Seabed lease auctions for offshore wind zones, such as the one planned by the Crown Estate for England or the recent New York Bight auction are “the wrong approach”, according to a senior executive at the world's leading offshore wind developer.

“If we have to pay upfront a billion euros, pounds or whatever currency you take, for just getting the hands on a site, that is a lost opportunity and lost money that we need also for ramping up the supply chain,” Martin Neubert, chief commercial officer (CCO) at Orsted, told the WindEurope 2022 conference in Bilbao.

He told governments and policy makers to avoid the mistake to “monetise on offshore wind” instead of “delivering society a win” by reaping the socioeconomic benefits of a rapid build-out.

If developers incur big losses from lease auctions, money will eventually end up being reshuffled between taxpayers and electricity payers as companies have to monetise on their capital expenditure, and will have to bid for higher prices at auctions, Neubert added.

He also rejected the possibility of negative bidding at the upcoming Dutch auction, which in practice also means companies have to pay for the right to build offshore wind farms.

Orsted by contrast “very much likes what we have seen in the ScotWind tender”, Neubert said, where a very large volume of seabed was allocated without huge amounts to be paid just to secure acreage at sea.

Instead, the Scottish seabed landlord said it would raise £700m ($958m) in so-called option fees, which could unlock a £25bn supply chain bonanza. Those option fees did not exceed £87m per company, but developers in exchange had to include significant supply-chain plans in their agreements with Crown Estate Scotland — and face having those measured as their project plans advance.