Wednesday, 19 January 2022

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 wind were created by nobody and thus belong 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 per km2. 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.


Lola said...

Eh? That is bonkers. But then Krankie is witless (and probably bonkers) so not a surprise then.

Bayard said...

I very much doubt that Nicola Queen of Scots will share the fate of her predecessor.

L, she's not witless or bonkers, just corrupt.

Doonhamer said...

Yes, but what is the guaranteed price for all those expensive kWh?
And what do they get paid for NOT producing kWh when the wind is too strong?I
And who pays for all the interconnecting copper?
And who pays for the clean up when the rusting stumps and sea bottom concrete are no longer useful.?
And who pays for the fossil fuel back up when the wind speed is too low or too high?
No, I jest. I already know who will pay.

Mark Wadsworth said...

L, I tend to agree with B on this one. Nobody could be that stupid. They just need to run the English/Welsh bidding process through the photocopier and email it round.

D, we all know. I will do a new post in reply.

Lola said...

B. MW. I am very happy indeed to stand corrected.

Bayard said...

L, by happy coincidence, this appeared in Craig Murray's blog: which explains a lot.

Mark Wadsworth said...

B, seems vaguely plausible. Hence all the grandstanding and photo bombing she did at that Climate Conference thingy last year. Get herself onto the 'international stage'.