The Scottish Government has faced criticism over its windfarm development auction, accused of undervaluing Scotland’s offshore wind potential.
News reports also claimed ministers spent profits from the special auction of Scotland’s offshore wind licences – known as ScotWind – on propping up the overall Scottish budget.
Ferret Fact Service explains what is going on.
What is ScotWind?
ScotWind was the name given to the leasing of Scotland’s seabed to companies who want to build offshore wind farms.
These sections of the seabed aren’t sold off, but leased to developers for up to ten years at a time with the aim of them eventually building wind farms.
Who owns Scotland’s seabed?
Almost all of Scotland’s seabed up to 12 nautical miles out is owned by the King, and managed by the Crown estate. While ownership technically lies with the monarch, they cannot sell the assets, nor do the revenues from the land come to the monarchy. Profits generated by the crown estate land in Scotland goes to the Scottish Government.
The ScotWind auction was run by the Crown Estate Scotland. This is the Scottish Government body tasked with managing land owned by the British monarch.
It is this sea bed the Crown Estate has auctioned off in the ScotWind leasing round, which happens every ten years.
How much did the ScotWind auction raise?
There were 20 projects approved in 2022, after applying in the auction in 2021. Successful bidders can now decide if they want to build a wind farm in the area of the sea they have leased.
Originally, each successful project would have paid a fee for exclusive development rights to the area, of up to £10,000 per square kilometre (km²). The projects cover more than 7,500km² of Scotland’s sea bed.
There was criticism that this price, set by the Crown Estate Scotland, was too low and undervalued Scotland’s offshore wind potential.
The body said it had come to the figure in order to not deter smaller bidders, and to encourage developers to come to Scotland, as Scottish sites would cost more to develop than those in England.
After the results of a similar auction in England and Wales, a commissioned report recommended the fee should be increased. The option fee eventually set at up to £100,000 per km² of sea bed.
Developers will then pay a rent based on the number of megawatt hours of energy produced by the wind farms that are eventually built.
The Crown Estate Scotland said it anticipated most of the revenue from the leasing would come from rents rather than option fees.
In total, the ScotWind leasing round brought in more than £756m in option fees in income to the Scottish Government.
What happened to the money?
The Scottish Government committed that money received from the ScotWind auction would be reinvested in the energy sector, saying it would be spent on tackling “the twin climate and biodiversity crises”
However, finance secretary Shona Robison confirmed in a Scottish Parliament committee on 23 January that money raised through the ScotWind leasing round was being spent to support Scotland’s overall budget, which faced a significant shortfall. £350m of the money from ScotWind has been drawn down for this purpose so far.
She said: “Any money that is drawn down from ScotWind is used to support the budget, so, in essence, it is used to support public services.”
“One could argue that, if whatever amount of the up to £350m of ScotWind money is part of supporting the budget, it is also part of supporting that £4.7bn of the budget that is tackling climate change,” she argued.
The money raised from the ScotWind auction is only part of the money that will be raised through the leasing of Scotland’s sea bed for wind power development. Wind farms that are built will then pay a rent of £1.07 per megawatt hour produced.
Ferret Fact Service (FFS) is a non-partisan fact checker, and signatory to the International Fact-Checking Network fact-checkers’ code of principles.
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