Guidance

Strategic compensation measures for offshore wind activities: Marine Recovery Fund interim guidance

Published 29 January 2025

1. The Offshore Wind Environmental Improvement Package (OWEIP) is being developed by Government to help offshore wind project applicants address unavoidable impacts to Marine Protected Areas (MPA) at a strategic level, facilitated through one or more Marine Recovery Funds (MRF) into which applicants can choose to pay to discharge environmental compensation obligations. The vires to enable this approach were secured through the Energy Act 2023 and the OWEIP is in the process of being implemented through secondary legislation and guidance.

2. This guidance is intended to assist eligible offshore wind applicants in understanding how they can refer to the strategic compensation measures in the OWEIP Library of Strategic Compensation Measures (LoSCM) (see paragraph 5 below) prior to the MRF being operational. The approach set out below operates within the parameters of the Nationally Significant Infrastructure Project (NSIP) planning process under the Planning Act 2008 and applies to relevant offshore wind activities only. It does not create a separate or parallel process.

3. Applicants must continue to apply the mitigation hierarchy for their projects.  Where it is determined that the hierarchy has been exhausted, applicants may present a derogation case under the appropriate legislation.  If the derogation case is agreed, compensatory measures and/or measures of equivalent environmental benefit are likely to be required under Regulation 68 of the Conservation of Habitats and Species Regulations 2017, Regulation 36 of the Conservation of Offshore Marine Habitats and Species Regulations 2017 (the Habitats Regulations), or S.126 of the Marine and Coastal Access Act 2009.   Where this guidance refers to the term “compensation” or “compensation measures”, this should be understood to mean both compensation under the Habitats Regulations and measures of equivalent environmental benefit under the Marine and Coastal Access Act 2009.

4. Applicants should continue to ensure that their engagement with Statutory Nature Conservation Bodies (SNCBs), the Department for Environment, Food & Rural Affairs (Defra), relevant regulators, Local Planning Authorities and relevant stakeholders and is consistent with relevant National Policy Statements and the relevant legislation.

Current approved strategic compensation measures

5. The OWEIP includes development of a LoSCM.  This contains measures developed through the Collaboration on Offshore Wind Strategic Compensation^{[footnote 1]} and approved by the Defra Secretary of State as appropriate strategic compensation measures for relevant offshore wind activities under certain circumstances.

6. The MRF will only accept payments for measures in the LoSCM and applicants can also choose to deliver measures which have been approved for use in the library themselves. This guidance is relevant to use of measures in the LoSCM only.

7. The appropriateness of using a strategic compensation measure in the LoSCM to compensate for an adverse effect from a specific project should be discussed with SNCBs and Defra at the earliest opportunity. SNCBs can advise whether a strategic compensation measure in the LoSCM may be appropriate for a proposed development’s potential adverse effect. SNCBs can also provide advice as to the likely required timing for delivering such a compensation measure. Any such advice should be included with an application for development consent.

8. The LoSCM currently contains the following approved strategic compensation measures:

• New MPA designations and/or extensions to existing MPAs to provide benthic compensation;
• Offshore Artificial Nesting Structures (ANSs) as ornithological compensation specific to kittiwake^{[footnote 2]}; and,
• Predator reduction for ornithological compensation^{[footnote 3]}.

9. The following sections set out an approach which developers can use to refer to the above measures in their development consent applications in advance of the MRF delivered as part of the OWEIP becoming operational.

Use of MPA designation and/or extensions of MPAs as benthic compensation

10. The Government has commenced a programme of work to identify possible modifications to the existing MPA network to provide compensation for unavoidable damage to benthic habitats from offshore wind projects. Defra has committed in a Written Ministerial Statement (WMS) to the delivery of sufficient MPA designations and/or extensions to provide strategic compensation for likely benthic environmental impacts resulting from offshore wind developments.  The WMS provides further detail on the anticipated scope of any new designations and extensions to existing MPAs, based on available information.  The WMS should be referenced by applicants when they are seeking development consent for projects which are expected to have adverse effects on benthic habitats and wish to use MPA designation and/or extensions as compensation.  A further statement may be laid as new information becomes available.

