13 Offshore Wind Projects Selected in World’s First Innovation and Targeted Oil & Gas Leasing Round

March 24, 2023, by Adnan Durakovic

Crown Estate Scotland has selected 13 out of a total of 19 applications with a combined capacity of around 5.5 GW in the world’s first leasing round designed to enable offshore wind energy to directly supply offshore oil and gas platforms.

INTOG (Innovation and Targeted Oil & Gas) leasing aims to attract investment in innovative offshore wind projects in Scottish waters, as well as help decarbonise North Sea operations, Crown Estate Scotland said.

The INTOG process allowed developers to apply for seabed rights to develop offshore wind projects that either reduce emissions from the North Sea oil and gas sector – by supplying renewable electricity directly to oil and gas infrastructure (TOG) – or consist of small-scale (IN) innovative projects of 100 MW or less.  

This distinctive offshore wind leasing is different to any other previously carried out in the UK or in the world.

INTOG, which has been designed in response to demand from government and industry to help achieve the targets of the North Sea Transition Sector Deal through decarbonising North Sea oil and gas operations, is also expected to further stimulate innovation in Scotland’s offshore wind sector, create additional supply chain opportunity, assist companies to enter the renewable energy market, and support net-zero ambitions.

The list of successful applicants is shown below.

The successful applicants have now been offered initial agreements – called Exclusivity Agreements – that, if they accept the offers and proceed to sign them, enable them to start offshore wind development work while the Marine Scotland’s planning process for the INTOG Sectoral Marine Plan (INTOG SMP) is completed.

If a successful proposed project is in the final INTOG SMP, an option agreement will be offered. Projects will then go through planning, consenting, and financing stages. Responsibility for these next steps does not sit with Crown Estate Scotland, and projects will only progress to a full seabed lease once all these various planning stages have been completed.  

As the table above shows, five projects have been offered Exclusivity Agreements for IN, and eight for TOG.

Exclusivity Agreements will cover projects with a proposed capacity of up to 499 MW for IN and 5 GW for TOG.

Once the Sectoral Marine Plan has been finalised and option agreements signed, expected 2024, around GBP 262 million in applicant fees will be secured. Once projects are operating, further revenues will be secured. All net revenues from Crown Estate Scotland go to Scottish Government for public spending Crown Estate Scotland said.

The area of seabed covered by the IN projects is just over 139 square kilometres and by the TOG projects 1,534 square kilometres.

Crown Estate Scotland will offer a seabed lease of 50 years for TOG projects and 25 years for IN projects.

”Today’s results for this very distinctive and targeted leasing round are extremely encouraging. INTOG provides a range of practical ways to support innovation, reduce North Sea carbon emissions, and encourage technical and commercial innovation in the offshore renewables market,” Colin Palmer, Director of Marine at Crown Estate Scotland, said.

”In addition to delivering economic and environmental benefits, INTOG will generate funds for the Scottish Government, from initial fees when option agreements are signed, to ongoing rent payments when the projects are constructed and move to operation. There are still significant challenges that need to be addressed to ensure INTOG’s many opportunities are realised fully, but today marks a real step forward.”

INTOG contract awards were determined on a largely open-auction basis and were judged on a mixture of price and quality.

Option agreements are expected to be offered in 2024. To secure an option agreement, developers must provide a Supply Chain Development Statement (SCDS). Information from these Statements will then be published.

”This milestone in the INTOG leasing round is the next step in realising another world leading opportunity for Scotland’s energy transition: helping both decarbonise our existing oil and gas operations while helping our offshore wind sector to expand, innovate and deliver on our ambition to be a renewables powerhouse,” Michael Matheson, Scotland’s Net Zero & Energy Secretary, said.

”The announcement from Crown Estate Scotland not only indicates that the INTOG initiative will provide a significant contribution to the public purse but ensure the continuing growth and development of Scotland’s offshore expertise and wider supply chain, supporting a true just transition for our energy sector.”