The ScotWind auction resulted in 17 projects being chosen covering a total of 7,000km2 of Scotland’s seabed, resulting in a windfall of £700m for the Scottish Government.
The windfarms, should they be developed to their full potential, could generate a capacity of 25GW, well over double the initial expected outcome of 10GW.
Many of the companies which won areas are major oil and gas companies including BP and Shell, and state-owned entities such as the Swedish state owned company Vattenfall.
However, concerns have been raised that the resource was sold too cheaply, with critics pointing at auctions in England and Wales which saw an average of £361,000 per sq km compared to the cap in Scotland of £100,000.
Ministers are facing mounting pressure to answer further questions on how the cap fee came to be agreed, with documents demonstrating Crown Estate Scotland had initially planned on selling without such a cap.
The documents state the Crown Estate “will not place a ceiling” on the value of the seabed in May 2018, before reversing that decision in November later that year.
A cap of £10,000 was initially agreed before the public body was warned by Strathclyde University the auctions in England and Wales had attracted “unexpectedly high annual fees option”, going on to warn the initial cap did “indeed underestimate the market value of sites in Scotland”
The Scottish Liberal Democrats have tabled 10 parliamentary questions demanding answers from the government around the change in strategy.
Their leader, Alex Cole-Hamilton, said the decision to set a maximum price had “baffled” people.
He said: “Documents show the sales strategy chopping and changing. One moment it said there shouldn’t be a cap, the next figures like £10,000 then £100,000 were seemingly being plucked out of thin air.
“People are baffled by the decision to set a maximum price. Anyone who has ever sold anything on Ebay knows that you start with a reserve price which is the minimum you are prepared to sell it for.
Auctions south of the border and around the world were showing this is a fiercely competitive market. Yet the Scottish Government and Crown Estate Scotland still decided to require companies here to make rock bottom bids for Scotland’s prized national assets – and not a penny more.
“Scotland’s seabed can only be sold once. It’s money that goes straight to the Scottish Government to be spent on our schools and hospitals. The Scottish Government needs to answer these parliamentary questions and start being open about what has been going on.”
The Crown Estate has defended its approach, claiming it took a wide-ranging approach to its auction, including a focus on the supply chain and the quality and ability of applicants to actually deliver the projects.
The government has also claimed that the complexity of the sites auctioned through ScotWind is also more complex for developers due to the depth of the sea, rocky seabeds, challenging conditions, and higher grid costs, alongside the risks of floating wind – a technology not yet come at scale.
A spokesperson for Crown Estate Scotland said: “Comparing ScotWind to processes in other countries is comparing apples and pears as a range of factors such as seabed, supply chain, and grid all influence pricing.
“The £700m from initial fees – which were for 10-year option agreements, not one-off sales – is just one part of the picture, with current estimates stating there could be £1.5bn investment in the Scottish economy for each of the 17 projects, plus annual multi-million-pound payments eleven projects are operating.
A spokesperson for the Scottish Government said the supply chain development statements could see £25bn of investments in Scotland.
They said: “The ScotWind leasing round was designed and administered by Crown Estate Scotland and it was designed to focus on quality and deliverability of bids. Placing a cap on the amount bidders could offer per square kilometer ensured that bidders would have confidence to meet the further investment necessary to deliver on each project and realize the associated supply chain benefits.
“The evidence-based approach to including a cap on bids ensures these projects can move forward with certainty, ensuring a sizeable pipeline of projects for the supply chain – supporting jobs and bringing economic benefit to Scotland.”
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George Holan is chief editor at Plainsmen Post and has articles published in many notable publications in the last decade.