Round 1 was announced in December 2000, and is progressing very successfully. The first construction work is already well underway at North Hoyle. Site preparation has commenced for a number of projects. Development consent for the eighth project at Burbo Bank has been announced today. Overall if all these projects go ahead, the 17 proposals from Round 1 will amount to more than 500 turbines with a total output up to 1,500 MW of electricity – sufficient to power the households of a city the size of Greater Manchester.
All the Round 1 projects were limited to 30 turbines, a policy aimed at getting things moving quickly. This has proved to be very successful. Developers are now expressing an appetite for development on a much larger scale – with individual project proposals of up to 1GW, comprising hundreds of turbines. Evidence from developers’ expressions of interest, combined with assessment of predicted impacts, suggest that Round 2 could deliver between 4GW – 6GW, depending on the most likely or optimistic assumptions.
This rapid growth in offshore wind is extremely significant, not just because of the important contribution it can make to the UK’s renewables targets, but also because of its role in supporting the security of our energy supply, and the dynamic development of a new industry. There is clear evidence that the biggest new contributor to our renewables target is going to be offshore wind and government has a strong interest in encouraging it to develop quickly and successfully.
The arrangements for Round 2 are designed to provide the best framework for rapid and successful development of the new offshore wind industry. Capital grants and the Renewables Obligation have a big role to play in providing a favourable economic climate. But it is also important to have the right planning regime in place. This is not only to ensure that Government is able to make the right decisions about consent applications in a timely manner, but also to enable efficient development of the onshore transmission system to link up to new offshore electricity generation.
This approach has been supported by organisations with responsibility for environmental protection and conservation. The NGOs and the Government’s nature conservation advisers back offshore wind energy in principle because of its important contribution in addressing climate change, but they also want assurance that any adverse effect on the environment will be managed and minimised. They welcomed DTI’s intention of adopting the SEA process in helping to achieve this.
Restricting the allocation of new site option agreements to time limited rounds, and in defined areas, gives many advantages. It provides a framework to enable greater efficiency in the provision of the transmission infrastructure. It also provides the opportunity to assess the total impact of all the development proposals in each area – the cumulative impact – at an early stage in the process. This will be important in assessing the impact of all the proposed development on other marine users such as shipping and fishing.
An SEA has been completed for the three proposed Round 2 strategic areas, the Thames Estuary, the North West and the Greater Wash. These areas were defined initially in Future Offshore consultation and subsequently modified with an extension to the north-west part of the Greater Wash region. The modified Strategic Areas were published in the SEA Environmental Report. The assessment looked at the potential impact of various scenarios of windfarm development. The policy framework and specific constraints within which Tthe Crown Estate has been asked to conduct Round 2 take into account the consultation responses to the SEA Environmental Report, as well as responses to the Future Offshore consultation.
A summary of the responses to the SEA consultation, with the DTI’s conclusions is also available at the same address.
The Crown Estate has been requested by DTI to invite developers to tender for sites in all three Strategic Areas, with the exception of a coastal strip of a minimum width from the shoreline of 8km but extending to 13km in areas of particular sensitivity. In addition, certain shallow water regions will be excluded from the North West strategic area. The excluded regions will not be offered to developers in Round 2. This is in recognition of the potentially higher sensitivity of shallow coastal waters to windfarm development, in particular the possible disturbance to birds, the visual impact from the shore, the potential impact on inshore fishing and recreational activities, and the much larger scale of development proposals anticipated in Round 2 than Round 1.
Potential impacts of windfarm development and conflicts with other users of the sea, including cumulative impact.
The SEA Environmental Report recognises there will be some impacts of development in different locations within the strategic areas, ranging from those which are likely to happen, to those which may possibly happen. Impacts will, or might, affect the marine environment and other users of the sea. Developers cannot assume therefore that any site within the areas for which The Crown Estate is inviting tenders will be problem free.
