The Crown Estate has reported a record net revenue profit of GBP 442.6 million (around EUR 512 million) for the financial year 2022/23 thanks to earnings from option fees that the developers of the Round 4 offshore wind farms started paying this year. Offshore wind has also boosted the value of The Crown Estate’s wider Marine portfolio, which now climbed to GBP 5.7 billion (around EUR 6.6 billion).
The Crown Estate bagged GBP 129.9 million (approximately EUR 150 million) more in the past year, a 41.5 per cent increase compared to the financial year 2021/22.
A portion of the massive profits now pouring in from offshore wind option fees – which are set to bring billions to The Crown Estate and HM Treasury over the coming years – is expected to be funnelled into the public pot as King Charles III has asked that the share of the offshore wind earnings to which the Royal Family is entitled “be directed for wider public good” .
The Crown Estate has signed Agreements for Lease for the six sites awarded in the UK’s Round 4 offshore wind seabed leasing in January which, apart from enabling the developers to progress their plans, also kicked off the period in which they will be paying annual option fees of around GBP 900 million (approximately EUR 1.04 billion) .
Option fees are payable for a minimum of three and up to ten years, depending on when the project will be ready for signing a lease.
The option payments reduce as a project enters a lease and cease when a lease for the maximum capacity/entire site is granted, at which point developers will move to paying rent.
The six Round 4 offshore wind farms – RWE ’s Dogger Bank South East & West (3 GW), EnBW and BP ’s Morgan and Mona (3 GW), TotalEnergies and Corio Generation ’s Outer Dowsing (1.5 GW), and Cobra and Flotation Energy ’s Morecambe (480 MW) – could begin operating by the end of the decade and will produce enough electricity to power more than seven million homes .
As for the now-higher value of The Crown Estate’s Marine portfolio, which has also been largely brought about by offshore wind, the increase is both a result of the signing of Round 4 Agreements for Lease and “supporting customers to progress Round 3 offshore wind projects” , according to the UK’s seabed manager.
The Marine portfolio has further contributed to the value of the entire portfolio of land and seabed areas The Crown Estate manages by 1.3 per cent, which now stands at GBP 15.8 billion (around EUR 18.3 billion) .
“Our enhanced revenue from the Round 4 offshore wind leasing programme reflects the immense amount of ground-breaking work we have undertaken over the past two decades, working in partnership across many sectors, to create a world-leading offshore wind market”, said Dan Labbad , Chief Executive of The Crown Estate.
“We are now focussed on how we continue to maintain the UK’s position as a global leader, including supporting other technologies, the supply chain, skills and jobs, all of which are vital to a net zero and energy secure future”.