A floating wind farm in the Atlantic Ocean. In a seabed leasing round in Scotland, floating projects won more capacity than their fixed-bottom counterparts. Source: EDP Renovaveis

Nearly 25 GW of new offshore wind development rights in Scotland were awarded Jan. 17 following a hotly anticipated seabed lease auction, with the lion's share of capacity going to floating wind projects.

Seventeen projects were successful out of 74 applications, with incumbent utilities, power producers and oil supermajors among the winners, according to Crown Estate Scotland, which manages the Scottish seabed.

Winning bidders have now been offered option agreements, which reserve the rights to specific areas of the seabed. In the competitive U.K. market, would-be developers need to pay so-called option fees to the state in exchange for development rights. The ScotWind auction, which was the first in Scotland in 10 years, yielded just under £700 million in option fees for the Scottish government.

Iberdrola SA was the largest single winner, being awarded 7 GW of projects, including 5 GW of floating capacity in a joint venture with Royal Dutch Shell PLC.

"Offshore wind is essential for a net-zero world as it delivers large volumes of clean energy at competitive prices, as well as boosting industrial development and creating significant employment," Iberdrola Chairman and CEO Ignacio Galán said in a statement.

Consortia led by BP PLC and SSE PLC won 2.9 GW and 2.6 GW, respectively, while Canada's Northland Power Inc. was awarded 2.34 GW. Ocean Winds SL, a joint venture between EDP Renováveis SA and Engie SA, was successful with a 1-GW fixed-bottom project near to its existing Moray East and Moray West sites.

Floating specialists rise up

Certain offshore wind heavyweights were notably absent from the roster of winners, including Equinor ASA, Electricité de France SA and RWE AG. Ørsted A/S, the world's largest offshore wind developer, was awarded only a single 1-GW floating site in a joint venture with Falck Renewables SpA and BlueFloat Energy LLC.

Italy's Falck, which is new to offshore wind, was awarded 2.7 GW across three joint ventures, all of which will be floating capacity.

Other newcomers were also successful, including BayWa r.e. UK Ltd., which won a 960-MW project with Elicio NV and Ideol SA. "The project will be one of the world's largest floating offshore wind farms when built, helping to meet Scotland's net-zero target and putting the country at the very forefront of the global growth of this new technology," said Gordon MacDougall, BayWa r.e.'s U.K. managing director.

Indeed, the auction is a watershed moment for floating offshore wind in the U.K. as more than 14 GW of awarded capacity begins its development journey. Unlike fixed-bottom technology, there are different approaches and designs in the market for floating wind, ranging from buoy technology to barge-like anchored floats.

The U.K. is targeting 40 GW of offshore wind capacity by the end of this decade. Already a mature market, the industry will need to venture into deeper waters to harvest the best additional wind resources using floating platforms. More remote projects will incur higher transmission costs to get power to land.

But as the cost of seabed rights in English and Welsh waters has surged, some argue Scotland's floating wind will gain an advantage in upcoming subsidy auctions.

'A new era'

U.K. renewables industry group RenewableUK called the ScotWind auction "the start of a new era" and a "landmark" in the scale of ambition for offshore wind.

"The 25 GW of new capacity announced today is two and a half times the U.K.'s entire current offshore wind capacity. It's also equal to the entire current operational offshore wind capacity for the whole of Europe," the group said. Tied to this plan will be billions of pounds of private investment and the creation of thousands of jobs, it added.

Securing seabed rights is only the first step in the process, and it will take years until suppliers are selected, subsidies or off-take agreements are secured, final investment decisions are made and construction is undertaken.

But the auction results are a vote of confidence in Scotland as an energy transition powerhouse, argued Simon Hodge, CEO of Crown Estate Scotland.

"The variety and scale of the projects that will progress onto the next stages shows both the remarkable progress of the offshore wind sector, and a clear sign that Scotland is set to be a major hub for the further development of this technology in the years to come," Hodge said.