The Energy Transition | UK government completes record Contracts for Difference allocation round with 6.2GW capacity

This week we look at the Contracts for Difference scheme's record Allocation Round 7a results, delays on Ofgem's protected projects for grid connection reforms, the government's plans for advanced nuclear and consultation response to Clean Industry Bonus reforms, and the next competition round for connection to the East Coast Cluster. 

Government completes record Contracts for Difference Allocation Round 7a with 6.2GW capacity 

The UK government, following the publication of initial Allocation Round (AR) 7 results in January for offshore wind, has published the AR7a results, covering all other eligible technology types, with the combined results representing its largest Contract for Difference (CfD) scheme allocation round so far.

The AR7a auction results delivered 6.2 gigawatts (GW) of capacity across solar, onshore wind and tidal power – with tidal stream the only successful technology in the round's "pot" for emerging technologies. Taken together with offshore wind results, the government has secured 14.7 GW of clean power.

AR7 has also delivered the greatest number of successful projects: 201 across all awarded technologies. These include 157 solar projects (4.9GW), 28 onshore wind projects (1.3GW), 12 offshore wind projects (8.4GW) and four tidal stream projects (20.9MW).  

Project highlights

Notable successful projects include Imerys Wind Farm in Cornwall, which is the largest onshore wind project in 10 years, and Sanquhar II Wind Farm in Scotland, which is the fourth largest onshore wind farm in the UK. 

On the Lincolnshire-Nottinghamshire border, the West Burton Solar Farm, which is designated as a nationally significant infrastructure project, will produce 480 megawatts (MW) and is the largest project so far to win a government renewables contract.  

Strike price 

Solar projects under AR7a achieved a strike price of £65.23/MWh (in 2024 prices), a reduction from the AR6 price of £72.92 and 13% below the administrative strike price.

Onshore wind cleared at £72.24/MWh, slightly higher than the price achieved in AR6 but still 21% below the administrative strike price. Tidal stream projects were cleared at £265/MWh representing a 29% decrease compared to the administrative strike price.  

Towards Clean Power 2030 

Both onshore wind and solar projects awarded under the round will benefit from the increased term length for AR7 from 15 to 20 years along with other CfD reforms.  

DESNZ reiterated that the results of AR7 and AR7a are a crucial step in delivery of the government's Clean Power 2030 strategy. 

Ofgem updates on delays to connection dates for TMO4+ protected projects 

Ofgem's ongoing TMO4+ reforms to the GB grid connections process have resulted in various projects qualifying for protection clauses. Under these provisions a project would maintain its existing connection date and point of connection following the conclusion of the "Gate 2 to Whole Queue" process.  

Delay notification 

The National Energy System Operator (NESO) and regional transmission owners (TOs) notified Ofgem on 2 October 2025  that certain projects qualifying for protection clauses would not be able to maintain their original connection date after all.

The letter from NESO and the TOs explained that, if TMO4+ was followed strictly, the process would result in unachievable and inaccurate connection dates being protected, which would not only result in regulatory non-compliance from NESO and the TOs but would also require further variations to the Gate 2 offers for affected protected projects.

NESO and the TOs sought relief from Ofgem from regulatory obligations in permitting a departure from TMO4+ processes by changing the connection dates of affected projects that should otherwise have had their dates protected. 

Ofgem's response 

In its response letter dated 6 February, Ofgem confirmed that, at present, there was insufficient evidence to draw any conclusions on the impacts and drivers of the delays, and that it would not therefore grant any regulatory relief to NESO and the TOs in relation to the affected offers.

In addition to its refusal to grant relief, Ofgem's letter confirmed that 62% of the 340 projects with connection dates in 2026 and 2027 that qualified for protection would not receive the same connection date in their Gate 2 offer. Ultimately this means that qualifying for protection under TMO4+ does not secure a project's connection date, casting further uncertainty on a reform process that has already been hindered by delays. 

Ofgem concluded its letter expressing its frustration and disappointment in the outcome, while confirming that it will continue to engage with NESO and the TOs in investigating the causes of the delay. Ofgem acknowledged that it would be necessary in some circumstances to issue offers that depart from the TMO4+ methodologies. It also expressed that it expects TOs and NESO to offer projects their best view of the most ambitious connection dates possible. 

Government sets out advanced nuclear framework for UK modular reactors 

The government has published its advanced nuclear framework to accelerate the development pipeline of small, advanced and micro-modular reactors (MRs) known as advanced nuclear.   

Developing a UK advanced nuclear pipeline  

The framework outlines plans to develop a "pipeline" to review project proposals for advanced nuclear projects and assess their potential viability for deployment in the UK. The pipeline will operate as a register of projects that the Department for Energy Security and Net Zero (DESNZ) in collaboration with Great British Energy-Nuclear deem as sufficiently mature and are ready to be credibly delivered.  

