Scottish seabed windfarm auction delayed as oil groups send prices soaring

An auction of windfarm seabed leases off the Scottish coast has been halted after a similar sale in England earlier this week led to huge prices being paid.

Crown Estate Scotland, which manages the sites on behalf of the Queen with its income funding the Scottish government, said it wanted to review how the sale is structured in order to ensure fair prices.

Results of the auction of seabed leases off the coasts of England and Wales were announced on Monday, with the amounts bid up to five times more than expected.

Oil giants () and Total paid huge sums to secure sites, something that it is claimed they will only claw back through higher electricity prices for consumers once projects are built.

Supermajor oil companies such as BP are entering the market to bolster their green credentials following commitments to reduce their dependence on fossil fuels.

Trade body RenewableUK said that too few sites were offered in the England and Wales auction given the rise in demand for wind power assets.

“The industry had warned that the limited number of sites available and high demand risked an auction that resulted in very high bids,” it said.

Crown Estate Scotland’s auction was scheduled to start on 24 March but now faces a six-week review with no new start date set.

Amanda Bryan, chair of Crown Estate Scotland, said the outcome of the auction for England and Wales had “changed the market dynamics around offshore wind leasing”.

From the England and Wales auction, the Crown Estate will receive £879mln a year, adding up to £9bn if all the six leases awarded run the full ten-year term though payments stop once a final investment decision is made to go ahead (or not) with a project.

The Queen is entitled to £220mln a year from these proceeds, with the money used to pay for the royal household. The remainder goes to the UK Treasury.

Bids in the England and Wales offshore auction varied widely with BP and its partner EnBW paying almost twice as much for its leases than German utility .