Both Arstet and Wind Europe have warned of the high option fees paid by developers to acquire new maritime rights in the Crown Estate’s Round 4 lease auction.
Martin Newbert, chief operating officer of Ostet, said higher charges could have been avoided if the circuit had used a more efficient cap.
“The UK Lease Round 4 confirms that the UK is an attractive market and clearly proves that hunger in this lease round outweighs the very high supply, resulting in sustainable pre-final costs not being sustainable,” he said.
Newbert said higher fees would generate sustained financial returns for developers and the risk of sending higher energy costs to future energy consumers.
“The authorities need to work with this sector to provide a predictable allocation to the oceans at an adequate and sustainable price level so that society can achieve green change at the lowest possible cost and fastest,” he said.
“Crown Estate has undertaken regular leasing rounds to provide more maritime coverage to the sector; lessons need to be learned from Lease Round 4, and the leasing process takes a life cycle approach to provide value to the community in the future.”
Wind Europe has termed the UK’s latest seawater leasing round “badly wrong”, which risks raising the sector’s costs.
The trading board criticized the new bidding system, which requires investors to pay an advance ‘optional fee’ for the right to create projects.
Optional fees will be paid each year until the companies receive final planning approval, after which they will have to bid on contracts for differences (CFDs).
Wind Europe warned that the planning process could take up to 10 years.
It also said the UK did not have enough capacity to meet the expected high demand, risking bidding with too many bids.
Wind Europe CEO Giles Dixon said: “The UK has done a great job in sea air so far. They have used the correct bidding format with CfDs.
“They are building a strong supply chain that will create thousands of jobs. They have drastically reduced the cost of seawater. They have set very ambitious goals to build.
“But now with their new naval lease auction, they are getting it wrong.
“Bidders do not have to pay large sums for the right to cultivate sea air.
“They make very little capacity available and developers have to pay huge sums to win the auction.
“Developers will have to pay for these costs, so it’s a whole new burden on consumers who don’t have the added benefits.”
Wind Europe said the optional tariff announced in today’s Round 4 results is approximately 9 879m (b 1bn) per year for 8GW and represents the most important amount for developers.
Dixon said: “England last set aside naval rights 10 years ago and they are now four times more efficient than being auctioned off.
“Yet now they are trying to create more sea air. And there are more companies that want to create this.
“Plus it is not clear when the next auction will take place. So there is a price frenzy in the auction – it will be sent to energy bills. ”
He said there was no other country in Europe like this for naval leasing.
Dixon said: “Asking for extra upfront payments will increase the cost of seawater.
“When sea air becomes such a success story for the UK, they become more expensive, increase energy bills and undermine the expansion of the industry and all the work it generates, especially in the Northeast of the UK.
“This is bad for the economy and bad for the energy shift that the UK needs to succeed.”