The Crown Estate boosted its net profit by 16% this year after a mammoth leasing round for wind farms off the UK coast, producing a future pay-out of approximately £78 million for the Royals.
The estate generated £312.7mln in net profit from revenues in the fiscal year ending in 2022, a £43.4mln uplift compared to last year, it said in a statement today.
Each year the Royals get 25% of the Crown Estate’s net profits, calculated over two years, half of which goes towards servicing Buckingham Palace and the rest is taken by the Queen. The Sovereign Grant is payment in kind for the donation of revenues from public land to the public purse.
A sum of 25% of the profits would equal about £78mln, so that is provisionally the sum that the Queen can expect to get. It is paid in arrears, so for example the core grant for 2020-21 was £51.5mln based on 2018-19 profit of £343.5mln, according to the Sovereign accounts.
In the year 2021 to 2022, the Crown Estate outperformed the yearly benchmark by three percentage points, posting an annual total return of 12%, also outperforming the benchmark on a three-year rolling basis by 8.3% to 2.3%, according to a statement released today.
These gains were largely due to the impact of the Crown Estate's latest offshore wind leasing round for seabed rights. Round 4 of its offshore wind leasing programme is part of a pipeline to deliver 43 GW of new offshore wind capacity. The estate also plans to enable 4 GW of new floating offshore wind capacity in the Celtic Sea and said it has received applications for two floating wind projects, Llŷr 1 and Llŷr 2, from Floventis Energy Ltd.
It said the value of the marine portfolio increased by 22% to £5bn, driven largely by the latest offshore wind leasing round. As a result of this boost, the total value of its portfolio of rights grew 8.3% to £15.6bn.
Offshore wind power generation on the land leased by the Crown Estate now comprises 12% of UK electricity needs. Last year, the estate leased land for up to 8 GW of offshore wind power projects under the fourth round of its leasing programme, which are subject to environmental approvals.
The Crown Estate is exempt from certain laws by a process of “derogation” that enables projects leased from its sites to progress if localised environmental impacts are offset by the overall positive effects. The estate announced its “intention to proceed with all of the selected projects [in the latest round] on the basis of derogation”.
The Crown also owns a portfolio of assets in London valued at about £7.7bn, which underperformed the MSCI West End benchmark for the period at 3.5% compared to 5.7%.
The estate is managed by an independent management team instituted following a Parliamentary act. All profits are paid to the Treasury, which then in turn issues the Sovereign grant. The Queen and Royal household each get 15% of the Crown Estate profits through the grant, which in the past has gone towards spending on, for example, refurbishing Frogmore Cottage, according to the Sovereign’s accounts logged in Companies House.
The income the Royals receive on top of the grant fell in 2019 to 2020 due to the impact of Covid-19 on the opening of the Royal Palaces. As a result of the pandemic, the Queen was due to receive a so-called bailout to supplement the sovereign grant.
“The core Sovereign Grant is calculated based on 15% of the income account net surplus of the Crown Estate for the financial year two years previous,” the 2020-21 accounts said. “The Royal Trustees agreed that from 2017-18, the Sovereign Grant will be calculated based on 25% of the income account net surplus of the Crown Estate for the financial year two years previous, with the additional 10% to be used to fund the Reservicing of Buckingham Palace over a period of ten years.”