11. Our current expectation is that projects that might come forward to use MPA designation and/or extensions as a strategic compensation measure whilst this guidance applies are likely to include:

• Projects that received a seabed lease from The Crown Estate under Leasing Rounds 3 or 4, and the 2017 extensions round;
• Projects in the current Leasing Round 5 in the Celtic Sea;
• Associated transmission infrastructure projects (e.g. those forming part of the Holistic Network Design). Work will be continuing with Devolved Governments on how this relates to projects in their waters where cabling will come through English waters;
• Projects that have already been granted consent, but are unable to discharge their consent conditions or where adaptive management may now be required as the agreed compensation measures have not had the impact expected when consent was granted; and
• Operational projects delivered in Leasing Round 2 which might sometimes be required to compensate for essential maintenance activities carried out once the wind farm is operational and/or for unforeseen impacts.

12. Applicants wishing to rely on MPA designations and/or extensions as compensation for benthic impacts should work closely with SNCBs, and Defra, to determine whether this would provide appropriate compensation measures of a type suitable for a proposed development’s potential adverse effect. Any views that SNCBs provide on such matters should be provided with the application. Applicants, SNCBs and interested parties should refer to the information provided in the WMS when seeking to include MPA designations and/or extensions as a compensation measure for their proposed development.

13. Applicants will be required to pay into the MRF to access MPA designations/extensions as a compensation measure. The DCO should also include a requirement to provide post-consent evidence that the agreed contribution has been paid, and a requirement to provide a high-level Implementation and Monitoring Plan (see paragraph 15 below), prior to commencing any works which will give rise to the adverse effect for which compensation is required. The DCO should also include a requirement to provide a full Implementation and Monitoring Plan as soon as this is available from Defra on the completion of the MPA designations/extension programme.

14. Where consent is granted, DESNZ Secretary of State will usually expect to see greater clarity and certainty regarding the compensation and the ongoing management and monitoring before works which give rise to the adverse effect for which compensation is required can commence. When the MRF is operational, this information would normally be provided by the MRF Operator to the applicant for submission to the DESNZ Secretary of State as a full Implementation and Monitoring Plan.

15. It is recognised that the detailed information usually expected by DESNZ Secretary of State may not be fully available until the Government’s MPA designation/extension programme is complete. The WMS therefore commits to the production of high-level Implementation and Monitoring Plans, which should be obtained from Defra by the applicant and provided to the DESNZ Secretary of State before works which give rise to the adverse effect for which compensation is required can commence. These plans will contain the following information:

• High level explanation as to how designation of an MPA will compensate for effects on each relevant habitat and, where possible, ratios used.
• Implementation timetable and an explanation of the MPA designation process.
• Information on current monitoring, long term management and reporting of MPAs, and any differences for MPAs designated for compensation purposes.
• Information on how the effectiveness of the MPA designation would be maintained in terms of enforcement and adaptive management.
• Commitment to providing an updated IMP as the designation process continues and detail is resolved.

16. The high-level Implementation and Monitoring Plan must be submitted for approval by DESNZ Secretary of State. Alternatively, if an Implementation and Monitoring Plan on MPA designations and/or extensions is published separately by Defra, DESNZ Secretary of State may consider this to be sufficient and provide approval to commence works which give rise to the adverse effect on this basis. However, DESNZ Secretary of State reserves the right to request more information on the details of the proposed compensation measure where they consider it necessary to do so.

17. At all stages of the NSIP planning process, as an application progresses, the draft DCO requirements regarding compensation measures may be updated as more clarity on MPA designations and/or extensions becomes available, and certainty as to the type of compensation which is available and is being delivered increases over time.

Use of Offshore Artificial Nesting Structures (ANS) for kittiwake ahead of the MRF

18. Defra Secretary of State has approved this measure for inclusion as a strategic compensation measure in the LoSCM on the basis that it should only be used by proposed developments up to and including Leasing Round 4. Where applicants wish to rely on offshore ANSs for potential adverse effects on kittiwake ahead of the MRF being operational, they will need to be able to deliver the measure themselves, or in collaboration with other projects. They should work closely with SNCBs, and Defra, in conjunction with the relevant regulators and stakeholders to develop, as normal as part of their DCO application, a without prejudice compensation plan to submit with their application, and an outline Implementation and Monitoring Plan.  A full Implementation and Monitoring Plan will need to be developed to submit to DESNZ Secretary of State once development consent has been granted.

