The UK government has confirmed changes to the Contracts for Difference (CfD) scheme ahead of Allocation Round 8 (AR8), following consultation with industry. The reforms are intended to simplify the allocation process, provide more flexibility for applicants and improve the administration of future auctions.
One of the key changes for AR8 is that the National Energy System Operator (NESO), as the CfD delivery body, will be able to correct certain administrative errors during the application assessment process. Developers whose projects are initially considered non-qualifying will also be able to provide additional documentary evidence during Tier 1 appeals in specific circumstances. The changes follow feedback from industry, which highlighted the need to avoid projects being excluded because of minor administrative issues.
The government has also confirmed the CfD price base that will apply for AR8. Administrative Strike Prices will continue to be expressed in 2024 prices, with the main technology caps set at £113/MWh for offshore wind, £271/MWh for floating offshore wind, £92/MWh for onshore wind and £75/MWh for solar photovoltaic projects. These figures represent the maximum strike prices available in the auction; developers will compete by submitting bids below these levels, with successful projects receiving a CfD payment based on their awarded strike price, adjusted for inflation over the contract period.
The government’s consultation response confirmed that the CfD price methodology will be updated for AR8 to provide greater clarity and consistency for developers. The strike prices will continue to be indexed through the CfD contract mechanism, allowing support payments to reflect changes in inflation while maintaining certainty for investors.
The government has also clarified grid connection requirements for AR8. Under the reformed connection process, projects progress through different stages, known as Gates. A Gate 1 agreement provides an initial place in the connection queue but does not provide the same level of certainty on delivery timing and network capacity. As a result, projects holding only a Gate 1 connection agreement will generally not be eligible for AR8, unless they have a Gate 1 Connection Point and Capacity Reservation (CPCR), which protects their connection location and capacity.
Projects with a Gate 2 connection agreement, representing a more advanced stage of the connection process with greater certainty around delivery, will remain eligible to apply. The change is intended to ensure that projects supported through the CfD scheme have a realistic pathway to connecting to the grid.
The legislative changes will be introduced through amendments to the Contracts for Difference (Allocation) Regulations 2014, with updated contract documents reflecting the revised rules for AR8. The government said the changes are intended to maintain a competitive auction process while improving clarity and efficiency for renewable energy developers.
