Scotland shows England how to conduct wind auction | Opinion

Scotland has taught its southern neighbors a lesson in how to run a proper wind auction. Last year’s sale of UK seabed leases, a precursor to building offshore wind turbines, ended in a brutal competition that raised fears that participants had overpaid. The Scottish equivalent, announced on Monday, makes more sense long term.

In the short term, Scottish voters may think the 700 million pounds (800 million euros) raised from the sale puts Prime Minister and pro-independence leader Nicola Sturgeon on the wrong side of an unconvincing deal. The 17 offshore blocks received 74 offers from companies including Iberdrola, Royal Dutch Shell and BP, reaching a maximum of 100,000 pounds per square kilometer. It is true that the cap has been inflated from the initial £10,000 bid, but it still suggests the ceiling could be higher.

At £28,000 (€34,000) per megawatt on average, sales in Scotland are also cheap in terms of the planned 25 gigawatts (GW) installed capacity. At a British auction last year, BP paid more than five times as much for a package in the Irish Sea. Even if the Sturgeon had stayed at its original 10GW capacity, it would have been a lot cheaper.

In the long run, however, Scots’ generosity may make sense. Ensuring bids have roughly the same principal value gives winners a better chance of selecting winners based on their ability and willingness to invest in infrastructure and jobs in Scotland, an important consideration given the impending decline of North Sea oil and gas. With lower initial costs, developers will also find it easier to meet profitability targets and it is less likely that projects will be delayed by selling to other players.

This increased confidence, as well as improved technology and the need to reduce carbon dioxide emissions to zero by 2050, are reasons why operators may be looking at more capacity. This large amount of wind power in turn translates into political power. Upon completion, Scotland’s generating capacity – almost all of it renewable – will increase from 9 GW to 34 GW, almost half of the UK’s current installed base.

With just 8% of Britain’s population, Scotland, the main driver of Britain’s climate ambitions, will have more bargaining power in any secession battle.

The author is a columnist for Reuters Breakingviews. Opinions are yours. Translation, by Carlos Gómez Abajo, is the responsibility Five days

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