Application Process for a Lease Option / Lease for Deployment for Demonstration or Pre-Commercial Wave or Tidal Energy Device

Introduction

Those wishing to deploy a wave or tidal energy device or small array of up to 20 devices with an aggregate capacity of less than 10 MW in UK waters or the Renewable Energy Zone (REZ) beyond 12 nautical miles need to obtain permission from The Crown Estate (as owners of the seabed out to the 12 nautical mile territorial limit and with renewable energy rights in the REZ) in the form of a seabed lease or site option agreement.

Any developer wishing to deploy a test device or demonstration array should be able to provide assurance they have the financial, technical, and environmental capability to implement the project. Additionally the developer must provide a Health and Safety plan for implementation during EIA process, installation, operation and decommissioning. Such information must be made available to The Crown Estate, typically in the form of a business development plan.

In the first instance, any developer considering deployment should contact The Crown Estate to discuss their project proposal and potential device location. This is important as it will allow us to perform an initial check on the site, to identify any other Crown Estate interests in the area and ensure there are no known conflicting interests at the site under consideration. Please note: in areas where a commercial leasing round has, or is due to, take place (commonly known as strategic areas) The Crown Estate are unlikely to approve any demonstration or pre-commercial arrays. For the avoidance of doubt, this currently includes the Pentland Firth Strategic Area but other areas can be notified through The Crown Estate’s website from time to time.

We expect any developer to have some prior knowledge of the deployment site, including bio-physical characteristics, and to be aware of environmental sensitivities and other sea uses, as this will indicate why they have chosen the particular site against other options, and why it is the best site for the demonstration of the technology under consideration. Developers will be required to submit their business development plan for consideration.

Following identification of a potential location and discussions with the marine team, and prior to deployment, the developer may be invited to apply in writing to The Crown Estate for a lease option agreement for the identified site. From 1 January 2010, all applications will be processed in April and September of each year but developers are encouraged to initiate discussions with The Crown Estate at the earliest opportunity. If a lease option agreement is granted it will be time limited and can only be exercised once the device is ready to be deployed and all the necessary statutory consents for the project have been obtained from the relevant government regulator(s).

Application for Site Lease Option Agreement

We encourage developers to contact us at an early stage in the development of their project proposals. Granting of a lease option agreement will only be considered upon submission of a written application accompanied by a site survey report, options appraisal and a robust business development plan. It must be noted that these will need to satisfy the minimum requirements indicated below, and submission alone will not automatically result in a lease option agreement being granted. Provided that submissions for test and demonstration sites meet with our minimum requirements and do not evidently conflict with any existing dealing or constraint then developers will be offered lease options on an area of sea bed for a limited period on a first come first served basis. In the event of more than one application for an area, The Crown Estate will, in the first instance speak to developers to find resolution. In the event that resolution cannot be reached, The Crown Estate will use pre-defined criteria to make an objective assessment of the project to be awarded a lease option.

The Site Survey Report must as a Minimum:

• Demonstrate to The Crown Estate’s satisfaction that the site is suitable for secure deployment, operation (including any cabling and grid connection requirements), maintenance and removal of the device or devices in question, with respect to substrate, bathymetry, hydrography and oceanographic conditions.
• Detail what other sites have been considered and why an application is being made for a specific site. The developer will need to indicate and highlight any environmental sensitivities and indicate how potential environmental impacts will be taken in to account and managed along with other users of the sea and seabed in the immediate area of the proposed site.

The Business Development Plan must as a Minimum:

• Provide a timetable of development milestones leading up to deployment, including the application for all necessary consents.
• Specify the term of lease requested (and the rationale for the term).
• Demonstrate that finance and resources have been secured sufficient to support development, deployment, operation and removal of the device(s) and any associated infrastructure such as grid connection.
• Provide a Health and Safety plan to be implemented during the EIA process, installation and decommissioning of the works.
• Indicate what arrangements are proposed to be put in place for electrical connections.
• Include the EIA methodology, including proposed scoping with consultees and a programme of stakeholder consultation.
• Provide details of any research and monitoring planned during deployment.

In our assessment of the financial aspects of the project we will require that bank details and company financial reports are made available to enable verification of financial status. Provision of financial security to cover the removal of the device(s) should be considered within the business development plan.

If a lease option agreement is granted it will incorporate timetabled development milestones leading up to deployment which, if not met, may render the agreement void, at our discretion. These milestones will be based upon the submitted business and development plan and discussions with the marine team at The Crown Estate. Whilst the lease option agreement is in place, The Crown Estate would require that it is supplied with all environmental and monitoring data collected, including the data acquired for the completion of the environmental statement submitted as part of the consenting process.

At that point, when it is agreed that all of the development milestones in the lease option agreement have been achieved, it may be exercised for the granting of a lease.

Term of Lease, Rent and Charges

As we are dealing only with test and demonstration projects leases will be short term. Leases issued for the deployment of single test devices will normally be up to one year and up to seven years for small demonstration arrays. Demonstration leases may include an option to extend the term for a further period of up to seven years providing certain pre-agreed conditions and milestones have first been met. We charge a non-commercial rent for test projects starting at £100 for a single device. For demonstration projects the rent will be discounted for the initial lease term. We will require payment of reasonable legal fees to cover the cost of arranging the lease option and lease agreements. Your business development plan should identify, where known, future development expectations for the project.