How The King Stands To Make Millions From Government’s Net Zero Plans
4 min read
Meeting net-zero requires a massive increase in offshore wind farms and a bonanza for the seabed landlord, the Crown Estate. Adam Bell suggests ways to reduce the embarrassment of riches
Decarbonising our power system by 2030 – the government’s stated aim – involves building at least another 30GW of offshore wind generation. For those less familiar with measurements of electrical infrastructure, this is equivalent to building over 2,000 offshore wind turbines, each over 250m high.
Built out at sea, the majority will be connected to the sea floor using monopiles – enormous steel tubes driven into the seabed. A small number will be erected on the equivalent of very large barges and floated out to sea in places where the water is too deep for bottom fixing. All of them, however, will play their part in perhaps the greatest royal bonanza since the Civil List was established in 1760.
The Crown Estate owns the UK’s seabed up to a distance of 12 nautical miles from the shore. But it also has the exclusive right to generate electricity from renewable energy sources throughout the entirety of the UK’s territorial waters. Rather than exercise that right itself, it issues leases to wind farm developers and their associated cabling providers. And it charges a rather large amount of money for such leases. In 2021, BP paid just under £1bn to develop up to 3GW worth of offshore wind, implying that in the run-up to 2030 the Crown Estate could make over £10bn for essentially being a landlord for fish.
Now, it’s important to be clear – as people often insist – that the Crown Estate doesn’t give money to the King. Rather, revenue from the Crown Estate goes to the Treasury. The Treasury then calculates the level of the Sovereign Grant, which is the money the King gets. The level of the Sovereign Grant is set in part by the profits received from the Crown Estate, but importantly, the Crown Estate doesn’t give money directly to the King, in one of those peculiar British quirks that means no one can possibly be held accountable for anything.
Traditionally, the Sovereign Grant included 25 per cent of the profits of the Crown Estate, but for 2025-26 our gracious King has requested that this be reduced to 12 per cent. Even including this reduction, the grant totalled a mere £132m, a £46m increase from 2024-25’s £86m. If the share of the profits received from the Crown Estate had not been reduced, then the taxpayer would’ve given the King over a quarter of a billion pounds.
While it is perhaps nice that the King has requested to reduce his cut, revenues from offshore wind will continue to rise. Even at a rate of 12 per cent, the King is likely to earn at least a half a billion pounds from this government’s clean power plans. Bear in mind, this is only the beginning: a reasonable view of what we’ll need to get to net-zero sees us building an additional 50GW of offshore wind. This is another £1.5bn of potential revenue for the Royal Family.
With this in mind, it’s important to be clear who actually pays this cost. Certainly, offshore wind developers will pay upfront, but they’ll increase how much they charge for their power to reflect the fact that they had to pay a really quite staggering amount of money for the right to build.
It was only last year that the Crown Estate started realising that explicitly gouging the billpayer was quite a bad look, and is seeking to provide value by helping developers with the planning process.
All this comes at quite a delicate time for the offshore wind industry. Ørsted recently decided not to proceed with a major development that won a contract in the government’s last offshore wind support round, citing higher supply chain costs. However, Ørsted has explicitly said that it will hang onto its lease, for which it has indeed already paid through the nose.
This is a blow to the government as it is looking to buy 30GW of offshore wind power very quickly, and now needs the next support allocation round to be a roaring success. But because it is buying so much at once – very nearly everything on the market – competition will be slack, and developers will charge as much as they can. It is likely that this round will see offshore wind prices go up, reversing the trend of the 2010s that saw prices fall.
The King, a great advocate for action on environmental issues, may find himself in part responsible for a rise in energy bills that could turn the public against decarbonisation. The government has committed to looking again at the level of the Sovereign Grant in the years to come, but there is a very pressing argument that the roughly £20 on annual bills the Crown Estate’s leases represent could be tackled earlier.
