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Out-Law News 2 min. read

Scotland launches offshore wind seabed leasing programme

Investors and developers seeking new offshore wind opportunities in Scottish waters may now apply to lease access to the seabed for future projects.

The ScotWind Leasing programme is being run by Crown Estate Scotland in its role as manager of Scotland's seabed. It is the first round of offshore wind leasing in Scottish waters in a decade.

Investors and developers can register their interest in obtaining an 'option agreement' with Crown Estate Scotland through an online portal. Successful applications will be granted leases to build offshore wind farms in one of the areas of seabed that will be identified as suitable in the Scottish government's sectoral marine plan (SMP) for offshore wind, which has been published in draft form.

Crown Estate Scotland is anticipating closing applications between October 2020 and early 2021, depending on when the SMP is formally adopted.

Applicants will be required to prepare and submit a 'supply chain development statement', setting out how they plan to engage with and utilise the supply chain to successfully develop their projects. This statement must include information on the geographical location of supply chain activity and evidence of how the commitments in the plan can be fulfilled.

In their launch summary document (7-page / 156KB PDF), Crown Estate Scotland said that it was encouraging "realistic" supply chain commitments. The ScotWind Leasing process does not impose any requirements on level or location of supply chain impact, but commitments will be incorporated into the final option agreement with contractual remedies possible if the commitments are not met.

"More detail on the supply chain requirements for applicants has been keenly awaited, though this remains a moving target as CES has invited feedback on its supply chain commitment proposals by the end of July," said renewable energy expert Alan Cook of Pinsent Masons, the law firm behind Out-Law. "Shortly after the adopted sectoral marine plan becomes available, they will publish an addendum to the ScotWind Leasing launch documentation which will confirm final details of their requirements. Although bidders’ supply chain development proposals are not to form part of the scoring which will determine which applicants for seabed areas are successful, this will nevertheless be an important document and will form the basis for contractual commitments in the option agreements which will be granted to successful bidders and to which bidders will then be held."

"There is a tension for bidders between, on the one hand, addressing the aspirations of politicians and potential local supply chain participants and, on the other hand, developing projects to be as economic as possible in order to be able to bid successfully under the Contract for Difference subsidy regime. New global entrants to the Scottish offshore development market may also feel less of an obligation to be seen to be meeting politicians’ and unions’ local supply chain aspirations than existing Scottish/UK-based players. More bullish bidders may even be tempted to submit weak supply chain commitments on the basis that the CES launch documentation makes it clear that this will be irrelevant to the process of awarding options over seabed areas anyway," Cook said.

 Energy minister Paul Wheelhouse said that the leasing round "presents an opportunity to help develop our strategic economic response to the Covid-19 pandemic".

"As we emerge from the crisis, we have a chance to re-imagine the Scotland around us and to begin building a greener, fairer and more equal society and economy," he said.

Crown Estate Scotland said that total investment in ScotWind Leasing could ultimately surpass £8 billion and deliver enough electricity to power every home in Scotland, saving over six million tonnes of carbon dioxide emissions every year.

John Robertson, head of energy and infrastructure at Crown Estate Scotland, said: "Offshore wind is currently one of the cheapest forms of new electricity generation and Scotland is perfectly poised to host major new projects, with a well-established energy skills sector as well as some of the best natural marine resources in Europe".

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