Developers are strongly advised to take into account the advice given in the SEA Environmental Report, including the possible impact on fishing and navigation and other users of the sea. Developers should also be aware of the DTI’s hydrocarbon licensing activity in the Greater Wash Strategic Area. More information about hydrocarbon licensing activity can be found at http://www.og.dti.gov.uk/www.og.dti.gov.uk. The Crown Estate website has information on a range of other marine uses, especially marine aggregates dredging. Applicants are strongly advised to consult the Ministry of Defence and the Civil Aviation Authority to ascertain whether they would object to development in any particular location. A process has been established to assist developers to gain this information which is described in the publication Wind Energy and Aviation Guidelines, which can be found at http://www.dti.gov.uk/energy/renewables/publications/pdfs/windwnergyaviation.pdf.
Once all the applications for site leases have been submitted, DTI and The Crown Estate will seek advice on certain aspects of the cumulative impact of the proposed developments in each of the three Strategic Areas, particularly in relation to other users of the sea. This approach should help identify, and possibly eliminate, the more problematic proposals before site option agreements are offered. This should reduce some of the risks and uncertainties facing developers in obtaining full development consents from statutory bodies.
The procedures and terms of the tender are described in The Crown Estate’s documentation issued to all companies eligible to submit a tender. All compliant submissions will be assessed on the criteria set out in the tender documentation. A full description of the terms of the competition can be found at http://www.crownestate.co.uk/
As with Round 1, once developers have entered into exclusive option agreements with The Crown Estate they will be able to work up their detailed development proposal and conduct an environmental impact assessment, prior to applying for development consent from Government.
Round 2 sites outside territorial waters
The Energy White Paper indicated that the Government would bring forward legislation as soon as the legislative timetable allows to enable renewable energy generation to take place beyond the limits of the territorial sea. Until such legislation is brought into force, the Government is able only to grant development consent for windfarms within territorial waters. However, the Round 2 strategic areas go beyond the territorial water boundary onto the UK Continental Shelf. The Crown Estate is inviting developers to tender for any site in the three Strategic Areas apart from the excluded 8-13km coastal strip and the shallow water areas in the North West Strategic Area, as defined by DTI. For sites beyond territorial waters The Crown Estate will award exploration licences, rather than option agreements.
Provision of grid connection
There are options in how offshore wind farms are connected to the GB electricity market. The scale of offshore developments in Round 1 has meant that it is sensible and efficient for them to connect to the wider transmission system at an onshore point. However due to the likely much larger scale and concentration of wind farms in Round 2, we also now need to find a mechanism that can allow a number of wind farm connections to be marshalled at transmission hub points offshore. In this situation it would be more efficient for the transmission system to be built out offshore to meet the wind farm developments. We will need a mechanism to regulate these networks offshore to allow fair and open access for offshore generators.
We have decided that transmission licences will be issued to those providing high voltage networks for offshore generation. We expect that applications for licences will come forward at the same time as the pattern of anticipated developer investment in the Strategic Areas becomes clear, when the announcement of lease awards is made. As with onshore transmission, licences will be granted to geographical areas. Applicants may choschoosee to apply for transmission licences that cover whole or part of the strategic areas. The rationale is that we believe that this will produce a more efficient outcome in terms of the provision of cabling, ensuring we do not a have a proliferation of cabling connecting onshore.
Intentions regarding future rounds
Marine renewable energy is expected to have an important role in supplying the nation’s future energy needs and in meeting renewables targets, part of the Government’s strategy for implementing Kyoto Protocol agreements on reductions of greenhouse gas emissions. In recognition of this importance the DTI will continue its SEA programme to help guide policy and planning decisions for future site leasing rounds for offshore renewable energy development.
Planned actions include:
- A review of all UK marine renewable energy resources (whether or not commercial technology presently exists to harness it) to inform the programme of future rounds
- A series of studies and surveys required to inform regional SEAs
- The systematic compilation of information on the effects of windfarms (and in time other renewable energy sources) so that this is available to guide debate and facilitate decision making in the future.
The geographical location of future SEA areas will be determined by prioritisation of offshore energy potential (both renewable and non-renewable). Scoping of these SEAs will be conducted in a transparent manner and a steering group composed of representative stakeholders and experts will guide the work. It is possible that future rounds for offshore windfarm development will be offered in the Round 2 Strategic Areas as well as in new SEA areas.
