UK Crown Estate sees offshore wind option fees falling after record year

The Crown Estate said it expects its revenue from future offshore wind leasing rounds to fall after the sector drove the UK’s seabed landlord to a record annual profit.

That round saw bidders including oil giants TotalEnergies and BP and utility RWE bid a total of £879m a year for the right to advance 8GW of projects towards leasing and during early development, with the Crown Estate feeling the benefits last year as the option fee incomes rolled in.

Round 4 was criticised by some at the time for favouring deep-pocketed fossil fuel groups. The years since 2021 have seen huge cost pressures on the offshore wind sector and a dampening of expectations over the level of fees developers are willing to pay in European auctions.

The Crown Estate, which delivers the revenue it generates to the UK Treasury, which in turn sends a cut to Britain's royal family, said today: “Option fee income is expected to continue at a similar level in the current financial year before dropping to more normal levels when customers begin the development phase of their projects.

“Option fees for successive leasing rounds, whilst set at auction, are also expected to be lower. However, we expect underlying group profits to continue to grow in the medium term.”

Crown Estate CEO Dan Labbad said: “We have welcomed the Government’s commitment to bring forward legislation that will broaden our investment powers and enable us to have an even greater impact in the long-term national interest, from supporting the UK’s decarbonised, energy secure future to nature recovery, regeneration and economic growth.”