Scottish Government accused of lack of transparency over plans for £755m ScotWind funds
Audit Scotland says it is ‘not clear’ how £96m used has supported net zero transition
IT IS “not clear” how the Scottish Government has used £96 million of ScotWind funding to support the transition to net zero.
That is the damning assessment of Audit Scotland, which says the Scottish Government “needs to be more transparent” about how it will use the £755 million raised through the ScotWind offshore leasing round.
Two offshore wind projects proposed to the east of Shetland came through the government-backed ScotWind process.
The ScotWind leasing round resulted in 20 projects securing seabed option agreements, with the Scottish Government saying it has delivered more than £750 million in revenues to the public purse in initial option fees.
However the public spending watchdog said the government had drawn almost £100 million of that to date – with no clear evidence of what it had been used for.
Audit Scotland added it was also not clear “how the Scottish Government intends to use remaining ScotWind funds over the course of the parliament”.
It has called for greater transparency from the SNP government over how money raised from the “high risk and reward” leasing round is used.
The money was banked by Crown Estate Scotland over 12-month terms on behalf of the Scottish Government, giving ministers “maximum access to the funds”.
The money can also be used to balance the budget.
However, Audit Scotland said this had “limited Crown Estate Scotland’s investment options and financial returns”.
A rare £10 million capital grant pledged to the SIC by the Scottish Government for inter-island connectivity, which would go towards a new ferry, is due to be paid for by revenue from the ScotWind offshore wind leasing process.
Government’s £10m inter-island connectivity grant to be funded through ScotWind revenue
Auditor general for Scotland, Stephen Boyle, said it was unclear yet whether the ScotWind leasing round “represents value for money”.
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“If developers sign long-term leases before their option periods end, then annual payments will continue to benefit Scotland for the next 60 years,” he said.
“However, if they give up their options the capped option pricing model will result in limited wider economic benefits and substantially reduced public revenues.
“What is now important is that the Scottish Government is much more transparent about their plans for how the ScotWind funds will be used across this parliamentary term and beyond.”
Responding to the report, energy minister Stephen Gethins called ScotWind a “success story”.
He said it was “delivering jobs, investment and clean green energy projects across Scotland”.
“As the report from the public spending watchdog makes clear, ScotWind will bring in an estimated £80-110 million in annual income over the 60-year lifetime of the project, with the report also pointing to £29.1 billion of commitments so far in the wider supply chain.
“ScotWind was designed to secure long-term economic benefits for Scotland and this report makes clear that more than £755 million of fees have been generated from this opening leasing round alone.
“I recognise the importance of providing clarity on how offshore wind revenues will be managed, and we will continue to do so through our annual budget setting process.
“This government also remains committed to establishing a ScotWind Wealth Fund during this Parliament to ensure future generations benefit from Scotland’s renewables wealth.”
ScotWind was launched in 2020 by Crown Estate Scotland, with the leasing round offering buyers capped prices for the option to develop the seabed.
Audit Scotland said that “no single business case for the ScotWind leasing round was produced” in its report.
A review of ScotWind was launched in 2021 after a rest-of-UK leasing round generated record revenue through an uncapped, open pricing approach.
The seabed development fee cap was then increased from £10,000 to £100,000, although a much higher cap was considered and rejected.
Two offshore wind farms with a combined capacity of 2.8GW – Stoura and Arven – were originally proposed to the east of Shetland via the ScotWind leasing scheme.
Since then Arven has handed back the lease for one of its sites, which would have had a generating capacity of 500MW.
This means that the total capacity now being developed is 2.3GW, consisting of Arven’s 1.8GW and Stoura’s 500MW.
The proposed offshore wind farms have drawn strong opposition from fishermen who feel they may be pushed out of some of their traditional fishing grounds.
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