The Crown Estate has announced a significant initiative to make it easier for small firms to enter the UK’s growing wave and tidal industry.
From January 2012 The Crown Estate will significantly reduce the level of parent company financial guarantees it requires from wave and tidal customers. For projects that have already won rights in the Pentland Firth and Orkney Waters, the option will now be available for parent company guarantees to be reduced from £25 million to no more than £5 million per project.
This will make it easier and more affordable for smaller companies to take on seabed lease options, allowing the exploration of wave and tidal opportunities as well as the progression of formal planning processes.
In granting both lease options and leases in relation to wave and tidal energy, The Crown Estate requires developers to provide parent company guarantees or similar forms of security. Up to now levels have been partially based on the need to mitigate the risk of third party claims against The Crown Estate for issues relating to tenant actions. Going forward the guarantee levels will not incorporate this estimate of potential third party liabilities, unless the specific nature of the agreement requires it.
Gareth Baird, The Crown Estate’s Scottish Commissioner said: “We are pleased to be announcing this significant step forward to help drive the UK’s emerging wave and tidal industry, making it more accessible for small businesses. No longer requiring financial security over third party liabilities arising under the lease agreement is a clear example of how we are supporting the growth of the industry.”
Dan Pearson, Chief Executive Officer at MeyGen added: “MeyGen welcomes this positive policy change by The Crown Estate as it will help encourage new developers and investors to this nascent but fast developing industry. It also demonstrates how the continued, regular dialogue between existing developers and The Crown Estate is working well.”