The British crown is among the country's largest wind tycoons, with a portfolio of marine assets worth £5 billion that keeps on growing.
Today the crown’s land manager confirmed plans to lease five slices of Celtic Sea seabed to wind farm developers, increasing the amount the Royals will reap from leases and annual deposits.
The Crown Estate, which manages land on behalf of the Royals, owns almost all of Britain’s seabed out to 12 nautical miles. Anyone looking to develop a wind or fish farm off the coast must apply to the estate for a seabed lease.
The crown's land manager could net “billions”, or more likely millions of pounds, from the latest plans to develop floating wind farms off the coast of Cornwall and Wales, according to the estate's 2021 annual report.
"We are looking to the future with our plans for floating wind in the Celtic Sea, which could ultimately attract several billion pounds of investment to Wales and the South West," the estate said.
Its modus operandi is to run competitive auctions for seabed leases, where, like housebuilders, operators buy land on which to build and wind farm developers and power producers compete to secure seabed rights.
Last year, the crown leased six slices of the UK seabed to offshore wind developers in its fourth leasing round, meanwhile introducing a new deposit for developers to pay.
The estate netted £312.7m of net profit that year, it said in its annual report, based on an uptick in visits to Windsor Castle after Covid and solid revenue from its marine portfolio.
This surge in profit is estimated to lead to a future payout to the Royals of about £78mln, based on a 25% Royal grant, half of which goes towards up-keep and half to the Queen herself.
The crown’s marine portfolio is now worth about £5bn, 22% than a year earlier, according to its full-year earnings report, “driven largely by offshore wind, in particular the Round 4 valuation”.
The Royals boosted their net assets to £16.5bn up from £15.2 billion a year earlier.
The marine portfolio was the second most valuable below the Queen's London assets, which include a swathe of Regent Street properties, in 2021.
“Our Marine business continuing to play a key role in enabling the UK’s ambitious journey to net-zero, while our London and Regional portfolios face stress and uncertainty from economic headwinds,” the estate said in its financial report.
Wind farms are even more profitable for the Royals following the introduction of a new option fee deposit on developers. The Crown Estate generated £879mln (Eur1bn) in option fee deposits alone for leases won in the fourth leasing round last year, averaging out at about £111mln each year per gigawatt of capacity, according to RenewableUK.
Dalia Majumder-Russell, a partner at law firm CMS Cameron McKenna Nabarro Olswang LLP, told Proactive that these additional fees are "definitely a factor" in whether we will continue to see further reductions in the price of offshore wind.
The fee is effectively a placeholder charge developers payable to reserve seabed leases until developers get planning permission, which could generate a further £444mln of annual income from the latest floating offshore projects in the Celtic Sea.
Most of the biggest wind tycoons are outside the UK, in places such as Denmark, the US and Spain.
Warren Buffet is one of the world’s largest wind profiteers, owning Berkshire Hathaway Inc (NYSE:BRK.A) and making a one-time bid for Oncor.
Turbine maker Vestas, founded by Peder Hansen, is among the top three profitable wind companies, behind NextEra Energy (NYSE:NEE) which has a US$156bn market cap and General Electric (NYSE:GE).
NextEra’s largest shareholders include mainly pension funds, and among them is T. Rowe Price Associates, founded by the late Thomas Rowe Price.
To invest in wind farm assets on the open market, some of the biggest investment trusts that hold stakes in wind energy include Global X Wind Energy ETF and First Trust Global Wind Energy ETF.