The Crown Estate, in collaboration with the UK Government, has recently outlined the expectations for developers looking to construct new floating offshore wind farms in the Celtic Sea. Recognising the vital significance of ports, the developers will be required to acknowledge their critical role when participating in the bidding process. Additionally, The Crown Estate aims to promote social value through the auction process. In preparation for the leasing round, the organisation is taking proactive measures to reduce project risks. This includes addressing emerging spatial constraints, which are currently under review by the UK Government.
In 2021, The Crown Estate initiated efforts to investigate feasible options for potential leasing opportunities in the Celtic Sea, with a focus on establishing commercial-scale floating wind projects in the coastal regions of Wales and the South West of England. In order to minimise development risks and facilitate a smooth leasing round in the future, The Crown Estate has been actively taking several measures. These include providing support for test and demonstration projects, investing in pre-consent surveys, and undertaking preliminary work on environmental assessments and grid design. These steps aim to lay the groundwork for successful and sustainable floating wind projects in the Celtic Sea area.
Furthermore, The Crown Estate has been actively involved in extensive engagement with governments and stakeholders. In May of this year, the organisation provided an update to developers, indicating that the seabed area in question is subject to numerous competing demands. As a result, further efforts are required from the UK Government to address various spatial considerations and policy factors. The Crown Estate is lending its support to these ongoing endeavours.
Taking into account these new considerations, The Crown Estate has modified its approach and now aims to deliver approximately 4GW of floating wind capacity across four designated project sites. These sites are situated in two of the shortlisted search areas that were disclosed in October 2022.
By accomplishing this goal, it is anticipated that enough clean and renewable energy will be generated to power approximately four million homes. The Crown Estate perceives these sites as an attractive investment opportunity for developers within the global market, constituting the initial phase of development in the Celtic Sea. The sites’ close proximity to the shore and simplified future grid connections contribute to their appeal.
To ensure a comprehensive assessment, further engagement is planned throughout the summer to address any significant considerations before proceeding to the market later this year. In addition, The Crown Estate is committed to keeping potential developers well-informed about any additional requirements that may arise from the ongoing collaboration with the UK Government.
As part of the tender process, bidders have been notified of the requirement to outline various commitments. This includes detailing how they plan to acknowledge the crucial role of ports in the assembly and deployment of wind turbines. Integration ports, in particular, are anticipated to play a significant part in tasks such as foundation assembly, cabling, and placing turbines on floating foundations. It is widely agreed within the industry that these ports should be in close proximity to project sites to allow for the efficient transportation of assembled turbines to their final locations.
The updated tender design introduces new elements that demand developers to provide more comprehensive details on how they intend to generate lasting social and environmental value. This includes incorporating questions aligned with the UK Government’s social value model (SVM), which places emphasis on education, inclusion, environment, and communities.
Prospective developers will need to think creatively and constructively about how their proposed projects can contribute to broader benefits in alignment with the UK’s economic, social, and environmental objectives. The objective is to establish a legacy of healthier, more resilient, fair, vibrant, and prosperous communities that extend beyond the duration of the leases.
Developers will be required to demonstrate a clear commitment to these aspects to advance to the subsequent stages of the leasing process.
In order to enhance transparency and provide developers with the best possible opportunity to determine suitable prices, The Crown Estate has introduced changes to the auction design. These modifications reflect an evolutionary approach that considers various factors and feedback from stakeholders. They also aim to address and mitigate the risks associated with developing new technology in a new location.
One notable change is the adoption of a “rising clock” auction format, departing from the traditional practice of bidders submitting their best and final offer immediately. In the “rising clock” auction, pricing movements will be publicly disclosed during different rounds, enabling developers to have greater visibility into whether other parties are still bidding for specific locations. This approach promotes transparency and allows developers to make more informed decisions throughout the auction process.
