Photo by Pete Godfrey
The UK government’s announcement of a £1.08 billion budget for Allocation Round 7 (AR7) of its Contracts for Difference scheme has prompted widespread disappointment across the offshore wind industry, with major trade bodies warning the allocation could severely restrict sector growth and jeopardise the nation’s ambitious 2030 clean energy targets.
Budget allocation and timeline
The Department for Energy Security and Net Zero confirmed on 27th October that £900 million will be made available for fixed-bottom offshore wind projects in Pot 3, with a further £180 million allocated to floating wind schemes in Pot 4. Projects awarded contracts will receive 20 years of support, an increase from the previous 15-year term, with delivery years spanning 2028-29 through 2030-31.
However, industry leaders have responded with alarm, calculating that the budget will likely secure only 5-6 GW of new capacity from the more than 20 GW of eligible projects, approximately a quarter of what is available. With the UK currently operating 16.6 GW of offshore wind capacity and targeting 50 GW by 2030, stakeholders argue that only two auction rounds remain to deliver the necessary infrastructure.
Industry warns of missed opportunities
Giles Dickson, CEO of WindEurope, warned that “this budget risks severely restricting the growth of offshore wind in the UK. There are lots of good projects waiting to be built, and consumers and industry want the cheaper electricity that they’d bring. But with this initial budget proposal, only a quarter of the projects will get through.”
WindEurope calculated that the limited budget means the UK would miss out on £53 billion in private investment and 45,000 jobs, with each gigawatt of offshore wind capacity typically generating £2-3 billion for the economy.
Ana Musat, Executive Director of Policy and Engagement at RenewableUK, stated that “the budget announced today will not maximise investment in new offshore wind farms. We have a record amount of offshore wind capacity eligible for this auction – more than 20 gigawatts – and the current budget would only procure about a quarter of that.”
She continued: “Given the amount of competition in this year’s auction, we expect to see competitively-priced bids, so the Government should adjust the budget to maximise procurement, which could attract up to £53 billion in private investment in the UK economy.”
Scottish sector particularly concerned
Scottish concerns were particularly pronounced, with Claire Mack OBE, Chief Executive of Scottish Renewables, describing this year’s auction as “a pivotal moment to inject fresh momentum into Scotland’s offshore wind sector.” She warned that “an auction that fails to deliver for Scotland will seriously undermine our ability to maintain and secure the growth that is essential for energy security.”
Mack emphasised that “the budget announced today would significantly restrict that value from reaching consumers and communities. We urge careful consideration to ensure the final budget best delivers on our long-term national interests.”
Government defends flexible approach
The government, however, has defended its approach as strategically designed to maximise competitive tension whilst maintaining flexibility. Chris Stark, Head of the UK’s Mission for Clean Power, explained that bids exceeding the budget are expected “by design” and that, for the first time, officials will be able to view the full bid stack beyond the initial allocation.
Stark stated: “For the first time, we will be able to ‘see’ the bid stack (but not the bidders) beyond the agreed budget and make informed decisions to contract for more offshore wind capacity at a price that offers real value to consumers.”
UK Energy Minister Michael Shanks described the auction as “another step towards delivering the clean power this country needs to end our reliance on volatile global gas prices, ensuring our energy security and bringing down bills for good.”
Strike prices and supply chain support
The government has set administrative strike prices of £113 per MWh for fixed-bottom offshore wind and £271 per MWh for floating wind, reflecting the higher development costs of the emerging floating technology. Additionally, a Clean Industry Bonus worth £20.1 million per gigawatt of capacity has been made available to support domestic supply chain development.
The sealed bidding window for AR7 is scheduled to open between 11-17 November, with results expected on 14 January 2026. The auction’s outcome will be closely watched as a critical indicator of whether the UK can maintain momentum towards its Clean Power 2030 mission whilst balancing the competing demands of industry growth, consumer value, and energy security.