For questions on this note, please contact Caroline Roberts or Mike Brook in the Energy Group Licensing and Consents Unit
mailto:caroline.roberts@dti.gsi.gov.ukcaroline.Roberts@dti.gsi.gov.uk, 020 7215 2831
mike.brook@dti.gsi.gov.uk, 020 7215 2813
DTI
14 July 2003
Offshore Windfarms Round 2: Q & A
1: The areas on offer to developers in Round 2
What are the boundaries of the Round 2 Strategic Areas ?
North West
54 50 00N 04 00 00W
54 50 00N 03 00 00W
53 20 00N 03 00 00W
53 20 00N 04 00 00W
Thames Estuary
52 00 00N 00 48 00E
52 00 00N 02 00 00E
51 20 00N 02 00 00E
51 20 00N 00 48 00E
Greater Wash
53 56 00N 00 10 35W
54 01 38N 00 10 00E
53 50 00N 00 24 00E
53 50 00N 02 00 00E
52 50 00N 02 00 00E
52 50 00N 00 24 00E
How were the three Strategic Areas chosen?
The three areas were chosen following an analysis of the potential wind resource available, the bathymetry of the offshore area, proximity to grid connections and preliminary expressions of interest from potential developers. These areas were identified in the Future Offshore consultation. Developers were invited to inform DTI as a matter of urgency if they had concerns over the proposed strategic areas for Round 2, or wanted DTI to modify the boundaries. As a result, the boundary of the Greater Wash Area was extended in the north-west corner and along the western boundary to accommodate developers’ expressions of interest.
Has The Crown Estate been asked to invite tenders for sites anywhere within these three Strategic Areas ?
No, DTI has stated that a coastal strip will be excluded from all three strategic areas. The excluded coastal strip has a minimum width of 8km but extending to 13km in areas of particular sensitivity. In addition, certain shallow water regions have been excluded from the North West strategic area. (Specifically, the area shoreward of the 10 metre bathymetric contour where this forms a continuous limit, i.e. not including sandbanks or other areas of shallow water that are separated from the 10m contour by areas of deeper water.)
Developers may tender for any sites within the boundaries of the Strategic Areas other than in the excluded regions. However, in deciding whether to bid for particular sites, developers will need to assess other constraints and take a view on whether these are likely to be significant hindrances to development proposals.
Why have these coastal areas been excluded?
The coastal areas have been excluded because we are adopting a precautionary approach to Round 2, in view of the anticipated large scale of development proposals, compared with the restricted scale of Round 1. Exclusion of these areas recognises the potentially higher sensitivity of shallow coastal waters to windfarm development, in particular the possible disturbance to birds, the visual impact as well as the potential impact on inshore fishing and recreational activities.
Will these coastal areas be ruled out in future rounds?
Not necessarily. We are adopting a precautionary approach for Round 2, but we will continue to develop the approach for future rounds in the light of evolving knowledge and understanding of the impact of offshore windfarm development. We will continue to draw on a wide range of views as part of this process.
Is it possible to tender for sites outside the three Strategic Areas?
No. Arrangements for Round 2, set out in the Future Offshore consultation document, require prior strategic environmental assessment of the areas to be offered. The first phase of the offshore renewablesSEA programme has focused only on the three Strategic Areas.
How firm is the “no leases in the coastal exclusion zone rule”?
DTI has asked The Crown Estate not to award option agreements for sites, or parts of sites, within the excluded coastal zone in Round 2.
Why were Round 1 site leases awarded in these excluded areas.
Round 1 was a pilot round of development on a strictly limited scale to inform strategy and direction for future rounds.
Will sites in the SEA buffer zones be offered?
No. There is insufficient environmental information available to justify making sites available in these areas.
Can applications be made for extensions to Round 1 sites?
Applications for site extensions can only be made for those Round 1 sites which fall within the Strategic Areas made available in Round 2, i.e. not in the excluded coastal strip.
2: The Round 2 site allocation process
Who is eligible to tender for sites in Round 2?
