The Energy Transition | UK government confirms changes to CfD Allocation Round 8

This week we look at the UK government's response to proposed refinements to CfD Allocation Round 8 (AR8), and its targets for emissions reductions under the seventh Carbon Budget. 

UK government confirms changes to CfD Allocation Round 8

The UK government has published its additional responses to its proposed amendments to the Allocation Round 8 (AR8) Contracts for Difference (CfD) standard terms. The AR8 consultation was launched in December 2025 and the government published its initial responses in March. The government has now confirmed the changes with which it will proceed: 

Surrendered CfD capacity

To protect auction integrity and deployment timelines, the government has confirmed that surrendered CfD capacity will be permanently restricted from bidding into AR8 and future allocation rounds. 

Hybrid metering

From AR8 onwards, hybrid metering for single-technology, multiple commercial arrangements will be enabled, allowing CfD and merchant assets of the same technology to share metering infrastructure from AR8 onwards. 

Generators holding a CfD agreement from AR7 or earlier can make requests for hybrid metering to the Low Carbon Contracts Company (LCCC). Approval of the requests remains at the discretion of the LCCC.

Multiple CfD units from the same allocation round will not be able to use hybrid metering, with the exception of tidal and phased offshore wind projects. 

The government has recognised the case for widening exemptions to include projects with staged grid connections; this issue will be considered in future allocation rounds. Generators holding private network agreements are not eligible. The LCCC will publish guidance on suspension and termination for failure to comply with metering obligations and when this will be considered to have occurred.

FLOW longstop extension

The longstop period for new floating offshore wind, or FLOW, projects will be extended to 24 months and the required installed capacity threshold will be reduced to 85%, in line with fixed-bottom onshore wind. 

ODOW technology category

A new category for other deepwater offshore wind, or ODOW, will be introduced for AR8 to ensure appropriate treatment and support for hybrid offshore wind solutions that do not technically float but are nonetheless distinct from fixed-bottom onshore wind. 

"Gate 1" connection exclusion

Any project with a "Gate 1" connection offer will be excluded from participating in AR8 as the government says these projects are unlikely to meet expectations in line with the AR8 delivery years. This exclusion applies to projects that have been issued with a Gate 1 connection offer or those expected to receive one based on the connection date in their CfD application, with the exception of Gate 1 connection point and capacity reservation (CPCR). 

As a one-off exception for AR8, applicants will be required to provide either their Gate 2 to whole queue (G2tWQ) notification in its entirety in order to demonstrate its Gate 2 or Gate 1 CPCR status or, if it is in receipt of a Gate 1 CPCR connection agreement or Gate 2 connection agreement, the full connection agreement. 

Projects holding a connection offer with a connection date aligned to a phase 1 connection in 2026-2030 but that have been notified through the G2tWQ process of deceleration to phase 2 in 2031-2035 may still be eligible to apply for AR8. The government considers that these projects could still, in theory, receive a connection date within the applicable AR8 delivery years, whether phase 1 or phase 2. Where the new Gate 1 CPCR or Gate 2 connection offer has been issued but not signed and countersigned, eligibility will be assessed on the basis of the current connection agreement held by the applicant at the point of CfD application and the G2tWQ notification.

Projects notified of possible advancement may use their G2tWQ application requested advancement date for their CfD application, alongside their existing connection offer and G2tWQ notification or Gate 1 CPCR. Projects that have requested advancement within a phase are not eligible, as they cannot provide the same evidence of advancement as a project moving between phases. 

The government also expects the LCCC to update its guidance on grid-delay provision under the CfD following connection reform; however, no further details on this have been provided. 

Visibility of sealed bids

The secretary of state's visibility of sealed and anonymised bids will now be extended to solar and onshore wind, having previously been limited to offshore wind. 

Seventh Carbon Budget target set for long-term emissions reduction 

The government has announced that the UK emissions reduction target for the seventh Carbon Budget covering the period 2038 to 2042 will be 87%, which is a level supported by both the Environmental Audit Committee and the Climate Change Committee. 

The 87% reduction target is science- and evidence-based, and assumes strong renewable growth, investment in clean energy jobs, widespread adoption by UK consumers of technologies such as solar, batteries, and electric vehicles, and increased nature recovery and regeneration.  

The announcement follows the publication of an independent report by the Energy and Climate Intelligence Unit, with analysis from the Confederation of British Industries Economics. The report finds that the net-zero economy supports over 1 million UK jobs, contributing £105 billion in gross value added to the UK economy in 2025, and confirming its status as one of the country's fastest-growing sectors. 

This article was written with the assistance of Osborne Clarke trainee solicitor Elise Hill, and solicitor apprentice Jackson Clay.