UPDATE 3-Scottish wind sale nets nearly $1 billion with Shell, BP among winners

(Adds comment from Shell, BP, analysts)

By Nina Chestney

LONDON, Jan 17 (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 pounds ($958 million) for public
spending.

Competition for offshore https://www.reuters.com/article/us-global-windpower-analysis-idUSKBN2BU0R8
wind sites has intensified as governments and investors have
woken up to the urgency of cutting carbon emissions, with oil
majors making high bids.

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.

The 17 winning Scottish projects will produce nearly 25 GW
in the next decade, helping to provide low-carbon power in line
with a UK-wide goal to cut emissions to net zero by mid-century.

A gigawatt equates to roughly two coal-fired power plants
and is enough to power 750,000 homes in Britain, where the
overall power demand can be between 20-47 GW per day, depending
on the season. Around 35% of the country's electricity
generation is already generated from renewables.

Power generated in Scotland, where the population is much
smaller, is brought ashore on the Scottish coast via underwater
cables and connected to the national electricity grid.

Crown Estate Scotland said there were 74 applications from
developers seeking to build projects across 15 areas of seabed
and option agreements have been made to companies including BP,
SSE, Shell New Energies, Iberdrola's Scottish Power,
TotalEnergies and Vattenfall.

The biggest winner was Scottish Power Renewables, which has
the go-ahead for projects totalling seven gigawatts (GW).

They include a joint venture with Shell to develop the
world's first large-scale floating wind farms at two sites with
total capacity of 5 GW.

Thomas Brostrom, senior vice president of global renewable
solutions at Shell told Reuters it was too early to say exactly
how much it would invest: "It's clear you are looking at
multi-billion pounds for the construction of these wind farms."

The projects include six fixed offshore wind, 10 for
floating wind and one mixed.

Crown Estate Scotland said it only grants full seabed leases
when developers have all the necessary consents and planning
permissions from the Scottish government and other bodies.

But should any application not progress to signing a full
agreement, the next highest scoring application will instead be
offered an option.

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.

A joint venture between BP and Germany's EnBW were
successful in bid for a 2.9 GW wind project which BP previously
said would result in 10 billion pounds of total investment.

BP opted to bid for fixed-bottom rather than floating sites,
adding that it would not rule out looking at the technology.

“We always said within the BP financial frame we are looking
at returns of between 8-10% and this [Scotwind, fixed-bottom
project] fits well within that frame,” Louise Kingham, BP UK
country chair, told Reuters.

The world's largest developer of offshore wind, Orsted
, had submitted five bids either alone or through
joint ventures but was only awarded one option agreement for a 1
GW project together with partner Falck Renewables among others.
($1 = 0.7312 pounds)

(Reporting by Nina Chestney; additional reporting by Christoph
Steitz, Susanna Twidale, Stine Jacbonsen, Ron Bousso, Dominique
Vidalon; Editing by Kirsten Donovan, Emelia Sithole-Matarise,
Barbara Lewis and Alexander Smith)