Enabling a sea-change Marine estate

As custodians of a nationally important natural resource, we have a key role to play in enabling developers to realise the potential of offshore wind, wave and tide to meet the increasing demand for electricity. Success in developing renewables will improve the UK’s energy security as well as the nation’s measures to mitigate CO₂ output. Importantly, it will also create jobs and investment across the UK and contribute to the development of a significant UK-based industry with great export potential.

Our role as enablers is to deliver a series of major initiatives, managing complex negotiations and partnerships while the industry builds capability and invests in some of the largest infrastructure projects in the world.

The key highlight of 2009/10 was the Round 3 offshore wind programme which culminated towards the end of the financial year in the announcement of the successful bidders for each of the nine wind zones around the UK coastline. Coming on top of Rounds 1 and 2 and a Scottish Territorial Waters round, all of which are still in development, Round 3 aims to deliver a quarter of the UK’s total electricity needs by 2020. All parties have now signed agreements with the estate to take the proposals through the planning and consent phase, and The Crown Estate has committed to invest in excess of £100 million in Round 3 to remove as many of the risks as possible which could get in the way of development.

In March 2010, we passed another milestone with the announcement of the successful bidders for the world’s first commercial wave and tidal leasing round, for 10 sites in Scotland’s Pentland Firth and Orkney waters. The 1.2GW of installed capacity proposed by the developers for 2020 is more than four times the peak output of Dounreay power station and will provide enough electricity to meet the needs of 750,000 homes. This programme will enable a step change to take place in the industry in terms of its technical and commercial viability. Central to the success of the programme was the close involvement of Highlands and Islands Enterprise, Highland Council, Orkney Islands Council and the Scottish Government. For 2010, our aim is to build on this partnership through a memorandum of understanding that includes all the local authorities in the Highlands and Islands of Scotland.

We can derive considerable satisfaction from the way in which we have worked alongside our partners to support these technologies and enable the market to perform in a way that makes the UK a global centre of excellence for renewables. A measure of our involvement as facilitators can be gauged through the success of the 12 offshore wind supply chain events we held with our partners from the UK Government and devolved administrations, from January to March at locations around the UK. Over 3,000 businesses attended these events, which we created to bring together interested parties from across the supply chain.

Infrastructure remains a core issue for the supply chain and during 2009/10 we worked with Ofgem and the wider energy industry to clarify the requirements for an effective transmission network to carry power from the wind farms to where it is needed. We expect this to move forwards in the coming 12 months, in time for the first Round 3 wind farms becoming operational from 2014.

During the year we also committed £17 million to purchase a new radar installation to address the concerns of the Ministry of Defence that wind turbines could cause radar interference in The Wash. Our involvement helped supply chain continuity and confirmed the momentum from Round 2 to Round 3. We aim to recover our investment in this radar project through an enhanced leasing arrangement with successfully consented and built wind farm projects in The Wash.

Closely allied to our role in the renewables sector, we have continued to support demonstration projects for Carbon Capture and Storage (CCS). By the end of the 2010/11 financial year, we will have a better idea of which projects are likely to proceed and will aim to support them with a lease as they progress. As was the case with wind farms a few years ago and is true of wave and tidal facilities today, CCS is a new technology that requires far-sighted decision making and long-term facilitation on our part. Again, a key to success will be the further development of close working relationships with the UK Department of Energy and Climate Change and the Scottish Government.

As the UK’s oil and gas reserves dwindle, the resources at our disposal take on increasing importance. The work in which we are currently engaged is important not only to the developers and The Crown Estate, but to the whole UK.

We own and manage the mineral rights to the seabed across an area extending to the edge of the UK continental shelf. Consents are issued for non-exclusive sampling and licences for commercial aggregate extraction as well as leases for major pipeline and cable projects. Although revenue from aggregates reduced during the year from around £20.3 million to £17.5 million, due to a fall in construction activity, it continues to be a very important business.

Aquaculture is also a long-established business on the marine estate, particularly in Scotland where it provides valuable jobs and income to local communities. Activity increased during the year, partly as a result of Scottish salmon farmers seizing the opportunities provided by supply problems within the industry in Chile, a major international competitor.

The annual Crown Estate Marine Aquaculture Awards continued to encourage innovation and best practice across the industry. The scheme ensures that the industry receives the recognition it deserves for its excellent standards of husbandry, welfare and environmental sustainability. Among the winners, Shetland-based Blueshell Mussels scored a hat-trick, winning Best Shellfish Farm, Best Marine Aquaculture Company and the Innovation award.

For the 11th consecutive year, the Marine Stewardship Programme promoted good stewardship of the marine estate. During 2009/10 we invested £835,000 in a range of projects through two funds: the Marine Communities Fund and the Marine Research Fund.

Following two years of acquisitions that saw three important marinas join the portfolio, 2009/10 was a year of consolidation on the coastal estate. Ports, harbours and marinas make a significant contribution to the UK economy. In 2008, we published a report that measured this contribution at almost £50 billion annually, together with 890,000 jobs.

During the year we enhanced the coastal estate through a number of projects including works at Tarbert, which complemented those carried out in 2008/09, and at Wick, where the Princess Royal opened a new £576,000 marina development funded in part by The Crown Estate. We also supported developments at Ullapool through the funding of eight new visitor moorings which will improve the harbour’s share of the leisure market.

Sustainability is inextricably linked to our role as guardians of the marine estate. During 2009/10 we continued to support a range of innovative initiatives designed to protect and enhance the natural resources for which we are responsible.

We have continued to invest in the marine spatial planning system (MaRS) which we developed to ensure the fair and sustainable use of the marine environment. Drawing on complex indexing to guide decision-making where there is a competing requirement for resource, MaRS was instrumental in helping identify the most suitable locations for the Round 3 wind farm developments. The system is now rolled-out across the marine estate and is attracting interest from other organisations, including the Norwegian, Dutch and US governments. A challenge for the coming year will be to explore ways in which we can give third parties access to MaRS and to help develop its functionality.

With the impact of wind, wave and tidal renewable technologies, the character of the marine estate has been transformed in recent years. Further change can be anticipated as these programmes come to fruition, complemented by carbon transportation and storage activities.