King Charles has said he would like any new profits from offshore wind projects to be given back to the public. But it’s not clear how much the monarchy has historically made from offshore wind, or how much it plans to forego. So how does King Charles profit from renewable energy in the first place?
King Charles has said he would like any new profits from offshore wind projects to be given back to the public.
The announcement came as the Crown Estate, the manager of royal land and sea, said it expects to make an extra £1 billion per year from the development of six new offshore wind projects.
But it’s not clear how much the monarchy has historically made from offshore wind, or how much it plans to forego.
So how does King Charles profit from renewable energy in the first place?
Buckingham Palace wrote to the prime minister on Thursday following an upsurge in renewable energy profits last year.
The letter asked that “this windfall be directed for wider public good”.
The monarchy’s public funding, known as the Sovereign Grant, comes via the Treasury.
The Sovereign Grant is set at 25% of the profits of a separate commercial business, the Crown Estate. Normally the Sovereign Grant is 15% of the Crown Estate’s profits, but until 2028 an extra 10% is being given to pay for the refurbishment of Buckingham Palace.
Last year the Sovereign Grant was £86.3 million. The Crown Estate made £313 million in total profit, £133 million of which came from its marine portfolio.
As manager of the monarchy’s territory, one way in which the Crown Estate makes a profit is from fees and rent it charges renewable energy developers.
On Thursday, the Crown Estate announced development deals for six new windfall projects which it said could end up powering seven million homes, and which would give it around £1 billion in fees each year for up to a decade.
So as profits from renewables rise, the King has asked the prime minister that “an appropriate reduction” be made to the Sovereign Grant resulting from these large increases in the Crown Estate’s profits.
As well as oil and gas companies making record profits last year, some renewable energy companies are expected to have made record profits because in the UK the price of electricity – regardless of how it’s generated – is set by the price of gas.
When the price of gas shot up after Russia’s invasion of Ukraine, so too did the profits of offshore wind operators, whose costs hadn’t changed.
In November, the government announced a levy on what it sees as unexpected, surplus revenues from electricity generation, including from renewable energy like offshore wind.
The monarchy doesn’t develop or operate any wind projects, so wouldn’t be subject to any new taxes, but does generate revenue from them by being one of Britain’s largest landowners — and charging fees for use of its territory.
The Crown Estate is an independent commercial business which owns around half of the coastline of England, Wales and Northern Ireland, and all the surrounding seabed. A separate entity, the Crown Estate Scotland, was set up in 2016 to manage the monarchy’s equivalent territory in Scotland.
That means all renewable energy companies in the UK have to pay for the initial development and operation of offshore wind, either to the Crown Estate or Crown Estate Scotland.
Initially, companies competitively bid for the right to explore a piece of seabed for the possibility of a full wind power development, and then pay what is called an option fee.
It is the option fees for the six new offshore wind projects which the Crown Estate will total around £1 billion each year.
Then, if a project is carried through after development, the company must pay the Crown Estate or Crown Estate Scotland rent for operation of the project, which is 2% of the project’s turnover.Last year the Crown Estate made £133m in profit from its offshore marine portfolio. It told Channel 4 News that the majority of this is offshore wind, but that it does not publish an exact revenue from total option fees and rent from the offshore wind projects around Britain’s coast.