The United Kingdom is pushing forward with its ambition to become a clean energy superpower by 2030, announcing a series of strategic reforms to its flagship Contracts for Difference (CfD) scheme. The Department for Energy Security & Net Zero has set in motion regulatory amendments designed to accelerate the deployment of renewable technologies, particularly offshore wind, and optimise the auction process to secure capacity at the best value for consumers.

To date, the CfD scheme has delivered approximately 9 GW of renewable capacity, with a further 26 GW contracted and scheduled to become operational by 2030. However, to reach the government’s clean power target, at least an additional 12 GW will be required across the next three allocation rounds—AR7, AR8 and potentially AR9.

“The success of the next allocation round will be measured by the capacity secured at a competitive price for consumers,” states the Department for Energy Security & Net Zero.

Budget publication changes

A central reform involves shifting the timing of the Contract Budget Notice, which will no longer be released at the start of the application window but only after the allocation process has taken place. Instead, a capacity ambition for AR7 will be published, along with a forward-looking schedule for future allocation rounds.

“The aim is to enable more efficient budget-setting decisions, with greater certainty about the capacity and price achieved through the auction,” the Department notes.

Consultation feedback was mixed: 50% of respondents felt a monetary budget was not essential ahead of bidding, while the other half saw it as critical. Nonetheless, a majority agreed that replacing it with a capacity ambition would not hinder participation.

“Many stakeholders requested more clarity on how the capacity ambition will interact with other auction parameters,” the Department acknowledges.

While some developers warned this shift could impact strategic planning and board approval timelines, others saw it as an incentive to submit more realistic, minimum viable bids.

Access to auction information

Another significant change is the introduction of a mechanism allowing the Secretary of State to access anonymised bid data, including prices and capacity, before finalising the budget. This will apply across all technologies and is designed to address the risk of underspend and improve auction efficiency.

“This information will be independently verified and securely held within Government,” the Department explains.

The majority of consultation respondents supported this change, though many cautioned about perceived political interference, which could affect bidder behaviour and investor confidence.

“The Secretary of State will use this insight to balance capacity procurement with consumer cost considerations,” the Government clarifies.

To address stakeholder concerns, the final Contract Allocation Framework will detail which technologies are subject to this rule and how the data will be used.

Changes for fixed-bottom offshore wind

For Allocation Round 7, the Government has confirmed that flexible bids will not be allowed for fixed-bottom offshore wind projects. The rationale is that, given access to anonymised data, flexible bidding no longer offers significant added value.

“Flexible bids serve little purpose when the Government can review the bid stack before setting the budget,” the Department asserts.

Although many developers opposed this limitation, the Government maintains that precise budget-setting outweighs any potential drawbacks of reduced bid flexibility.

Plans to fast-track the fixed-bottom offshore wind auction—if no Tier 1 appeals are filed—have been set aside due to legislative constraints. Nevertheless, non-legislative options are being explored, and updates will be shared ahead of AR7.

Integration of Clean Industry Bonus into the price cap

A further technical adjustment involves incorporating Clean Industry Bonus (CIB) costs into Ofgem’s price cap methodology, ensuring an accurate reflection of all Cfd-related costs in consumer pricing.

“It is essential that CIB costs are captured correctly to ensure the accuracy of the price cap,” the Department affirms.

Among 28 responses on this topic, most supported the change, while a few raised concerns about repayment timing or the exclusion of marine and solar technologies from CIB eligibility.

What’s next?

The Government will implement the confirmed changes through secondary legislation and plans to release final guidance on budget structure and the Contract Allocation Framework ahead of the AR7 window.

“These reforms are essential to secure large-scale renewable deployment at a cost-effective rate for consumers,” concludes the Department for Energy Security & Net Zero.

With these adjustments, the UK reinforces its global leadership in clean energy policy, striking a balance between transparency, deployment targets and affordability as it accelerates towards its 2030 clean power goal.