Each year, the Government holds auctions for renewable developers to secure Contracts for Difference (CfDs), known as Allocation Rounds (AR).
At the time of writing in early February, the National Energy System Operator (NESO) had just released this year’s results of the second CfD auction for renewable contracts. For comparison of energy prices, I have used the Drax Electric Insights that show the average wholesale price for the previous 12 months was £77.60/MWh.
Allocation Round 7 – Offshore wind results
The Energy Secretary approved plans for six new offshore wind farms following an auction of renewables contracts known as AR7.
Thousands of wind turbines are to be built around Britain’s coastline after the UK awarded additional yearly subsidies of up to £1.8 billion to green energy developers.
This has been claimed as a major step towards clean power by 2030, and the price secured in this auction is claimed to be 40 per cent lower than the alternative cost of building and operating a new gas plant, using a 30 per cent load factor for that technology. However, a Combined Cycle Gas Turbine (CCGT) plant typically aims for a higher load factor – often between 60 and 85 per cent.
The latest auction grants developers CfDs, which guarantee a minimum power price and protect them from major losses.
Under the auction system, the Government sets an overall budget and invites wind farm developers to bid competitively for contracts.
The results of the offshore wind section of the UK’s seventh Contracts for Difference Allocation Round (CfD AR7) were announced on 14 January 2026. In total, 8.4GW of capacity was awarded in the auction, a strong result compared with the 3.8GW of fresh capacity awarded in AR6 and the previous record of 7.0GW in AR4.
RWE was the biggest winner, securing 6.9GW of the capacity awarded, while the Government dramatically utilised its new powers to increase the budget mid-round from £900 million to nearly £1,800 million. Industry reaction to the outcome of the auction has generally been positive.
Allocation Round 7a – Solar, onshore wind and tidal
The results of the second phase of the AR7 CfD auction for solar, onshore wind and tidal, were announced on 11 February 2026.
The Government awarded contracts to a record number of renewables projects, including 157 solar developments across England, Scotland and Wales. The total awarded in this auction was 6.2GW, bringing the overall total of 14.6GW for AR7.
The results have been welcomed by climate and clean energy groups, who see solar as a relatively inexpensive way to reduce the UK’s reliance on fossil fuels during the summer months.
However, some local communities oppose such large developments on their doorstep.
The West Burton solar farm, planned for the Lincolnshire and Nottinghamshire border, has become the largest ever to win a government contract, but local opponents fear it could cause ‘mass industrialisation’ of the countryside.
All the solar projects have already been granted planning permission and are now due to be delivered over the next few years.
Other renewable energy projects to secure contracts include onshore wind – mainly in Scotland – and a small number of tidal power developments.
By 2030, the Government wants at least 95 per cent of Great Britain’s electricity to come from ‘clean’ sources, including renewables such as solar and wind, alongside nuclear energy.
While solar cannot be relied on throughout the year – for example on short, dull winter days – it can complement wind power, particularly during the summer months when wind speeds tend to be lower.
Last year, solar energy provided more than 6 per cent of Great Britain’s electricity – rising to more than 40 per cent for a small number of half-hour periods in July. The problem is that when demand peaks in winter, solar generation is non-existent. Of course, as global warming leads to higher summer temperatures in Great Britain and consumers increasingly turn to air conditioning, solar will really come into its own.
The Government is targeting 45-47GW of solar capacity by 2030 to help meet its clean power goal, potentially rising to 54-57GW with additional rooftop solar. That would represent an increase from 21GW as of autumn 2025, according to government figures, although the solar industry puts current capacity at 24GW.
I find the Government target strange, as on the longest day of 2025 (23 June) at 1pm, demand was 37GW. By 2030, the oversupply of solar – combined with significant increases in both onshore and offshore wind, as well as over 6GW of nuclear – may mean consigning many gigawatts of generation off the system. Alternatively, are we going to magically develop and build long-term storage within the next four years, or should we be holding CfD auctions for long-term storage instead?
The Government has said it wants more batteries and other storage systems to make use of solar energy outside sunny periods. However, the combined cost of solar plus battery backup will surely make the overall cost of energy uncompetitive.
This auction’s allocation of solar farms secures a further 4.9GW of capacity across 157 projects, higher than the 3.3GW across 93 projects in the previous auction in 2024.
The results have been broadly welcomed by clean energy groups as a major step forward for the solar industry.
However, most analysts still have serious doubts about whether the Government will meet its 2030 clean power target, given the number of renewables projects that still need to be built and connected to the grid.
The solar and onshore wind projects awarded contracts are given a guaranteed price – for 20 years for solar and wind in this auction – and are linked to inflation. That certainty is designed to reassure developers that they will receive a return on their upfront investment.
The solar projects have been awarded a fixed price of £65.23/MWh of electricity generated, in 2024 prices. That is down from the £70/MWh awarded at the last auction in 2024 (also in 2024 prices).
Approximately 1.3GW of onshore wind projects were also awarded contracts. They have risen slightly in price to £72.24/MWh, up from £71/MWh in the last auction (both in 2024 prices).
These projects may raise or lower household bills, depending partly on how they compare with wholesale electricity prices. Wholesale market prices are, at present, largely driven by gas.
However, the final impact on bills is difficult to calculate, as it depends on future gas prices, grid upgrades, and how much our demand for electricity rises, among other factors.
A small number of contracts have also been awarded to tidal power projects. They are expensive, but the Government views them as an investment in a technology that could become cost-effective in future, while also boosting green jobs. Tidal generation is also totally predictable, unlike solar and wind, as tide times can be forecast far into the future.
Nuclear comparison
Hinkley Point C’s strike price is £92.50/MWh (in 2012 prices), index-linked and currently equivalent to approximately £133/MWh in 2025 prices. This price will apply during the construction period and over the subsequent 35-year tariff period.