In 2020, Scotland’s offshore wind farms produced three-quarters of all renewable energy in the country–demonstrating how its wind capacity is much larger than other renewable sources. The Scottish offshore wind sector is also stepping up, as 8.4GW will soon connect to the grid in addition to the 1.9 GW that is already connected.
Should the 24 GW of potential capacity be realized, Scotland will become a global leader in offshore wind energy and a significant hub for renewable sources.
Crown Estate Scotland is adding more projects in its latest Scotwind leasing round, awarding projects in January 2022 to 17 consortium bidders. Crown Estate also netted 24 GW of proposed capacity from the winning bids.
What is Scotwind?
Scotwind is the first offshore wind auction of Crown Estate Scotland in the past ten years. The offshore wind leasing round included floating wind and fixed bottom wind farm projects identified in 17 areas.
All the awarded areas are part of the sectoral marine plan of The Crown Estate, which are identified and undergoing pre-consultation with communities. As a result, this can fast-track the developers’ applications for a seabed lease.
Where are Scotwind Projects?
The green areas are the areas awarded by Crown Estate Scotland–a total of 17 regions. These areas surround Scotland on the east coast and the west.
Who owns Scotwind Offshore Wind Farm?
Scotwind developers were only awarded the right to develop the seabed. Thus the contract is only considered a lease for the operating period of the farm. However, the leasing is administered via the Crown Estate, while the revenues go to a government fund. The monarch is still the legal owner of the seabed rights.
In Scottish law, Crown Estate Scotland is classified as a public corporation and accountable to the Government. The monarch cannot sell the seabed rights because it does not constitute his “private property.”
Will all the jobs be reserved for Scottish workers?
The industry practice is that some aspects of the supply chain are delegated to expert companies, most of whom are headquartered outside of the UK.
A supply chain development statement was released by Crown Estate in April 2022, detailing the supply chain commitments from developers. The Crown Estate has secured these documents to ensure steady investment by foreign developers into the Scottish economy.
And although Crown Estate officially obtained the supply chain commitments from the developers, the UK government still needs to step up. Extensive training of a competitive workforce who can carry out large-scale offshore wind projects is required for sustainable offshore wind.
However, the practice of Scottish supply chain commitments is not new in the UK. Since 2012, with the boom of large, industrial-scale offshore wind, the Scottish Government has been ensuring that a fair amount of investment goes back to local contractors.
How much will be invested by companies in Scotwind?
Scotwind is considered a significant investment for every bidder, as the developers submitted bids as high as £85,900,000 (by BP, SSE Renewables) to develop the wind farms. The winning bids submitted an average of £ 41,129,411. Scotland raised almost £700 million in option fees from the winning bidders.
Based on estimates submitted to Crown Estate Scotland, the average project cost is £1.5bn. The economic benefits of these investments are higher employment and job opportunities. At the same time, the direct revenue will finance public spending and replenish public finances.
Although initial indications suggest an amount, it was admitted by the Crown Estate that the costs may be higher compared to projects outside Scotland, as grid costs, floating structures, and other factors would ramp up the price.
How many companies joined the bidding process?
There was strong interest, as the bid attracted 74 bids from different companies.
Who are the successful bidders of Scotwind?
In April 2022, 17 seabed option agreements were granted, which will expire in 10 years. Within that period, the winners must obtain the necessary permits before being granted a full seabed lease and commence construction and development.
The winning bids include ten floating wind farm projects, six fixed bottom wind farms, and one mixed. These bids are consortiums of multinational energy companies, investment firms, and global utility companies.
The oil and gas industry was well represented as TotalEnergies, Shell, and BP won their respective bids. However, Equinor could not secure a project award from Crown Estate, although it is developing the biggest offshore wind farm, Hywind Tampen, in Norway.
Successful applicants also include SSE renewables, Marubeni, and Vattenfall.
How large is Scotwind?
A total of 7,343 square kilometers were awarded to developers in January 2022, with an option agreement signed in April 2022. In an initial estimate by Crown Estate scotland, the project cost would average £1.5bn each.
How much total power does the project produce?
