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United Kingdom

Far more offshore bidders than expected -- Crown Estate initiates third round of site licensing in UK waters

A bidding competition for exclusive rights to develop wind farms in nine offshore zones around the UK has been kicked off by seabed owner The Crown Estate. The "invitation to negotiate" is a major step in the third round of site leasing for offshore wind power and could deliver up to 25 GW of new generating capacity by 2020.

Interest in Round 3 is far greater than expected, with 96 British and overseas companies registering initial expressions of interest. They include many who have not been involved with the first two UK rounds of offshore development. Companies and consortia that registered are now being invited to bid for one or more of the zones, which they would develop in partnership with The Crown Estate.

This active investment role for The Crown Estate during development of the projects is different from earlier offshore wind rounds. The Crown Estate stresses that it does not intend taking any role in the eventual ownership or operation of the wind farms when built, other than to provide long term leases of the seabed. It will be up to the selected "partners" to construct and operate the sites, it says. The presumption is that The Crown Estate will sell its interests in projects prior to their construction.

The location and number of zones could be subject to change once the government has concluded its strategic environmental assessment (SEA) of the nine areas currently available (Windpower Monthly, July 2008). But as a result of feedback so far from developers, The Crown Estate has modified the zones' locations. It has reduced the number from its original 11, dropping the Outer Wash, Lyme Bay off Dorset; north Cornwall; Cardigan Bay off west Wales and north Irish Sea. New areas are Hornsea, east of Humberside; off Norfolk; and west of the Isle of Wight. The Dogger Bank and Irish Sea areas have both been enlarged.

Rob Hastings from The Crown Estate says that developers and the supply chain will have greater certainty when the Department for Business, Enterprise and Regulatory Reform (BERR) completes the SEA in May 2009.

Round 3 builds on the 8 GW either built, under construction or in development from the previous offshore rounds. It could lead to an eventual 33 GW of UK offshore wind and will be essential in helping the country meet its target for 20% renewables supply by 2020.

Investment

Hastings says that Round 3 is important because it is enticing British and international companies to heavily invest in offshore wind projects in UK waters. "Attracting such investment is the only way in which government targets can be met," he says.

"The investment will be very significant and presents opportunities for UK companies in the supply chain, UK ports and other infrastructure support," he adds. "Early movers could reap the benefits and The Crown Estate will be engaging with these potential players to ensure they are well placed to take full advantage of the opportunities."

Meantime, Tthe Crown Estate has commissioned a study of options for connecting Round 3 wind farms to the electricity network, to be published next month. It follows a previous study into the feasibility of an east coast interconnector -- a high capacity offshore line running down the east coast of Great Britain from Shetland to Norfolk. This would take power from offshore wind farms in the north of Scotland and feed it into the mainland grid at various points. The study found that the core of the system would cost £1.7 billion, with the total network costing some £4.8 billion.

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