The UK government has announced a significant extension of its Contracts for Difference (CfD) scheme, increasing the duration of subsidy contracts for renewable energy projects from 15 to 20 years. This move aims to bolster investor confidence and accelerate the deployment of clean energy technologies, including offshore wind, onshore wind, and solar power.
Energy Secretary Ed Miliband emphasized that the reform is designed to provide developers with the long-term certainty needed to invest in the UK’s renewable energy sector. The extended contract terms are expected to lower financing costs and enhance the economic viability of large-scale projects, aligning with the government’s Clean Power 2030 Action Plan, which targets 95% clean electricity by 2030.
The reform also introduces changes to the CfD auction process, including relaxing eligibility criteria for planning consent for fixed-bottom offshore wind projects and providing more flexibility in project delivery timelines. These adjustments aim to streamline the development process and encourage a broader range of projects to participate in future CfD allocation rounds.
Industry stakeholders have largely welcomed the reforms, viewing them as a positive step towards achieving the UK’s ambitious renewable energy goals. However, some have raised concerns about the potential impact on consumer electricity bills post-2045, as extended contracts may result in prolonged state support.
The government is set to launch the seventh CfD allocation round (AR7) in the summer of 2025, with the new contract terms and auction procedures expected to be in effect. This round is anticipated to play a crucial role in meeting the UK’s renewable energy targets and securing a sustainable, low-carbon energy future.
