The role of the Crown Estate in Scotland’s marine energy development

The Crown Estate owns and is now offering parcels of the UK’s sea bed, including Scotland’s, to bidders interested in harnessing tidal energy. It has been much in the news this week through its association with the tidal energy developments announced for the Pentland Firth, Argyll’s Sound of Islay and the Antrim coast off Northern Ireland.

The Pentland Firth area, the first UK marine power site to be opened up for commercial-scale development, is expected to generate more than 700 MW of energy by 2020. Scotland’s First Minister has described it as ‘the Saudi Arabia of tidal energy’ and, with its surrounding area, it contains six of the top ten best sites in the UK for tidal power development. It already hosts the European Marine Energy Centre, the first test centre for wave and tidal technology anywhere in the world, offering another attraction to marine energy developers.

The granting and leasing of options over areas of seabed in the Pentland Firth area will be concluded in the summer of 2009. The first devices – expected to be full size demonstration turbines, will be on site in 2010 – 2011. The Crown Estate will look closely to see what local community benefits each developer can incorporate into their scheme and all commercial development will be subject to a comprehensive environmental impact assessment. The development will consider all ‘stakeholder’ interests such as international shipping routes, ferry traffic, fishing, defence, environment and ecology.

Rob Hastings, Director of the Marine Estate at The Crown Estate, said: ‘Unlocking the potential in the Pentland Firth is crucial to meeting Scottish government renewable energy targets, stimulating the north Scotland economy and boosting the fledgling renewables industry.

‘The Crown Estate is keen to play a central role in generating confidence in the investor community – the process we are announcing today is an important step towards achieving just that.

‘As well as the economic opportunities for energy production here, the area could become a world class centre of excellence in wave and tidal power development, research, testing and environmental monitoring’.

The Crown Estate is a historical anachronism which has carved a role for itself in the modern world through radical change.  It is a property portfolio historically owned by the monarchy but evolved into an institution transferring its income to the national government.

It is one of the largest property owners in the United Kingdom with a portfolio worth over £7.33 billion, with urban properties valued at £5.38 billion, rural holdings valued at £903 million; and an annual profit of £211 million, yielding 2.88% as of July 2008. The majority of the estate by value is urban, with a large number of properties in central London but it also owns 110,000 hectares (272,000 acres) of agricultural land and forest, and more than 55% of the UK’s foreshore.

In Scotland, the hereditary land revenues of the Crown were transferred to the Commissioners of Woods, Forests, Land Revenues, Works and Buildings and their successors under the Crown Lands (Scotland) Acts of 1832, 1833 and 1835. The holdings in question centre around former ecclesiastical land (following the abolition of the episcopacy in 1689) in Caithness and Orkney; and ancient royal possession in Stirling and Edinburgh; and feudal dues. There is little urban property but it owns the salmon fishing rights and, very germane to renewable energy development, it owns the Scottish foreshore.

The specific revenue transfer arrangements are likely to mean that all of the Crown Estate revenues automatically go to the Westminster Exchequer. Revenues from the leasing of Scotland’s sea bed, if not transferred to the Scottish Government, have all the potential to raise a new cry reminiscent of ‘It’s Scotland’s oil’.