Industry groups have welcomed the UK government’s confirmation of key reforms to the Contracts for Difference (CfD) scheme ahead of the AR7 auction, saying the changes are likely to strengthen investor confidence and support the delivery of new renewable energy projects.
The Department for Energy Security and Net Zero published its final policy positions earlier on Tuesday, outlining a range of updates including relaxed eligibility for fixed-bottom offshore wind projects, an extension of contract lengths from 15 to 20 years for several technologies, and a revised approach to budget setting.
“It’s good to see the CfD scheme evolving to meet the current challenges and attract the investment necessary,” said Dhara Vyas, chief executive of Energy UK. “Increasing contract lengths will boost the investor confidence essential for developers to commit to large-scale and long-term projects.”
Vyas noted that broader eligibility for offshore wind could increase auction participation but emphasised the need to maintain safeguards and streamline the consenting process. “We look forward to the government providing more detail around parameters for the next auction soon,” she added.
The auction, set to open next month, is expected to be the UK’s most significant to date, with up to 20GW of offshore wind capacity now eligible to bid—exceeding the country’s current operational offshore capacity of nearly 16GW.
Nick Hibberd, policy manager at RenewableUK, said the reforms bring “much-needed clarity and certainty for investors” and make UK projects more attractive amid strong global competition for clean energy capital.
He welcomed the revised budget setting mechanism, which gives Energy Secretary Ed Miliband partial visibility of sealed bids that exceed the budget cap. “The budget can then be increased to procure projects above the initial budget if they are deemed to be good value for money for consumers,” Hibberd said, adding that this could help avoid underspending seen in previous rounds.
Hibberd also described the inclusion of support for floating wind test projects and onshore wind repowering as “crucial” for expanding the UK’s renewable fleet.
He urged the government to finalise the auction framework quickly and to address issues such as strike prices, delivery milestones, and global cost pressures. “If we are to attract the record amount of investment this year, we need to see the rest of the auction details set out as soon as possible,” he said.
