ScotWind auction 'so odd': Economists can't understand why SNP put a price cap on windfarm sites they sold – Alex Cole-Hamilton MSP

To great fanfare, it announced it had sold off the lion’s share of Scotland’s seabed to windfarm companies for £700 million.

This sale was supposed to be a symbol of Scotland's renewable ambitions and a boost to our public finances but it’s starting to look like a story of economic incompetence that could make the Ferguson Marine ferry debacle look like a reasonable use of public money.

Analysis by the Scottish Liberal Democrats has revealed this is a fraction of what could have been achieved by such a sale, a pittance in fact, to the point where they have thrown away a fortune that could have funded dozens of new schools and hospitals.

The problem stems from the fact that for some reason, Scottish ministers and Crown Estates Scotland, which managed the sale in association with the government, explicitly prohibited companies from bidding a vast amount more than £700​m.

They decided to put a price cap on the sale to limit all bids to a ​one-off payment of £100,000 per square kilometre of seabed. Companies were banned from bidding a penny more. The cap was achieved in every case, suggesting companies would have been prepared to go much further.

We know from examples around the world that these auctions are incredibly popular and fiercely fought, so this cap doesn’t make any sense. Similar auctions in England and Wales, where there wasn’t a cap, netted an average of £361,138 per square kilometre in upfront fees alone, nearly four times the sum in Scotland.

What’s more, in Scotland this seabed was sold outright, while south of the border, the amount achieved was just a down payment, with companies set to pay an annual fee on top of that until they start producing energy.

So why the cap? I asked this at First Minister’s Questions last week and didn’t get an answer. It’s a question that’s ignited a lot of interest and got senior economists scratching their heads. Referring to my question to Nicola Sturgeon, Merryn Somerset Webb, editor-in-chief at Moneyweek said: “This is so odd. Who puts a cap on the price of something they are selling?”

Nobody seems to know. Some have suggested that because the areas of Scottish seabed sold are deeper and harder to access than other comparable auction sites, the cap was brought in to make these sites more attractive.

That makes no sense at all. Surely if you’re worried about interest in a sale, you start with a reduced reserve price (the minimum you’ll sell for) and let the market decide what it’s worth.

The fact that every single site sold achieved the cap price in a fiercely competitive market shows that much more money could have been achieved.

Scotland’s seabed can only be sold once and the sale price matters because this cash flows directly into Scottish Government coffers to build hospitals and schools and deliver public services.

It’s starting to look as though the Scottish Government have sold our national assets at a bargain basement price in yet further evidence of the seabed depths of SNP economic incompetence.

Alex Cole-Hamilton is Liberal Democrat MSP for Edinburgh Western