The role of the Crown Estate in the development of offshore windfarms

Transcription

1 The role of the Crown Estate in the development of offshore windfarms N JACOBSON The Crown Estate, London, UK SYNOPSIS The paper describes the role of the Crown Estate in a proposed NFFO based procedure for the development of offshore windfarms around England and Wales. As owner of the seabed, the Crown Estate s role is that of landowner, not planning authority or regulator. The proposal, subject of consultation between the DTI and the British Wind Energy Association, describes a system of prequalification, site selection and the granting of conditional agreements. The proposed procedure is dependent, amongst other things, on the outcome of the Government s review of renewable energy and legal advice as to the appropriate development consenting framework for offshore wind energy. WHAT IS THE CROWN ESTATE? The Crown Estate is an estate in land which includes extensive urban, agricultural and marine interests. It is the property of the reigning Sovereign in right of the Crown. It is not Government property but neither is it part of the Sovereign s private estates. Since 1760 the net surplus rents and profits have been surrendered by the Sovereign as part of the arrangement for the provision of the Civil List and are still paid annually to the Exchequer. The Estate is managed by the Crown Estate Commissioners under the provisions of the Crown Estate Act The Commissioners have a duty under the Crown Estate Act to maintain and enhance the capital value of the Crown Estate and the income obtained from it and in doing so, they seek to employ the highest standards of stewardship and good management of the Estate. The Crown Estate is an estate in land; as such the Commissioners role in managing the Estate is that of landowner, not planning authority or statutory regulator. WHAT ARE THE MARINE ESTATES? The Marine Estates form a substantial part of the Crown Estate accounting for nearly 14% of the gross income in 1997/98 and comprise about half of the foreshore around the UK and in tidal rivers and virtually all the seabed below mean low water as far as the limit of territorial waters. Foreshore is that part of the seashore lying between mean high water and mean low water, except in Scotland where spring tides apply. The Marine Estates also include the rights to explore and exploit the

2 natural resources of the Continental Shelf, excluding oil, coal and gas. The main revenue generating activity on the Marine Estates is the extraction of marine sand and gravel by licensed operators under a system known as the Government View Procedure. Under this system the Department of Environment, Transport and the Regions (DETR) (or Welsh/Scottish Office) decides on whether extraction can take place, following public consultation and technical studies including Environmental Impact Assessments (EIAs). If this is approved, the Commissioners will issue a production licence on commercial terms. Next year this will become a statutory procedure administered by DETR. The Commissioners have used their experience in this field in considering their role in the development of offshore windfarms. Other activities licensed by the Commissioners include the laying of oil and gas pipelines, electricity and telecommunications cables and the construction of maritime works including berths, land reclamation, moorings, jetties etc. In all cases the licence issued is subject to all necessary and statutory consents being granted. OFFSHORE WINDFARMS - WHAT HAS HAPPENED SO FAR With the apparent success of the experimental offshore windfarms in Danish waters and the increasing difficulty of gaining planning consents for onshore installations, UK developers have started to show keen interest in developing offshore schemes around England and Wales. Consequently, the Crown Estate has been inundated with expressions of interest from developers keen on exploiting this source of renewable energy. An interesting, although not unpredictable, offshore map has emerged with the main areas of interest concentrating around East Anglia, Lincolnshire, the Thames Estuary and the North West including North Wales. Only passing interest has been shown in Scotland. Naturally developers are looking for shallower water, good seabed conditions, high wind speeds and proximity to grid connections. The Crown Estate s position to date has been to register these interests on a Geographical Information System (GIS) database and generally advise developers of conflicts with dredging areas and other seabed users. Where sites have conflicted with other expressions of interest, the parties have been made aware although identities have not been disclosed. The Commissioners remain open to receiving further expressions of interest although no options, priority or expectations to deal are being given. At this stage there remain too many uncertainties. The two areas of main concern are consents and the Non Fossil Fuel Obligation (NFFO) process. CONSENTS It is the Commissioners understanding that the following consents would be required at present: Licence from the Ministry of Agriculture Fisheries and Food (MAFF) under the Food & Environment Protection Act 1985 (FEPA) Consent from DETR under the Coast Protection Act 1949 In respect of developments above 50MW, consent from the Department of Trade and Industry (DTI) under the Electricity Act 1989 Consent from the Crown Estate Commissioners as landowners In addition, the Conservation (Natural Habitats etc.,) Regulations 1994 would be relevant for developments adjacent to designated sites. Furthermore, an amending EIA Directive is due to come into force in March 1999 which will require an EIA for offshore windfarms where there are likely to be significant environmental effects. Other parties, such as Ministry of Defence (MoD), Civil Aviation Authority (CAA), local authorities and harbour authorities as well as the general public would also have a keen interest.

