Extension of CfD contract length: The length of new CfD contracts has been extended from 15 to 20 years for all wind and solar technologies. This provides greater certainty for investors, unlocking lower strike prices compared to 15-year contracts, and makes complete sense given the longer asset life we now see in these technologies.
Relaxed eligibility for offshore wind projects: Eligibility requirements have been relaxed to allow fixed-bottom offshore wind projects to compete for a CfD while awaiting full planning consent. We understand the government’s aim is to enhance auction liquidity and ensure there is sufficient competitive tension to deliver consumer value. But this is the reform that has the largest question mark hanging over it. There are concerns that the new approach has the potential to place undue pressure on consenting authorities to pass projects awarded CfDs, and for it to be detrimental for the supply chain, with immature projects looking to place contracts before they are close to making final investment decisions. I think it’s fair to say that the sector is waiting with interest to see how this change will work in practice.
Support for repowered onshore wind projects: The reforms include changes to allow repowered onshore wind projects to bid for CfD support, encouraging the UK’s older sites to bid for a new lease of life. It will be important that the government maintains a watching brief on this as further technologies, such as offshore wind, consider repowering strategies as well as extending asset life.
Auction process adjustments for value for money: The government has elected to retain a monetary budget in AR7. But to mitigate against the risk of CfD budget underspend as we saw the last round, bid information on fixed-bottom offshore wind projects exceeding this budget will be reviewed by the Secretary of State, who can increase the budget to contract additional projects offering the best value for money. This is a pragmatic approach aimed at ensuring consumer value while maintaining flexibility in the capacity procured.

UK auction reform signals new era for renewables investment – but questions remain