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Queen Elizabeth II will be a major, if unlikely, beneficiary of big oil’s latest push to diversify toward a more sustainable future.
The queen’s property manager and the U.K. Treasury stand to reap billions of dollars from leasing offshore waters to the likes of BP BP, +3.93%, Total TOT, +2.20%, and other energy players betting on wind power, including £879 million ($1.2 billion) in deposits this year.
The Crown Estate, owned by the reigning U.K. monarch, encompasses millions of acres of land, shore, and seabed around the U.K. and off its coasts. It announced on Monday that it had selected preferred bidders in a massive auction for rights to develop six offshore wind projects.
While the land is owned by the queen, it cannot be sold by the monarch and is managed by an independent board. Annual profits from the Crown Estate are handed over to the government’s Treasury department, and 25% of that is in turn paid back to the royal family in the form of the Sovereign Grant — though these rules are due to be reviewed next year.
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The Crown Estate will rake in an initial £879 million from option fee deposits, which are deposits on the right to develop an area of seabed for wind power purposes. It will collect that much each year for up to the next 10 years from leaseholders, which could bring an extra £8.8 billion to the Crown Estate.
That may mean billions in profits paid back to the royal family once the Treasury has taken its cut.
Anne-Marie Trevelyan, the U.K. energy minister, said that “energy delivered by the new offshore wind projects in the Crown Estate’s latest leasing round will help power seven million homes, driving forward our commitments to eliminate the U.K.’s contribution to carbon emissions by 2050, creating thousands of new jobs and ensuring Britain builds back greener.”
The U.K. is the world’s largest offshore wind market, and developing the gusty coastal waters around Great Britain is an integral part of Prime Minister Boris Johnson’s “green industrial revolution” plan. Johnson has said he wants to make the U.K. the “Saudi Arabia” of wind power, and create tens of thousands of jobs in the process of making the U.K. carbon neutral by 2050.
The groups selected as preferred bidders include BP, which has joined with German utilities group EnBW EBK, +7.83% to develop two leases, as well as a venture between French oil major Total and investment bank Macquarie’s MQG, -0.20% Green Investment Group. Sustainable energy giant RWE Renewables is another auction winner.
The plans for developing the six leases into wind farms must now be reviewed for environmental impact before the Crown Estate can finally award seabed rights.
