting bids are robust, lest they fall foul of changes which emerge when the final SMP is published," he said.
Sensible option fees are being proposed. This is welcome news, particularly as these projects may be more technically challenging.
Energy and infrastructure expert Gareth Phillips of Pinsent Masons said that the documentation showed Crown Estate Scotland was taking a "pragmatic" approach, particularly to option fees.
"The Scottish process for offshore wind leasing continues to diverge from that proposed for England and Wales," he said. "A highlight from the pre-launch summary is that sensible option fees - in the region of £5m for a commercial scale project - are being proposed. This is welcome news, particularly as these projects may be more technically challenging."
The Crown Estate published more details of its proposed tender process for developers seeking to lease the seabed off the coast of England, Wales and Northern Ireland for offshore wind projects at the end of July. Developers will be subject to a three-stage tender process when the leasing round launches later this year.
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