Supporting low-carbon electricity generation
The application window is now open for Allocation Round 7 (AR7) of the Contracts for Difference (CfD) scheme – the UK’s flagship mechanism to support low-carbon electricity generation. The Government-led scheme incentivises investment in renewable energy by shielding developers from volatile wholesale prices, through a flat indexed rate for the electricity they’ll provide over 15 years, also protecting consumers from paying increased support costs when electricity prices are high.
AR7 marks a significant step forward, with the Department for Energy Security and Net Zero (DESNZ) confirming that strike prices for fixed‑bottom offshore wind are now capped at £113/MWh and floating wind at £271/MWh – a reflection of 2024 market prices, giving developers and investors a welcome boost.
Government updates seek to boost confidence
Just two weeks ago, the government confirmed a series of long-anticipated reforms designed to restore investor confidence in, and accelerate the deployment of renewable technologies.
Most notably and as mentioned, DESNZ announced the highest ever Administrative Strike Prices (ASPs) for wind power. The ASPs represent the maximum price per megawatt hour that a project can receive under CfD contracts, so most successful bids are expected to clear below these levels. The increases reflected higher costs for raw materials and ongoing supply chain pressures, including vessel availability and skills shortages. The new ASPs are as follows:
- Floating offshore wind: £176 ➡️ £194 per MWh 📈
- Offshore wind: £73 ➡️ £81 per MWh 📈
- Onshore wind: £64 ➡️ £66 per MWh 📈
- Solar PV, on the other hand, has seen a notable reduction: £61 ➡️ £54 per MWh
Criticisms of recent reforms
While AR7’s higher strike prices show clear intent from the government, the political backdrop is more uncertain than it has been in years, and comments from Reform UK’s Richard Tice have recently muddied the waters. The Boston and Skegness MP has written to leading renewable energy companies, warning that any contracts awarded under AR7 could be “struck down” if his party wins or holds the balance of power at the next election. The letter underlines a growing political risk: long‑standing cross‑party consensus on net zero is no longer guaranteed.
While industry groups have welcomed the changes as a more ‘realistic’ reflection of current costs, consumer advocates have raised concerns about the potential impact on energy bills. CfD subsidies for June 2025 alone totalled a record £240 million, and with AR7 set to be the largest round to date, Ed Miliband’s claim that the green transition means cheap bills is coming under increased scrutiny.
Other key updates introduced in AR7
- Longer contracts: Term lengths for renewables have been extended from 15 to 20 years, reflecting improved technology and longer asset lifespans. The change is intended to shore up investor confidence by offering a longer period of guaranteed returns.
- Greater flexibility for solar commissioning: The government have acknowledged the planning and construction risks involved in utility-scale solar and extended the Target Commissioning Window for projects above 5MWh from 3 to 12 months. This will allow developers more breathing room to respond to supply chain delays and unforeseen obstacles without risk of losing their CfD.
- Planning flexibility for offshore wind: Fixed-bottom offshore wind projects can now bid before securing planning consent, potentially speeding up project timelines.
- No specific capacity targets: While the government has published overall ambitions, AR7 will not set round-specific capacity goals. Instead, the total budget will be confirmed ahead of the sealed bid window opening later this year.
- Separate clearing prices for “remote island” wind: Projects further offshore will benefit from tailored pricing to account for higher grid connection charges.
- New pot structure: Fixed-bottom and floating offshore wind will now be split into separate pots, enabling fairer competition and more targeted support for emerging technologies.
Increased flexibility may bring greater complexity
So, AR7 arguably introduces a more flexible, market-responsive CfD framework. But with that flexibility comes new complexity. With no round-specific capacity targets, planning consent allowed post-bid for offshore wind, and record-high ASPs, developers are operating in an environment where success depends not just on offering a low price, but on demonstrating credibility.
At Copper, we believe community trust and political alignment are now key enablers of deployment. The ability to demonstrate early buy-in, be it from local authorities, elected representatives, landowners and communities, will make the difference when investors weigh project viability. In a competitive round like AR7, projects that show they can manage reputational risk, secure planning consents, and bring visible local benefits are better placed to secure both funding and future pipeline confidence.
The deadline for applications closed on 27th August 2025. Applicants will be notified of the outcome of their qualification application on 26th September, with NESO sharing allocation results between November 2025 to February 2026, depending on the nature of qualifications and appeals.
Copper is supporting renewable energy projects across the country, with many of our existing clients engaging with or considering their position in AR7. If you are interested in how we can support your application or a specific renewable energy project, please do get in touch with a member of our team:
- To understand more about AR7 please contact oliver.gough@copperconsultancy.com
- If you have a specific renewable energy project you are looking to position through AR7 please contact tom.byrne@copperconsultancy.com
- For any press-related enquiries associated with AR7 please contact simon.renwick@copperconsultancy.com.