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UK offshore wind industry wins compensation guarantee

Offshore wind developers have been assured of compensation on offshore leases

By Isabella Kaminski

The UK Government has assured the renewable industry that offshore wind farm developers will be entitled to compensation if leases (or agreements to lease) awarded to them are withdrawn by the Crown Estate.

A clause currently exists in the Crown Estate’s seabed leases which allows offshore wind projects to be terminated if oil and gas reserves are found in the area – with no compensation payable to the wind developer.

In a ministerial statement made on 12 July, the Secretary of State for Energy and Climate Change Chris Huhne offered reassurances that no offshore wind farm lease would be terminated or amended without appropriate compensation, and that his department would work with the offshore wind and oil and gas industries to set out guidance on how to resolve conflicts. The compensation regime will be based on the existing compulsory onshore purchase arrangements, with the loss of future profits taken into account, as well as capital spend.

RenewableUK, which has welcomed the move, says the clause was a major barrier to investment in the sector.

Paul Reynolds, RenewableUK’s Offshore Wind Development Manager, says: “Although more work is needed to reflect this policy statement in the text of the leases themselves, this announcement will help to provide the additional certainty that offshore wind investors need to deliver the industry’s huge potential. RenewableUK will continue to work with The Crown Estate, Oil and Gas UK and DECC to implement this policy statement in full, and to work towards a successful co-existence of all parties in the marine environment”.

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Policy, investment and markets  •  Wind power