FOI 367_ScotWind Conditions

Request

1. Under each ScotWind project awarded via Crown Estate Scotland, what conditions were agreed with developers, including, but not limited to (a) the use of domestic content; (b) domestic spend; (c) job creation; (d) pay, terms and conditions, and (e) trade union recognition. I understand this may be outlined in the Supply Chain Development Schemes and elsewhere. “Domestic content and spend” refers to Scotland and the rest of the UK.
2. I understand that penalties are attached to these conditions. Under what circumstances will be penalties be incurred in relation to the above and what are the penalties?
3. Under wind projects awarded via Crown Estate Scotland after ScotWind, what conditions were agreed with developers, including, but not limited to (a) the use of domestic content; (b) domestic spend; (c) job creation; (d) pay, terms and conditions, and (e) trade union recognition.

Response

ScotWind projects were required to submit a Supply Chain Development Statement (SCDS) as part of their application to Crown Estate Scotland (CES). The ScotWind Leasing Offer Document April 2021 (Offer Document) is provided here [scotwind-leasing-offer-document-april-2021.pdf]. This document should be read with the ScotWind Leasing Guidance Notes (Guidance Notes), provided here [scotwind-leasing-guidance-notes-april-2021.pdf].

In the Offer Document, Section 3.6 ‘Sustainability of offshore wind development in Scotland’ explains the information required in an SCDS, and how the information will be used. The SCDS provides information about the level and the location of supply chain expenditure anticipated from the proposed project. This information is intended to play a part in supporting investment in, and development of, the supply chain. 

1. The SCDS does not require information on (a) the use of domestic content; (c) job creation; (d) pay, terms and conditions, and (e) trade union recognition. 

The SCDS does collect information on (b) domestic spend. The intended expenditure across four geographies and four project stages was required as per the table below:

The current SCDS Outlooks from each of the successful ScotWind projects can be viewed by clicking on the relevant polygons on our website, here: Offshore Wind | Current Projects

2. ScotWind Option Agreements include a mechanism for financial penalties based on a ‘Lowest Percentage Achievement’ (LPA), which is a test applied as part of stepping from Option Agreement to Lease. 

A Lease is requested by the Tenant Organisation submitting an Option Notice to Crown Estate Scotland. A ‘Contracted Position Statement’ (CPS, explained in Offer Document Section 3.6.6) must be provided no more than 12 months before submitting the Option Notice. CES compare the information in the CPS against the information in the current SCDS; the LPA is the “lowest percentage achieved” of any category of CPS Commitment. 

We will calculate any CPS Payment due as follows:

1. LPA = 100% or more - CPS Payment is zero
2. LPA = 90% up to but not including 100% - CPS Payment is £50,000
3. LPA = 50% up to but not including 90% - CPS Payment is £100,000 

4. LPA = 25% up to but not including 50% - CPS Payment is £250,000 

   If the LPA is less than 25%, the Lease may not be requested.

5. Innovation and Targeted Oil & Gas (INTOG) projects were awarded in 2023. They entered into Exclusivity Agreements helping enable the successful applicants to start offshore wind development work whilst Scottish Government update the Sectoral Marine Plan for Offshore Wind Energy (SMP). Upon completion of the SMP, those projects within the SMP may enter Option Agreements. 

Exclusivity Agreements do not require an SCDS. An SCDS is required as a condition of entering an Option Agreement. INTOG projects can also enter into an Option Agreement if planning consent has been granted by Scottish Government. On 19 April 2024, Crown Estate Scotland entered into an Option Agreement with Flotation Energy and Vårgrønn for their Green Volt INTOG project.

When INTOG projects enter Option Agreements, their SCDS Outlooks will be published on our website in alignment with the ScotWind SCDS process. Updates will be added here: INTOG leasing round | Crown Estate Scotland when they become available.

The INTOG Leasing Guidance Notes are available here [INTOG Leasing Guidance Notes.pdf]. This document sets out the information about the specifics of developing the projects and the assessment criteria.

The SCDS for INTOG projects does not require information about (a) the use of domestic content; (d) pay, terms and conditions, and (e) trade union recognition. 

The SCDS does collect information on (b) domestic spend. 

In relation to your point (c) job creation, it is set out in the Leasing Guidance note that, applicants should also show a good understanding of the current and future needs for the supply chains for Scottish offshore wind projects which includes skills needs and numbers of jobs.