Monday, 26 October 2009

Outcry over Crown's rent rise for wind farms

Plans by the Crown Estate to treble its revenues from offshore wind parks have angered energy companies, who say that the move could jeopardise the viability of important new projects and undermine government hopes to boost renewable energy in Britain.
The Crown Estate, which owns the seabed out to 12 nautical miles, is already set for a £500 million windfall from offshore wind power production by charging rent based on each unit of electricity produced.
A negotiated fee of about £1 per megawatt hour of electricity generated has been increased to £3 in talks over nine new giant offshore schemes, casting doubt over whether some of them will be commercial, according to the energy companies.
“The economics of offshore wind are difficult enough as it is,” an insider at one company said, “but the scale of these new charges can make the difference between new projects being built or not built . . . It’s creating a lot of difficulty in terms of making the numbers stand up.”
He estimated that if the Government meets its goal of building 33 gigawatts of offshore wind power by 2020, the Crown Estate stands to earn £262 million a year from offshore wind generation. Already, it is set to make about £25 million a year from existing wind projects where the leases have been awarded.
The Crown Estate, which holds property owned by the Queen, pays surplus revenues to the Treasury. Rob Hastings, director of its marine estate, confirmed that it was seeking higher charges for its latest leases — in line with inflation — and said: “Our rental charges are not material to the economics of these projects . . . The rental is practically notional.”
The Crown Estate, one of the largest property owners in Britain, with a portfolio worth £6 billion, is expected to award the leases to nine companies and consortiums by the end of the year. To meet UK targets of cutting carbon emissions by 80 per cent by 2050, compared with 1990, the Government has launched a programme to expand its offshore wind farms, already the world’s biggest, at about one gigawatt. To achieve this, about £100 billion of investment will be required by 2020, the Crown Estate reported this month. The total generating capacity of all Britain’s power stations and wind farms stands at about 75 gigawatts.
The latest “Round 3” offshore projects are divided into nine zones and the first turbine is expected to be in the water by 2014. ScottishPower, Mainstream Renewable Power, Vattenfall, RWE and Scottish & Southern Energy are among those bidding.
Source: The Times

No comments: