Scotland Details Innovation and Targeted Oil and Gas Offshore Wind Leasing Round

Crown Estate Scotland has revealed the proposed details of its Innovation and Targeted Oil and Gas (INTOG) offshore wind leasing process.

Developers will apply for the rights to build small-scale innovative offshore wind projects of less than 100 MW, as well as larger projects connected to oil and gas infrastructure to provide electricity and reduce the carbon emissions associated with those sites.

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Awards will be determined on a largely open auction basis and will be split into two pots – one for smaller scale innovation projects, and one for larger projects linked to oil and gas infrastructure.

The objectives of the Innovation element of INTOG leasing are to enable projects which support cost reduction in support of commercial deployment of offshore wind, including alternative outputs such as hydrogen; and to further develop Scotland as a destination for innovation and technical development which will lead to risk reductions and supply chain opportunity.

The objectives of the Targeted Oil and Gas element of INTOG leasing are to maximise the role for offshore wind to reduce emissions from oil and gas production; and to achieve target installed capacity in a way that delivers best value for Scotland and supply chain opportunity in alignment with just transition principles.

The proposed scoring criteria and weighting for the Innovation projects will be price (30 per cent), innovation (40 per cent), and deliverability (30 per cent). For the Targeted Oil and Gas Projects, the split will be price (70 per cent), and deliverability (30 per cent).

Bidding Window Expected to Open in June

The areas of seabed to be made available are set out in the Scottish Government’s Initial Plan Framework, the consultation for which closed in October 2021.

Applications must be sited within the areas and other planning parameters defined by the Initial Plan Framework to ensure that environmental and stakeholder considerations shape the leasing activity. The outcome of the planning process will be a new Sectoral Marine Plan (SMP) for offshore wind for INTOG, Crown Estate Scotland said.

The Scottish Government does not expect to publish the final plan until the Autumn of 2023, and potential INTOG projects will therefore be able to apply to Crown Estate Scotland for Exclusivity Agreements at an early stage. The draft plan will be based on the projects that are awarded Exclusivity Agreements. Only projects included within the final plan will be awarded Option Agreements.

Applicants will also be required to submit a Supply Chain Development Statement, outlining the nature and location of any supply chain activity linked to their proposed project.

Bids will be judged on a mixture of price and quality, with the bidding window currently anticipated to open in June 2022, Crown Estate Scotland said.

”Following our initial announcement last year, we’re now engaging with industry on how the next stage of the INTOG leasing process will work and what it can achieve,” Colin Palmer, Director of Marine for Crown Estate Scotland, said.

”This leasing is about creating an opportunity for enhanced roll out of offshore wind technology in Scottish waters. Whilst we recognise it will be for industry and government to take the key steps needed on oil and gas transition, we believe this will provide a step towards progressing that transition to net zero.”

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INTOG Leasing Structure

The INTOG leasing round will have three key stages: Exclusivity, Option Agreements, and Lease.

Potential developers will be invited to apply for Exclusivity, which is a preliminary agreement between Crown Estate Scotland and the applicant to later enter into an Option Agreement, subject to marine planning considerations and any other relevant factors.

Projects identified in the final INTOG SMP can be granted an Option Agreement which will set out the terms on which Crown Estate Scotland would grant a lease if the developer succeeds in obtaining all the necessary consents.

And finally, projects that obtain all necessary consents and serve a valid Option Notice within the Option Period will be granted a lease and construction can commence.

Source: Crown Estate Scotland

Crown Estate Scotland has invited feedback on the proposed leasing terms and conditions which can be provided until 21 March.

”The INTOG process will also open the door for smaller, innovative offshore renewables projects to demonstrate their technology, such as for green hydrogen, in Scottish waters and offer the potential for clean energy from offshore wind to support North Sea decarbonisation, building on the huge electricity generating potential already identified through the ScotWind offshore wind leasing round,” Michael Matheson MSP, Sotland’s Net Zero and Energy Secretary, said.

”As the recent ScotWind announcement has shown, Scotland is at the forefront of offshore wind development globally. As with the ScotWind leasing round, when we progress to the application phase, each applicant will be required to submit a Supply Chain Development Statement (SCDS) which includes commitments which set the anticipated level and location of expenditure during the various stages of their project. We expect engagement from the outset to help deliver supply chain commitments, and whilst these can be updated throughout the development phase, developers will ultimately be held to commitments.”

This process is separate to the ScotWind Leasing round for commercial-scale offshore wind projects in Scottish waters.

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