19. Where possible, applicants should work collaboratively to ensure that larger and fewer offshore ANSs are placed in optimal sites. Evidence of this planned collaboration should be included in applications. Applicants must put in place enhanced monitoring to test the efficacy of offshore ANSs. This should be discussed with SNCBs. Information on how developers can include a provision allowing for a contribution to be made into the MRF ahead of it being operational is provided in paragraphs 24 – 26. Note that project-specific ornithological compensation measures must be provided alongside this provision.

20. Applicants may also wish to discuss their ornithological compensation needs with the Defra-led COWSC group who will, wherever possible, enable collaboration between developers on offshore ANSs currently under development.

Use of Predator reduction ahead of the MRF

21. This measure in the LoSCM encompasses eradication of mammalian predators from island colonies; control and exclusion of mammalian predators from mainland nesting areas; and subsequent biosecurity monitoring and incursion response.

22. Applicants wishing to use predator reduction as a compensation measure ahead of the MRF being operational will need to deliver the measure themselves or in collaboration with other projects. Applicants should work closely with Defra and SNCBs when developing, as normal as part of their DCO application, a without prejudice compensation plan and outline Implementation and Monitoring Plan. Where possible, applicants should work collaboratively to deliver this measure. Evidence of collaboration should be included in applications. Information on how developers can include a provision allowing for a contribution to be made into the MRF ahead of it being operational is provided in paragraphs 24 – 26. Note that project-specific ornithological compensation measures must be provided alongside this provision.

23. A full Implementation and Monitoring Plan will need to be developed to submit to DESNZ Secretary of State once development consent has been granted.

Accessing ANS and predator control through the MRF in advance of implementation

24. When preparing their draft DCO, applicants may also wish to include a provision allowing for a contribution to be made into the MRF in substitution for delivering the ANS or predator control compensation measure(s) themselves.  Any such provision should usually restrict works which give rise to the adverse effect for which compensation is required until evidence has been provided that:

• an appropriate level of compensation has been secured through the MRF,
• the amount of any such contribution into the MRF has been agreed between Defra/the MRF Operator and the applicant, and
• payment has been made for the compensation measure.

25. This provision does not guarantee that such measures, which form part of the MRF, will be available and the relevant SNCB will be consulted regarding any such provisions. Note that this formulation alone cannot be relied upon for consent at this time, and must be provided alongside project-specific ornithological compensation measures.

26. Applicants whose approved DCO includes strategic compensation measures will, once the MRF is operational, be required to provide evidence to DESNZ Secretary of State that payment has been agreed with and made to the MRF Operator. Works which give rise to the adverse effect for which strategic compensation is required will usually not be permitted to take place until these provisions have been made and the strategic compensation has been in place for a timeframe determined by the DESNZ Secretary of State. The Secretary of State may consider circumstances where the adverse effect can occur before compensation is in place, however this would need to be considered against other factors.

1. COWSC has been set up to ensure that the compensation measures being placed into the library of measures are developed as openly and collaboratively as possible. It has Ministerial and Director/Deputy Director oversight, is joint chaired by Industry and Government and has the inclusion of multiple stakeholders, including representatives from industry, The Crown Estate, Devolved Governments, Statutory Nature Conservation Bodies, and eNGOs such as RSPB and The Wildlife Trusts. ↩

2. This measure was approved subject to the following caveats: it should only be available for projects in English waters up to and including The Crown Estate Leasing Round 4; enhanced monitoring to test efficacy must be put in place by all developers using it; and developers should work collaboratively to ensure larger (and, likely, fewer) towers are placed in optimal sites. Evidence of this collaboration should be included in developer applications. ↩

3. This measure should be delivered strategically with developers working closely with Defra officials and SNCBs. ↩