In February 2003 The Crown Estate issued a call for registration of interest to the offshore windfarm industry. Developers interested in bidding for Round 2 sites were required to submit an initial business development plan in order to register their interests. Only those companies and consortia registered with The Crown Estate as of March 20th 2003 are eligible to tender for sites within the three StratregicStrategic Areas. Organisations who have registered will be able to bring in other companies as part of their consortia.
Where can I find details on what the tender must include?
The Crown Estate is responsible for the tender process. Tender documentation will be issued on 15th July to companies and consortia eligible under the registration process. Details of the terms of the competition can be found on The Crown Estate web-site at
http://www.crownestate.co.uk/.
Who will assess the applications for Round 2 site leases?
An Assessment Panel drawn from the The Crown Estate and the DTI will be looking at all the lease applications. In the case of applications for sites wholly or partly in Welsh or Scottish waters, the panel will consult the Welsh Assembly Government and the Scottish Executive. The Assessment Panel will seek advice from relevant government bodies and agencies.
What criteria will be used to judge the Round 2 applications?
The criteria for the competition are set out in the Tender Documentation available on the Crown Estate web site at http://www.crownestate.co.uk/.
Will option agreements be offered for all sites proposed by developers on the Round 2 areas?
No, the Assessment Panel will consider the applications in the light of the SEA and the guidance above. Developers should also make themselves aware of the constraints set out in the Environmental Report that forms part of the SEA.
How will the potential cumulative impacts of tender applications be considered?
The cumulative impact of wind farm proposals can only be properly evaluated once the full consent applications have been made supported by statutory EIA. However at the tender assessment stage bids will be considered in the light of the SEA and policy guidance above.
If The Crown Estate award an option agreement, does this mean that mean that a consent will be granted automatically?
No. The Crown Estate option agreement gives the developer a period of exclusivity over a site during which he must carry out a full EIA and make applications for statutory consents. Detailed consideration of the impact of the proposed development will be made, and there is no guarantee that the holder of a lease agreement will be able to achieve the necessary consents – under the Electricity Act, the Transport and Works Act, the Food and Environment Protection Act and the Coast Protection Act. Further information on the consents process can be found at : http://www.dti.gov.uk/energy/leg_and_reg/consents/guidance.pdf
When will the announcement about lease awards be made?
The Crown Estate anticipate making an announcement during November.
Future Offshore and the SEA process focused on larger scale windfarm developments. Can`t small projects outside the Strategic Areas be considered separately on a case by case basis?
Round 2 is open only to development proposals in the three Strategic Areas which have been subject to SEA. Any proposals which meet The Crown Estate’s specified criteria will be thoroughly considered irrespective of the size of project concerned.
Will a limit be imposed on the total GW output of the development proposals or area of seabed for which option agreements will be awarded?
No. The government wants to see the maximum amount of offshore wind energy generation consistent with an acceptable level of impact on the marine environment and other users of the sea.
How much windfarm development do you anticipate from Round 2?
Evidence from developers’ expressions of interest, combined with assessment of impacts of a range of development scenarios, suggest that Round 2 could deliver between 4GW – 6GW, depending on the most likely or optimistic assumptions. This amount of development would provide between 3.5% and 5.5% of UK’s electricity requirement for 2010.
Will there be any limit on the size of development proposals permitted in this second round, along the lines of the 30-turbine limit imposed on development applications in the first round.
No. In order to achieve the maximum output, we recognise that there will be a need for large scale developments. Any decisions about the award of option agreements will need to take account of a number of factors whichfactors that ensure that any project is robust and able to contribute to the renewables targets.
Can developers apply for sites for renewable energy sources other than offshore wind in Round 2?
No. Round 2 is only open to windfarm developers. The SEA has focussed only on the impact of offshore windfarm development, because it is only the offshore wind energy sector which is in a position to develop on a commercial scale. However, there is likely to be commercial scale interest from other offshore renewable technologies in the future. It is likely therefore that we will consider applications for other renewable energy sources in future rounds once indications of commercial deployability are clearer, and necessary strategic environmental assessment has been completed.
Will companies be able to apply for sites in the strategic areas `out of round` (after the conclusion of Round 2)?
No, DTI is not anticipating asking The Crown Estate to make out of round site lease offers. There may however be a later round in the Strategic Areas.
Is Round 2 open to developers interested in sites beyond territorial waters?
Yes. The Round 2 Strategic Areas straddle the boundary of territorial waters. For sites beyond the territorial sea limit, The Crown Estate will be able to grant developers exclusivity agreements in order to conduct site exploration, with the expectation that these could be converted to agreements for licence once government has the necessary legislation.
3: Development beyond territorial waters
When will you introduce legislation to enable renewable energy development beyond territorial waters?
We will be introducing legislation as soon as the legislative timetable allows. Draft legislation is currently being prepared.
What will the legislation cover?
The purpose of the draft legislation will be to provide a comprehensive framework to give developers the legal certainty necessary to develop renewable energy projects beyond territorial waters, and to enable Government to regulate such development.
In particular the draft legislation is expected to:
- set up a legal regime to enable the UK to exercise its rights under the United Nations Convention on the Law of the Sea, to exploit renewable energy resources in a Renewable Energy Zone (REZ).
- enable the Crown Estate to licence sites in the REZ,
- establish criminal and civil jurisdiction around developments in the territorial sea and the REZ
- extend certain provisions of the Electricity Act 1989 to the REZ to establish a license framework for the generation, transmission and distribution of electricity in the REZ.
- give discretionary power to the Secretary of State to create safety zones around renewable energy installations both within territorial waters and in the REZ to protect shipping and reduce the risk of damage to structures through collision,
- enable the Secretary of State to direct that the public right of navigation be extinguished in relation to renewable energy generating stations.
- enable the Civil Aviation Authority to regulate the aeronautical lighting of structures in the REZ.
- set up a new regime for the decommissioning of renewable energy projects and will enable the Civil Aviation Authority to regulate the lighting of structures in the REZ.
Will the Transport and Works Act be extended beyond territorial waters?
No.
4: Addressing potential conflicts at consent stage
Not all aspects of environmental impact and conflict with other marine activities can be assessed at the tender assessment stage. Assessment of the tenders can only take into account the conclusions of the SEA. Developers need to be aware that assessment of potential conflicts will need to be considered in detail as part of the statutory consenting process.
How will the impact of offshore windfarm development on the fishing industry be taken into account?
We are advising developers to consider the impact of their proposal in formulating site specific plans. The British Wind Energy Energy Association has produced a set of best practice guidelines on consultation with the fishing industry which developers should consider following. The Tender Assessment Panel will seek advice from the relevant government departments and agencies on the cumulative impact of development proposals on the fishing industry, so any particularly difficult areas are identified early in the process. The impact of individual proposals on the fishing industry will also be assessed at the development consent stage.
How will the impact on navigation be taken into account?
Developers are advised to consider the impact of their proposal in formulating site specific plans, and consult with Maritime and Coastguard Agency and the Department for Transport. The Tender Assessment Ppanel will seek advice from these bodies in considering the impact of development proposals on navigation. Their advice would be sought in particular if there waswere a large area number of development proposals adjacent or in close proximity to one another, which might give rise to an unacceptable cumulative impact on navigation. This would help to identify any particularly problematic areas early in the process. The impact of individual proposals on navigation will be assessed at the development consent stage.
Some of the sites offered for wind farm development in the Greater Wash strategic area overlap with those offered recently by DTI for oil and gas development under the 21st licensing round. Is there a potential conflict between oil and gas development and wind farming?
The aim of the Department will be to ensure that the resource available in the strategic areas is developed in the best possible way in the overall interest of our national energy policy. In considering whether consent should be given for oil and gas development the Department will take into account the importance of the site for renewable energy projects. Similarly when the Secretary of State is considering whether to grant a developer consent to construct and operate a wind farm she will look at the importance of the site for oil and gas development.
Won’t windfarms interfere with military or civilian radar?
