Celtic Sea Floating Offshore Wind Leasing Round 5 - Project Development Area 2 - Direct Award

Overview

The Crown Estate will enter into a concession contract for the grant of new seabed rights to Celtic Sea Offshore Wind Farm Limited (“CSOW”) for the development of a new floating offshore wind farm within a project development area (a "PDA") in the Celtic Sea, which has a maximum potential energy generation capacity of 1.5GW (the "Contract"). The Contract is an 'agreement for lease', in which CSOW will acquire: - the rights necessary to develop a floating offshore wind farm in the relevant PDA; and - the option to enter into a lease for the construction and operation of the wind farm; for the purposes of the generation, transmission and sale of electricity (or other forms of energy, where permitted), subject to the satisfaction of certain conditions detailed in the Contract. As envisaged by Paragraph 5, Schedule 3 of the Procurement Act 2023 (“PA23”), the Crown Estate is unable to estimate the maximum contract value for the PDA which is the subject of this notice. Due to the nature of the market and the activities to which the Contract relates, it is impossible to predict what the likely overall value of the concession to CSOW will be. The maximum contract value has therefore been stated in this notice as [00000 GBP]. The Crown Estate has accordingly treated the Contract as having a value that is higher than the threshold for concession contracts in Schedule 1 of the PA23. The option fee price which will be payable by CSOW to The Crown Estate under the Contract will be £350/MW/annum. The Contract has been awarded by way of direct award to CSOW following an unsuccessful tendering procedure, in accordance with section 43 of the PA23. CWSOW is not an excluded supplier. The contract was not awarded under any other provision of the PA23. The Crown Estate held a competitive tender process for the granting of new seabed rights to developers for the development of new floating offshore wind farms within three PDAs, which was advertised by way of a concession notice published on Find a Tender on 28 February 2024 (notice identifier: 2024/S 000-006434) (Celtic Sea Floating Offshore Wind Leasing Round 5 ("Round 5")). The Round 5 tender process was designed to result in the award of three separate agreements for lease to three different successful suppliers - one for each of the three PDAs. Two bidders remained at the final (auction) stage of the process and bid successfully for two of the PDAs. Under the rules of the Round 5 tender process no bidder could be awarded rights in respect of more than one PDA and no tender was received for the third PDA. As a result, for the purposes of section 43(2) of the PA 2023, no suitable tenders were received for the agreement for lease for the third PDA. The Crown Estate considers that an award of the contract under section 19 of the PA 2023 is not possible in the circumstances. A delay to granting rights in respect of the third PDA while a further full competitive tender process is designed and run risks a number of potentially significant adverse effects on all three PDAs. Timely deployment of all three PDAs is needed to provide the certainty the supply chain, ports and other critical infrastructure need to plan and invest in floating wind in the UK. Without the full award of three PDAs, it is possible that the necessary investment in supply chain and ports may not be forthcoming (or may be delayed) resulting in possible delay to delivery. Any delays to the award of the third PDA could also delay skills development and the necessary investment in people required to support Round 5, causing delays in deployment of the programme. In addition, the experience and outcome of the Round 5 tender provide compelling evidence that the current challenging market conditions are such that a further, lengthy full tender process is unlikely to deliver a successful outcome for the third PDA.