What steps it is taking to ensure that the ScotWind Leasing process does not allow offshore wind farm developers to drive risk and cost red…

We are liaising closely with Crown Estate Scotland on the ScotWind review. Crown Estate Scotland are focused on supporting the development of a successful offshore wind sector, and the opportunities for the supply chain that this brings, while achieving a fair value for Scotland’s assets. The potential implications for the Scottish supply chain of any changes to the lease option structure are part of the review’s considerations, including elements such as the Supply Chain Development Statements required from those seeking a licence.
We continue to argue for reform of the all-important Contracts for Difference (CfD) mechanism that UK Ministers utilise to provide revenue support to projects that are successful in bidding in the next and subsequent auction rounds. The auction mechanism, while successful in driving down prices for consumers, has driven a rapid decrease in levelised cost of energy delivered by offshore wind. This has, however, led developers to try to recover their investment from lower revenue flows by lowering the up-front capital cost of the project which then squeezes capital goods prices that can be achieved by the supply chain. We are supportive of the direction of travel on CfD reforms indicated by UK Ministers, on lifting the arbitrary cap on capacity contracted in the third auction round, and UK Ministers proposals to give greater weight to developers’ Supply Chain Plan submissions to support supply chain development, and we have made a submission to that effect.