Crown Estate Scotland has opted to double the lease period for some of the seabed sites tendered through its upcoming Innovation and Targeted Oil and Gas (INTOG) auction following a backlash from offshore wind developers.
Targeted Oil and Gas (TOG) projects will receive a 50-year lease with a rent review or break notice at or around 25 years, according to Crown Estate Scotland’s consultation response on the leasing round.
Most respondents to the consultation complained that the original 25-year lease period set out by Crown Estate Scotland was too short given the design and operational life of a wind farm. Requests for extensions varied from 30 to 60 years.
Crown Estate Scotland said it had initially planned a 25-year lease period to match remaining oil & gas installation life but has agreed to the extension “acknowledging that a shorter project life has an impact on the business case for these complex projects”.
The document notes: “It should be emphasised that this change does not directly impact the required lifespan of the oil and gas installation, but it is recognised that this will improve the case for offshore wind projects supporting decarbonisation to proceed.”
The response did not include mention of changes to lease periods for Innovation (IN) projects, which are being tendered in parallel to TOG.
The lease period change is one of several alterations laid out in the consultation feedback on the auction, which will see developers bid to build wind projects off the Scottish coast that decarbonise oil & gas installations or encourage innovation.
Crown Estate Scotland also agreed to an extension of the option period from five to seven years amid fears from developers that they may not achieve planning consent or secure a grid connection within the timeframe.
Notably, the launch of the INTOG round has also been pushed back from June to August 2022, after most respondents felt that the stated application window seemed “optimistic and challenging”.
The application window has also been extended from two to three months.
Crown Estate Scotland has stood by a requirement for supply chain development statements but will take these at the option agreements rather than application stage after respondents expressed concern the level of detail required would be difficult to provide and result in “highly speculative” submissions.
Respondents also expressed concerns over scoring criteria, with current weighting towards the price element of TOG projects at 70% and IN at 30% with the option fee uncapped. Some stated that this could stifle innovation as IN projects cannot benefit from the economies of scale.
But Crown Estate Scotland has said the criteria is appropriate and said the price element of TOG projects equates to the area of seabed covered and the level bid by the applicant “so is directly linked to the scale of the decarbonisation potential”.
Crown Estate Scotland is incorporating the feedback into the leasing documentation, which is due to be finalised and launched in August.