At the beginning of June, DESNZ published a series of consultation responses and draft AR8 documents setting out the changes that will apply for Allocation Round 8 and, in some cases, future rounds.
The consultation package covered ten principal contract-term proposals, alongside separate legislative refinements. Explored in our previous article, these included surrendered CfD capacity and removal of default bidding, hybrid metering, changes for floating offshore wind and innovative deep water offshore wind, the exclusion of Gate 1 projects, measures aimed at auction efficiency and other refinements.
We now have direction on all the proposals together with the final policy responses. In this article, we look at the key changes being made post-consultation.
Proposal outcomes
- Surrendered CfD capacity: continuing the restriction from AR7 into AR8 and beyond, any capacity surrendered by way of Permitted Reduction and Final Installed Capacity flexibilities will be barred from being bid into subsequent auctions.
- Hybrid metering: after contract signature, generators will have the option to request approval to use hybrid metering for single-technology or multiple commercial arrangements, and this will also be available to CfD holders from previous allocation rounds.
- Floating Offshore Wind (FLOW): the Longstop Period for new FLOW projects will be increased to 24 months and the Required Installed Capacity threshold will be reduced to 85% offering support to these nascent projects.
- Other Deepwater Offshore Wind (ODOW): a new “Other Deepwater” category will be included within the CfD framework to recognise current and future offshore wind technologies using innovative deep water foundation solutions that may fall outside the existing floating offshore wind definition.
- Removal of default bids: no bid means no bid. The previous mechanism by which a project that failed to submit a bid was assigned the Administrative Strike Price is being removed in favour of treating the application as if it were withdrawn. This also applies to any “Pending Applicant” that fails to submit a “Pending Bid”.
- Preventing delayed CfD start dates: the Unilateral Commercial Operations Notice (UCON) provisions will be strengthened, with enhanced metering information used for monitoring. As the mechanism used to trigger the CfD Start Date, these changes are intended to reduce the scope for distribution-connected projects to delay commencement of the fixed-price CfD in order to benefit from a pre-CfD merchant period during higher wholesale price conditions.
- Exclusion of Gate 1 connection agreement projects: Gate 1 projects will be excluded from AR8 and beyond given the lack of certainty in delivery in the absence of confirmed connection date or point of connection. For AR8 only, transitional safeguards apply to certain projects awaiting updated connection offers under the connections reform process.
- Visibility of sealed bids: visibility of anonymised sealed bids will continue for fixed-bottom offshore wind projects in AR8 and be extended to solar and onshore wind, giving DESNZ greater visibility of bid information when setting budgets and making allocation decisions.
- Minor and technical changes: the Standard Terms and Conditions will apply the full-year 2024 CPI to the annual strike price adjustment from AR8 onwards and the definition of “Inside Information” will be expanded so that it is not limited to the Generator alone, but also captures relevant information relating to members of its group and associated listed financial instruments.
- Additional scheme changes: the Allocation Framework also includes additional changes not subject to consultation, including provision for separate clearing prices in certain cases, such as where different technology, location, repowering or project-specific categories are used within the allocation process.
Bottom line
The consultation outcomes are aimed at improving scheme efficiency, maintaining auction integrity, supporting timely deployment and preserving value for money for consumers.
They support emerging and innovative technologies, particularly in offshore wind, while also enabling more flexible commercial arrangements such as hybrid metering.
At the same time, the package tightens aspects of the CfD framework for distribution-connected projects and reinforces delivery certainty through the exclusion of Gate 1 projects. For developers, CfD eligibility is now being aligned more closely with connections reform: without a firm enough grid position, the project may not yet be CfD-ready.
Taken together with the associated legislative and technical amendments, the reforms reflect the Government’s wider Clean Power 2030 objective of accelerating low-carbon generation deployment while improving the operation of the CfD regime.
Key Contacts
Audio versions of this article are autogenerated and occasional errors in interpretation may be made. The content of this article is for general information only. It is not, and should not be taken as, legal advice. If you require any further information in relation to this article, please contact the author in the first instance. Law covered as at June 2026.