3 Thus although there are certain controls in place, these appear to be inadequate to encompass a totally new type of development which could have significant planning and environmental implications. It is possible that the Transport & Works Act 1992 (TWA) (for England & Wales) may be suitable since it can assimilate other statutory requirements (excluding, probably, FEPA) and has provisions for requiring an EIA, public consultation and inquiry. DETR processes TWA applications irrespective of which Secretary of State (SoS) makes or refuses an Order; the relevant SoS would probably be that for Trade and Industry who deals with energy related works interfering with rights of navigation. However, the whole consents position is by no means certain. The DTI, therefore, is seeking legal advice on what consents are required and the most convenient and appropriate legal framework for the consideration of all offshore wind energy development. The aim is to establish a single route to obtaining development consent. Whatever the outcome, the Crown Estate s role will remain firmly that of landowner. RENEWABLE ENERGY REVIEW / NFFO The Government has stated that it is committed to a new and strong drive to develop renewable energy. It has instigated a review to consider what would be necessary and practicable to achieve 10% of the UK s electricity needs from renewables by 2010 and how renewables can make an effective contribution to meeting requirements for future greenhouse gas reductions. Until the review is completed the Government can give no firm commitment to supporting offshore wind energy under NFFO, although the Energy Minister, John Battle was very positive in his Conference opening address. In the meantime, the Commissioners have been working closely with the DTI to agree arrangements on how the Crown Estate should fit in with the NFFO process. It is hoped that by the time the review is complete and a positive outcome determined, everything will be in place (including the resolution of the consents question) to allow a prompt start on the procedure for the development of offshore windfarms. The DTI and Crown Estate have now prepared a draft procedure which Mr Battle has announced is being put to the wind industry in the form of a proposal with questions and inviting comments. The BWEA offshore working party have already provided invaluable comments to DTI and, on all the most fundamental issues, the following proposals are in accord with those of the BWEA. Significantly, they do not require any new legislation - the roles of the SoS and Non Fossil Purchasing Agency (NFPA) will continue to be defined by the Electricity Act and the Crown Estate s role will be that of landowner. THE PROPOSED PROCEDURE It is vital that in a first round the will secure test ensures, as far as possible, that all NFFO contracts lead to a competent and timely application for development consent and, if granted, the subsequent construction of the wind farm at the earliest practicable date. The procedure is primarily geared towards assisting Government in meeting its 10% target by 2010; speed, efficiency and success are the driving forces. Furthermore, all bidders must be acceptable to the Crown Estate. Against this backcloth, the key points are: Pre-qualification At the outset, the Crown Estate will prequalify developers to obtain an Agreement for Lease which will give exclusive rights while the developers use their best endeavours to obtain a NFFO contract and development consent. If successful, a pre-agreed Lease will be granted. The purpose of pre-qualification is to satisfy the Crown Estate, as landowner, that the developer has the commitment, competence and substance necessary to develop, operate and de-commission the wind farm and meet its various obligations under the Agreement for Lease and Lease. In other words, the Commissioners must adequately protect their interests as would any prudent landlord.

4 The developer may be a single entity or consortium and guarantees could be provided in a number of forms, for example parent company guarantee, financial bond etc. There will be no specific requirements such as assets above a certain value or necessary competencies residing within the developer s own organisation. It is hoped that at least six independent developers can pre-qualify in the first round although the Commissioners must reserve their right not to pre-qualify any or even all applicants. The Crown Estate will advertise the invitation to pre-qualify and respondents will receive the invitation itself which will give information on the procedure, information required and the timetable. Site Selection Site selection will follow pre-qualification. Developers will identify their sites and if there are no conflicts the Crown Estate will allocate these sites accordingly. Sites will be considered to be in conflict if any aspect of one could affect the development of another, be unacceptable to the consents authority or affect existing seabed users. If developers cannot resolve a conflict among themselves they run the risk that the site will not be allocated at all. The Commissioners will assist developers in the provision of relevant information but ultimately developers will need to satisfy themselves on such matters. In both pre-qualification and site selection the Commissioners will consult and liaise closely with DTI. Agreement for Lease and Lease If the conditions precedent in the Agreement for Lease are fulfilled a 23 year Lease will be granted covering the period of construction (2 years), operation (20 years) and, if necessary, de-commissioning (1 year). The operational rent under the Lease will be 2% of gross turnover subject, in the longer term, to review when an open market will hopefully have emerged. In order to provide an incentive for the developer to expedite the project, a basic rent rising to 1.5% of the estimated gross turnover will be charged during the construction phase and the Lease will be nonassignable until the development is up and running. Drafts of both documents have already been prepared and submitted to the BWEA for comment and negotiation. It is hoped that standard documents can be agreed to minimise the time for this stage of the procedure and to provide consistency and fairness to all developers. Details on the proposed NFFO contract terms and will secure test can be found in DTI s proposal. The Crown Estate s involvement extends to the Agreement for Lease and Lease being part evidence of the will secure test. Furthermore, the Agreement for Lease allows the erection of anemometer equipment on the seabed and some important questions need to be addressed concerning this, for example type of equipment, duration and season for collecting data and erection of equipment prior to this procedure commencing. TIMETABLE The first offshore NFFO cannot be announced before completion of the renewable energy review. In the meantime, it is hoped that DTI, the Office of Electricity Regulation (OFFER), NFPA and the Crown Estate will have finalised their procedures in the light of BWEA s comments on the proposal and the draft legal documentation be in an agreed form. Hopefully, also, the consents process will have been clarified and guidance issued. Following the announcement of the first offshore NFFO, the pre-qualification, site selection, granting of Agreements and awarding of the NFFO could take place in the space of one year. Depending on the timescale for the consenting stage, the first development could be completed within 3 years of commencement of the overall process. SUMMARY It is the Crown Estate s intention to encourage and support the establishment of an offshore wind industry as far as it can within the

5 confines of its role as a responsible public landowner and so long as this is in keeping with Government policy. As with any emerging industry important questions need to be properly addressed if it is to be successful. A sound and uniform consenting procedure is essential covering all aspects of development including environmental, visual and navigational aspects and a strict, competitive and fruitful NFFO based procedure needs to be agreed. Much work has and needs to be done and the Commissioners look forward to a positive outcome of the Government s renewable energy review which will hopefully provide the impetus for putting these procedures in place.