From March, developers will be able to submit their projects to join the pipeline, which will be composed of three stages. Preliminary checks will confirm whether the project is within the scope of the pipeline. A project readiness assessment (PRA) will then determine the project's level of maturity and viability against the criteria laid out in the associated guidance documents and reported on in more detail below; followed by ministerial approval (in the minister's absolute discretion) for an invitation to the pipeline. 

Once part of the pipeline projects will have the opportunity to directly liaise with government and provide a clear process to assess projects. Where appropriate, DESNZ will offer "in principle" endorsement to projects within the pipeline and indicate potential future support. It will also engage with pipeline projects on any future revenue support mechanisms, which the framework states may include contract for difference style mechanisms, or protections for investors from government for high-impact, low-probability events.  

The pipeline will also incorporate "concierge style" services through the Advanced Nuclear Business Engagement Unit, a freshly created taskforce within DESNZ who will seek to act as facilitators for projects as they progress through engagement with other key public bodies.  

Pipeline eligibility 

DESNZ has in the accompanying guidance document provided detailed eligibility criteria that will be assessed as part of the PRA. This states that the framework will apply and the pipeline will be open to of small MRs (SMRs), advanced MRs (AMRs) and micro-MRs which are fission, uranium fuelled, non-mobile and on land; located in England or Wales; and targeting completion within 10 years of joining the pipeline.

There are also detailed requirements set out for the information that must be provided as part of the project's proposal, including delivery programmes and intended financing structures. The PRA will include a deep dive undertaken by GBE-N to comprise a detailed due diligence process interrogating the data provided as part of the proposal. 

Further measures 

In addition to the pipeline, the framework sets out "wider enablers" that the government is introducing and supporting. These include the reform of planning framework via the national policy statement for nuclear energy generation or EN‑7. The government intends EN-7 to streamline the system for SMRs and AMRs by bringing them within the scope of development consent and hopes that it will also support co-location of advanced nuclear with energy-intensive industry demand.

Further, the government has stated that 47 recommendations made by the Nuclear Regulatory Taskforce have been accepted in principle by government, with the publication of the framework for advanced nuclear promising that an implementation plan for these reforms will be published within three months. 

UK government publishes response to consultation on reforms to the Clean Industry Bonus   

The government has published its response to the consultation on reforms to the Clean Industry Bonus (CIB) which is part of the Contracts for Difference (CfD) scheme.

The CIB was introduced for CfD Allocation Round (AR) 7 to incentivise offshore wind developers by providing additional revenue to those improving the social, environmental, and economic sustainability of their supply chains. The proposed changes resulting from the government's response will take effect from CfD AR8 onwards.

The Fair Work Charter 

The government has confirmed that signing up to the Fair Work Charter will be a minimum requirement for CIB eligibility under CfD AR8. An interim charter negotiated between trade unions and industry representatives will apply while a full charter is developed. 

CIB expanded to onshore wind 

The government has confirmed that the CIB will be extended to include onshore wind from CfD AR9. However, only projects applying for CIB funding will be required to meet minimum standards (currently set at £25m/GW), rather than all developers applying for a CfD. It was also proposed that only one of the two criteria – short supply chains and sustainable supply chains – would need to be satisfied, but it has been decided both criteria will be applied, "with the option to iterate them through market engagement in 2026". Decommissioning will also be considered and may be brought into the CIB. 

Other reforms 

The government has confirmed it will proceed with an industry-wide skills investment fund for offshore wind, aiming for the fund to be operational by 2027. Both project-level and portfolio-level CIB bidding will be permitted.

Statutory timelines have also been updated to facilitate annual CfD cycles: the government has committed to sharing early drafts of allocation frameworks, not making "major amendments" to the Allocation Framework within 30 working days of CIB application window closure and sharing provisional budget notices as early as possible.

A "payment on delivery" mechanism will also allow CIB payments to commence once an "implementation statement" has been issued by a project, rather than waiting until the CfD start date.

New competition round opens for connection to the East Coast Cluster on Teesside  

The Department for Energy Security and Net Zero (DESNZ) has opened the latest competition round for carbon capture usage and storage (CCUS) projects seeking to connect to the East Coast Cluster (ECC) Teesside network so as to distribute to eligible projects what is left of the Endurance CO₂ facility capacity.

DESNZ's established ECC Teesside selection process will be used to choose projects that could connect to the network by 2032. Applicants will need to submit: 

• Annex A project plan forms (power, industrial carbon capture and waste, hydrogen, greenhouse gas removal and power bioenergy with carbon capture and storage).
• Annex B initial cost information forms.
• Annex C financial statement.
• Annex D1 economic benefits form.
• Annex D2 supply chain map.

DESNZ will host an engagement session for potential applicants in the week of 2 March to explain the process, criteria and application forms. The closing date for applications is 10 April.

This article was written with the assistance of Adam Budd, Oliver Derham and Yasmine Jauffur, trainee solicitors.