Regulatory and compliance

UK Crown Estate publishes plans for fifth round of offshore wind leasing

Published on 15th Dec 2023

Celtic Sea leasing round will start in February 2024 and will have some important differences to previous competitions

Wind and solar power farm

The Crown Estate has published its plans for Offshore Wind Leasing Round 5. The Round 5 Information Memorandum, published on 7 December, sets out its ambition for creating a new (fixed and floating) offshore wind sector in South Wales and South West England, along with the rules that will be applied in the competition for the first 4.5GW of offshore wind development opportunities in the Celtic Sea.   

There are a number of notable differences to previous rounds. The Crown Estate is seeking to de-risk the process for bidders, generate (and evaluate) social value contributions, drive improvements in port infrastructure and health and safety, and better identify prices through the use of an ascending clock auction process.

Leasing process

The leasing process will follow four stages.  A familiar pre-qualification questionnaire (PQQ) stage, beginning in February 2024, will be followed by a two-part invitation to tender (ITT). 

The first stage of the ITT will evaluate bidders' technical, health and safety, and environment capabilities, along with an assessment of their social and environmental value proposals. 

The second stage will be a new ascending clock auction, with prices escalating over a number of auction rounds. The auction approach has been favoured by the Crown Estate over the sealed bids method used in previous rounds, in the hope that it will allow better transparency for bidders and reduce potential inefficiencies and risk.

Delivery of social and environmental value will form part of the evaluation of ITT stage 1, reflecting latest policy in the wider public sector to drive additional social and environmental benefits through public procurement processes.

The focus on social and environmental value means that in addition to submissions on technical and Health and Safety Executive capability, bidders in Round 5 will be expected to provide (and, it is anticipated, will be evaluated on):

  • an apprenticeships plan, explaining how apprenticeships will be increased and committing to at least 3.5% of employees being apprentices;
  • a skills development plan, explaining how skills gaps and shortages will be addressed;
  • a "NEETs" (not in education, employment or training) plan to ensure at least 10 per cent of new workers in Round 5 are or have recently been NEETs;
  • a community impact plan, for engagement with affected communities;
  • a volunteering plan, to deploy the Round 5 workforce in voluntary schemes in the affected communities; and
  • a social value method statement.

Bidders will also be required to demonstrate how they will "accelerate progress towards a net positive outcome for environment and improved resilience of marine ecosystems."

Next steps

The Crown Estate is holding a "Bidders Day" on 31 January 2024 to provide details of the process and allow questions from prospective bidders.  The PQQ stage is expected to start in late February 2024, with ITT stages 1 and 2 currently anticipated to run from summer 2024 to Q2 2025. 

Summaries of the key legal agreements are planned to be published alongside the PQQ in early 2024, with full draft legal agreements to be provided to bidders that are successful in proceeding to ITT stage 1. 

Osborne Clarke comment

While much of the process will be familiar to bidders from previous rounds, the changes introduced by the Crown Estate for Round 5 will, in some respects, provide a welcome increase in certainty and transparency. 

However, there will be more elements for bidders to consider when compiling their responses to the ITT and in participating in a new and potentially unfamiliar auction process.

Prospective bidders should take the opportunity now to review the Information Memorandum and consider their questions for the Crown Estate ahead of the January 2024 Bidders Day (registration for which closes at 17:00 GMT on 22 December 2023).

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* This article is current as of the date of its publication and does not necessarily reflect the present state of the law or relevant regulation.

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