Crown Estate Scotland initially expected a capacity of up to 10 GW from the bidders. Still, after the awarding, the good news is that the proposed capacity from successful parties reached 24 GW. Achieving 24 GW in the next decade will help Scotland achieve its net-zero goals in 2045.
At the moment, Scotland is an exporter of energy both from renewable and non-renewable sources. The addition of these 17 projects in the pipeline will not only boost the installed capacity of Scotland but help provide the UK with a higher installed capacity via the national grid.
Expansion Plans
Floating offshore wind has grown from prototype and pilot to commercial stage and now moving to a large commercial scale.
The Hywind Tampen wind farm and Erebus Wind Farm clearly show that the offshore energy sector realizes the benefits of floating offshore technologies.
On top of these, the ten floating offshore wind projects awarded in this leasing round demonstrate the remarkable progress of offshore wind in its technology and the export opportunities it brings.
The winning bidders’ next stage is acquiring the necessary permits, licenses, financing, and approvals.
More details are expected when the Scotwind leasing clearing process ends in December 2022 or January 2023. The following stages would be the consenting, financing, and planning stages.
What are the major Scotwind projects?
Below are the projects and their developers classified according to the type of wind farms they will develop.
In total, there are ten floating offshore wind projects and six fixed bottom offshore wind projects that were awarded to seventeen developers. There is one project that mixes floating offshore wind and fixes bottom technologies.
Based on the Scotwind leasing round, initial indications suggest that each project will generate an average of £1.5 Billion in investments for the offshore wind sector.
The Scottish Government also obtained supply chain commitments from developers via a supply chain development statement submitted by each applicant.
Who are the developers in Scotwind?
Here is the link to the list of all the successful parties directly from the Crown Estate Scotland website.
Some major Scotwind developers committed significant offshore wind energy resources to the project.
Topping the list of the 74 applicants are the big oil and gas industry players, including Shell, who partnered with SSE renewables and Scottish Power Renewables on two winning bids. BP made it to the top with German and North American project partners.
The Scotwind round is also a clear sign that the Scottish economy is moving much faster towards net zero in the field of renewables.
Many developers have entered into joint venture consortiums that allowed them to submit application bids that led to a total potential capacity of 24 GW, which is more than double the 10 GW capacity expected by Crown Estate Scotland.
Can Scotwind still lease out eligible areas?
Crown Estate Scotland outlines the leasing clearing process in this document. Offshore wind developers who received and officially signed option agreements can proceed to the next steps of planning, financing, and consenting to the offshore wind projects.
The Scottish Government opened the leasing clearing process to consider proposals for the remaining 74 applicants who did not receive any option agreement but reached a specific cutoff score.
The process is not considered an offshore wind leasing round or a restart bidding process. Still, it is open only for applicants who received the cutoff score and underwent the evaluation cycle of Crown Estate Scotland.
The Scottish Government remains committed to maximizing the offshore wind sector’s economic and environmental benefits. As such, The Scottish Government may offer option agreements at the end of the leasing clearing process for successful bidders.
Option fees will be charged by Crown Estate Scotland, ranging from £2,000 per square kilometer to £100,000 per square kilometer.
Can Scotland go 100% renewables?
Scotland almost hit its renewable energy goals in 2020 by a narrow 3% margin–at least for its electricity consumption.
In 2020, Scottish wind farms produced 23 terawatt-hours of energy (72%) out of 31.8 terawatt-hours from renewable sources. The same year, the country used renewable energy sources for 97% of its total electricity consumption.
The country’s goal is to reach a fully renewable energy transition in their electricity consumption by 2030.
For heating and transportation needs, Scotland aims to use renewable energy to supply 50% of its requirement in 2030. The big picture goal of Scotland is to reach zero carbon emissions by 2045, which is five years earlier than the UK government, which aims to reach net-zero by 2050.
Wind energy capacity growth also shows remarkable progress and significant investment in the Scottish offshore wind sector.
Export opportunities for renewable energy will only increase as more offshore wind projects kick-off. Being on track to reach its targets, the Scottish Government is now focusing on floating wind farms. Developing the Scottish supply chain is also part of the plan.