The UK government has endorsed a series of reforms to its Contracts for Difference (CfD) scheme that will allow ministers and officials to set capacity targets rather than fixed budgets for the upcoming Allocation Round 7 (AR7), according to a statement from the Department for Energy Security and Net Zero (DESNZ).
Under the revised framework, the government will amend regulations to delay the publication of the Contract Budget Notice until later in the allocation process. Previously, the budget was required to be announced at least 10 days before the application window opened.
The changes will also permit the energy secretary to access anonymised, price-related information from sealed bids before setting the final auction budget. DESNZ said the move is designed to increase flexibility and ensure that the volume of contracts awarded reflects market conditions more accurately.
“This change aims to maximise the volume contracted in each round and avoid underspending scenarios seen in previous auctions,” DESNZ stated, referencing feedback received during a consultation on the reforms launched in February.
In previous allocation rounds, fixed pre-auction budgets led to concerns that available funds were not fully utilised, potentially limiting the number of renewable energy projects that could proceed.
A full government response to the consultation is expected ahead of the AR7 opening. It will address both legislative and non-legislative proposals, including the potential relaxation of eligibility rules for fixed-bottom offshore wind projects that have not yet secured full consent.
