Orsted on potential benefits of Isle of Man windfarm
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00:00We've already established it's not going to cost any sort of, you know, outlay from the government and such.
00:07The government will also sort of, or the public purse will also benefit from rates, is that right?
00:13Yeah.
00:14Rents as well I think?
00:15Yeah, so there's tax and there's rents, absolutely.
00:18Tax and rents, yeah.
00:20So when the turbines, if the turbines are operational, will Orsted just be, will all the money generated from selling the electricity be going purely to Orsted or will the government be getting a share of that?
00:33So the plan is that this is a 1,400 megawatt project.
00:38We're looking at up to 100 megawatts of that coming onto the island and we're in early conversations with Max Utilities to figure out what that would look like and what the commercial arrangement would be.
00:49So it's too early to say exactly what that would look like.
00:52I would point out that power from offshore wind actually is one of the cheapest forms of electricity generation.
00:57So there's every reason to believe that will offer great value to all the consumers on the island.
01:02But the bulk of the power, because the island simply doesn't need it, will go into the UK grid.
01:07And that will be, we expect right now, through what's called a contract for difference, which is a contract which gives us a guaranteed price for 15 years and that is won competitively between many wind farms bidding into an auction and the lowest price wins.
01:22You don't envisage that the government will be able to get a share of that?
01:28I've not heard any indication, Jonny, maybe otherwise, of the government wanting to take an investment in the project.
01:35No, I think it might be best to clarify how the rent works.
01:39So the rent under our seabed lease is an annual payment of a percentage of the revenue from the wind farm.
01:45And that's a revenue no matter what system we use.
01:49So, for example, if we have a contract for difference in the UK, then that would be a guaranteed revenue stream backed by UK government to ensure levelised cost.
01:59That would then mean that we would share a percentage of the revenue from the wind farm every year under the seabed lease for 35 years.
02:07So it's effectively how the rent calculation works, is the share of the revenue that the Alman government get every year.