Developers should consult the Ministry of Defence and Civil Aviation Authority at the earliest opportunity. They should follow the process set out in the Wind Energy and Aviation Guidelines which can be found at: http://www.dti.gov.uk/energy/renewables/publications/pdfs/windwnergyaviation.pdf
5: Future Rounds :
Where will the next offshore windfarm round be?
We will shortly be commissioning a review of all UK marine renewable energy resources (whether commercial technology presently exists to harness it or not) to inform the programme of future rounds. The output from this will assist us in determining the location of future areas.
When will this review be completed?
The review should be complete in Spring 2004.
How will you select the next SEA area?
The geographical location of future SEA areas will be determined by prioritisation of offshore energy potential (renewable and non-renewable).
How will you decide the scope of future SEAs ?
Scoping of these SEAs areas will be done in a transparent manner and a steering group composed of representative stakeholders and experts will guide the work.
Why have other renewable energy resources such as current and wave not been included in the Round 2 SEA?
While recognising the potential of other renewable energy sources, we do not believe that these are currently ready for deployment on a commercial basis. It is likely that we will consider applications for other renewable energy sources in future rounds.
6: Provision of grid connection
Why a transmission licence?
The regulatory regime in place onshore already extends up to the limit of our territorial waters so if companies were providing transmission assets for use within territorial water they would already need a transmission licence. It seems sensible to extend these arrangements to the renewables zone and create common arrangements.
Offshore connections will be much simpler than the onshore grid. Surely they don't need a full transmission licence.
They will need to comply with a 'Transmission Asset Owner' version of the transmission licence as we are suggesting under BETTA (project to create a GB electricity market). We will look hard at whether we can further simplify that form of licence, reflecting the greater simplicity of the offshore networks.
Why did you not follow the same route as offshore gas fields?
Gas fields are a separate market to onshore gas shipping whereas offshore electricity generators will be part of the GB electricity market. The situation is different in electricity. Generation whether on or offshore is the same. It is therefore sensible to have common connection arrangements.
Surely these are interconnectors? Why not regulate them in the same was as you are planning for them? Ofgem seems to favour this approach.
Offshore generators will be an integral part of the GB market. We do not believe it is appropriate to treat them in a different manner, just because they happen to be offshore. Interconnectors connect two different markets with differing arrangements. That's not the case here.
However, we fully agree with Ofgem that we should look to see if we can simplify the licence conditions that companies need to comply with. We will be working with Ofgem on this.
Won't this approach put off companies from providing connections?
Monopoly areas will produce a more efficient outcome in terms of the provision of cabling. Some form of price regulation to safeguard against the cable providers wielding monopoly power is wholly appropriate.
How will this support your renewables target?
This will create a one step arrangement whereby generators will be able to access the GB market so no new barriers to entry. Up-front costs can be significant for offshore projects. Our solution will encourage greater sharing of transmission connection assets which will reduce the initial - and ongoing - costs for any particular generator. The onshore regulatory regime is also well understood by market participants.
Who is going to be interested in connecting up offshore wind?
Probably companies who provide networks (transmission and distribution) both here and abroad.
Background to provision of grid connection
When the GB electricity market is created in April 2005, there will be one System Operator across GB who will manage the system on a minute by minute basis making sure demand equals supply. They will also provide the contractual interface with generators and suppliers allowing them access to the GB market. There will be transmission asset owners who provide the high voltage grid for the bulk transfer of electricity around the country. Onshore there are three transmission asset owners. One in England and Wales (NGT), the Lowlands (Scottish Power) and the Highland and Islands (Scottish and Southern Energy). In the main, the extent of their monopoly areas extends to the shoreline. No one has - as yet - applied to become licence holder offshore. Offshore development to date has been relatively limited.
The only legislative change we will need to make is to extend the reach of the Electricity Act 1989 from the territorial water limit to the wider Renewables Energy Zone.
This solution will involve the issuing of transmission licences to offshore areas. As monopoly areas we will be imposing some form of price regulation on them to safeguard against any abuse of their position. There is the potential for some simplification of the standard licence conditions that transmission asset owners need comply with as offshore networks are likely to be simpler in terms of scale and interconnection.
