An auction with a price cap is not an auction
This story is quite baffling, from Yahoo News/Reuters:
LONDON (Reuters) – BP, Shell and utility Iberdrola were among the winners of seabed rights to develop Scottish offshore wind projects, in an auction which raised nearly £700 million ($958 million) for public spending… Crown Estate Scotland, which manages the Scottish seabed, said on Monday that proceeds from the first such leasing deal in around a decade will go to the devolved Scottish government.
This is land value tax in action – the sea bed and the access it gives to ‘free’ wind belongs to everybody and nobody, so the government is perfectly entitled to claim dibs and auction it off on behalf of ‘everybody’. Good stuff so far, but…
Last year, seabed options around the coast of England, Wales and Northern Ireland were awarded at much higher prices at a leasing round held by the Crown Estate. However, Crown Estate Scotland capped the lease payments at £100,000 pounds. As a result the payment for leases per GW were 94% lower than the average in the English auction, said analysts at Bernstein.
The English/Welsh auction last year raised £9 bn, but that article doesn’t say how many GW or km2 were involved so I will accept the “94% lower” figure.
So it wasn’t really an auction at all, it was a freebie for those who were awarded the rights. I hope that Scottish citizens kick up a stink about this and that heads roll, starting with Wee Krankie.
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