Under the new regulations, DESNZ will publish a Contract Budget Notice later in the AR7 process, replacing the current requirement to issue it 10 days before the application window opens. Additionally, restrictions will be eased to allow the UK energy secretary to review anonymized price-related data from sealed bids before setting the auction budget. These adjustments are designed to ensure more effective use of funds and address past instances where pre-set budgets were underutilized, according to a DESNZ consultation launched in February 2025.
The consultation proposed a range of reforms to improve the CfD mechanism, which supports renewable energy projects by guaranteeing a stable price for electricity generated. DESNZ emphasized that the changes would help maximize contracted capacity in each auction round, supporting the UK’s clean energy goals. The government has committed to releasing a comprehensive response to the consultation before the AR7 auction begins, addressing all non-legislative proposals.
Among the proposals under consideration is the potential relaxation of eligibility criteria for fixed-bottom offshore wind projects that lack full consenting. This change could enable more projects to participate in the auction, further boosting renewable energy development. The reforms reflect the government’s focus on streamlining processes to accelerate the transition to sustainable energy sources while maintaining economic efficiency.
The CfD scheme plays a critical role in encouraging investment in low-carbon technologies, such as wind and solar, by reducing financial risks for developers. By adopting a capacity-driven approach, the government aims to better align auction outcomes with the UK’s energy needs and environmental commitments. The forthcoming response to the consultation is expected to provide further clarity on how these changes will be implemented and their impact on future auction rounds.
These reforms demonstrate the UK’s ongoing efforts to refine its renewable energy strategy, ensuring that the CfD auction process supports the growth of clean energy infrastructure while adapting to evolving market conditions.
