The value of the Queen’s real estate rights to exploit the seabed off the coast of Britain has risen to £ 5 billion following a record auction of offshore wind farms.
Profits for the crown mansion, which generates money for the treasury and the royal family, jumped £ 43.4 million to £ 312.7 million in the year to the end of March.
The total value of his portfolio, which includes parts of the seabed around Britain and the properties of Regent Street, London, has increased by 8.3% to £ 15.6 billion.
The first auction of the mansion for seabed licenses in a decade helped increase the value of the portfolio.
The mansion has licensed six offshore wind farms off the coasts of England and Wales, which could generate up to £ 9 billion over the next 10 years. Successful candidates included Germany’s RWE Renewables, which won two licenses at Dogger Bank off the coast of Yorkshire, and two from a consortium that includes oil company BP, which also invests in renewable energy.
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How the queen owns the seabed
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The Queen’s ownership of the British coast is an ancient right, but her power to collect fees from offshore wind and wave energy is much newer. The full rights to exploit the crown were granted by parliament in 2004.
Until the 1960s, there was no formalized legislation declaring the Crown’s property under the low-water mark. Until then, sovereignty was by convention and common law. In the eighteenth century, the three-mile limit was adopted by most coastal states.
There were exceptions, such as Soviet Russia, which claimed 12 nautical miles. In the twentieth century, this wider frontier came into use around the world, including the United Kingdom, and remains in effect today.
The queen’s maritime possession extends far beyond. It stretches to the mainland shelf, an area up to 200 meters deep around the British Isles. To the east, the UK border reaches halfway to the Netherlands and Belgium.
This is a relatively recent development. Until the late 1950s, government attorneys feared expanding sovereignty for fear that it might draw attention to the fact that there was no formal legislation to keep the crown’s property below the minimum water limit. A decade after her coronation, the issue was raised by the monarch herself. After an audience with Queen Elizabeth in 1962, the Earl of Perth, the Crown Commissioner, announced that “she had seen something about the Crown Estate, taking over land rights under the sea.”
The discovery of oil and gas in the North Sea was a catalyst, with drilling companies demanding clarity of ownership. In 1964, the Continental Shelf Act set a much wider line, which remains in force today.
Ownership of oil and gas on land and at sea is on the crown, but since 1934 the work of exploiting them by setting fees and transferring drilling rights has belonged to the government.
The strength of the wind is different. Since the first round in 2000, the leasing of wind farm plots has been managed by Crown Estate. Even then, the search was brisk. The auction generates plans for 20 farms. All were limited to the 12-mile limit, as ministers felt that the United Kingdom could not use the 1964 law to allow large structures such as turbines far out to sea without new legislation.
More space was needed to grow this green energy source. Thus, in 2002, government lawyers proposed using a UN convention to create an “exclusive economic zone” for wind and wave energy within the continental shelf. The Green Paper requested views on the “most appropriate body” to be entrusted with the management of this new area. The issue is regulated by the Energy Act of 2004; exploitation rights will remain with the crown.
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The government has not yet approved any of the projects. However, independent estimates of their potential income have increased the value of the maritime crown business by 22% compared to last year to £ 5 billion. We hope that wind farms will be able to power 7 million homes.
The crown manor donates all its profits to the treasury before 25% is returned to the royal household in the form of a sovereign grant, a funding formula currently being reviewed by the government. The state grant was increased in 2017 from its previous level of 15% to pay for extensive renovations at Buckingham Palace.
The financing agreement dates back to 1760, when George III reached an agreement to hand over his income from the Crown manor in exchange for an annual fixed payment, now called a sovereign subsidy.
The Queen is not liable for the Sovereign Grants Tax, but voluntarily pays a tax on her personal income from land owned by the Duchy of Lancaster and property she owns personally.
Profits of £ 312.7 million represent a significant recovery from last year, helped by increased rent collection and increased capacity of offshore wind farms, especially the Triton Knoll wind farm off the coast of Lincolnshire and Hornsea 2 Yorkshire. But profits are still less than the £ 345 million raised before the pandemic of central London.
The Crown seeks to increase its revenue from licensing renewable energy projects such as static wind farms in shallow water, carbon storage and leasing of floating wind farms. He hopes the floating wind farm planned for the Celtic Sea can generate up to 4 gigawatts of energy.
The value of his portfolio in London was 7.7 billion pounds, which was lower than the investment benchmark.
The estate’s chief financial officer, Robert Allen, said: “We all have work to do to get London back on its feet, to be honest – we have a lot of confidence in the long-term future of Regent Street. He said visitors to shops and restaurants were 38% of pre-pandemic levels last year.
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Dan Labad, the crown’s chief executive, added: “In London, we have played a role in its renewal and regeneration over the centuries and we are now focused on supporting the capital after the pandemic to maintain its status as a global city. ”
The company said the total return on its investment exceeded the benchmark and generated more than £ 3 billion in public spending over the past decade.
Labad said: “We are aware that our role is to work to support the nation in addressing some of the economic, social and environmental challenges and opportunities we face, while ensuring a strong return on the public purse.
The company also owns 191,000 acres of land, including Windsor Park in Berkshire, where profits rose by £ 1 million to £ 18 million as visitors recovered from the pandemic.
Allen said the crown plans to invest between £ 500m and £ 1bn over the next decade in modernizing its properties and improving the energy efficiency of its buildings.
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