Offshore wind farms gain option to extend leases

Round one and two offshore wind farm operators have the opportunity to extend their lease terms by up to 50 years, according to plans announced today by The Crowne Estate.

The extensions are aimed at enabling developed wind farms to produce green electricity for longer periods of time than would be the case under current lease agreements.

The offer is being made in response to requests from developers involved in both rounds, who have asked for longer leases to allow them a full operational period for their projects and to plan for future “repowering” of projects with new turbines.

The lease extension offer applies to:

• Round one sites with 22-year leases;
• Round two sites with 40-year leases (round two sites of 500-megawatt capacity or above already have 50 year-leases or agreements for lease, so will not be affected by this proposal); and
• Sites whether a lease has been signed or whether an agreement for a lease is in place.

Sites recently allocated in Scottish territorial waters will also have agreements allowing for 50-year leases, subject to the sites proceeding to the next stage of development following the strategic environmental assessment for offshore wind in Scottish waters. The Crown Estate will issue new lease options or leases to the projects concerned.

Where a lease has already been granted, the total lease duration will be 50 years from the commencement date of the original lease. This proposal does not affect the location, area or agreed generating capacity of any site.

An extension process would mean that the 8 gigawatts of offshore wind capacity allocated under round one and two would be able to produce green electricity for longer, an important consideration with some of the first round one leases due to expire shortly after 2020. For round two sites, a 50-year lease will allow for two operational cycles, with the opportunity to “re-power” with new turbines midway through the lease term.

The Crown Estate is making the offer at an early stage to allow tenants to plan now for the future of their projects, including the option of re-powering. This gives developers greater certainty about the future of their projects and allows them to plan strategically.

“Lease term extensions for round one and two demonstrates The Crown Estate’s commitment to driving the UK offshore wind energy industry forward and our commitment to creating a long-term sustainable energy source,” said Rob Hastings, director of the Marine Estate at The Crowne Estates. “This is an opportunity for our existing offshore wind operators to plan for the long-term future of their projects and to provide further confidence to the supply chain as we enter a period of rapid growth in the industry.”

Round one, launched in 2000, was intended to act as a “demonstration” round, enabling prospective developers to gain technological, economic and environmental expertise. Of the 17 projects originally allocated, seven are now fully operational and four are currently under construction.

A competitive tender process for round two sites was launched in 2003. The 15 successful projects awarded Crown Estate agreements for lease amount to 7.2 gigawatts and include sites within and beyond territorial waters. Three of these sites are now under construction.