CfD Allocation Round 7: What does this mean for corporate energy buyers as 2025 comes to an end?
Understanding the impacts of AR7 is crucial for planning long-term procurement or sustainability strategies.
The results of the Contracts for Difference Allocation Round 7 are expected between late 2025 and early 2026.
While the outcome of the latest auction is to be announced, now is the time for corporate energy buyers to review how Allocation Round 7 affects renewable availability, pricing and long-term procurement strategies.
What is the CfD?
The Contracts for Difference (CfD) scheme is the UK Government’s main mechanism for supporting low-carbon electricity generation. It guarantees developers a fixed ‘strike price’ for the electricity they produce.
When the market price is below the strike price, the government tops up the revenue. When prices are above, the generator pays back the difference. This is set to stabilise income for renewable projects and make financing easier, while shielding consumers from volatile market prices.
CfDs and Corporate PPAs: Two routes to renewable power for UK developers
Both CfDs and Corporate Power Purchase Agreements (CPPAs) offer developers long-term revenue certainty — but they serve different markets and functions.
CfDs are government-backed and auction-based, designed to accelerate the development of renewable energy projects on the National Grid.
CPPAs are commercial agreements between corporates and developers, designed to secure renewable power and realise sustainability goals.
What is in the Allocation Round 7 budget?
Headline figures from the Allocation Round 7 budget included:
- Total Budget: £1.08 billion (2024 prices) for delivery years 2028/29 – 2032/33.
- Offshore Wind: £900 million/year.
- Floating Offshore Wind: £180 million/year.
- Admin Strike Prices: £113/MWh (offshore), £271/MWh (floating).
What does this mean for me?
The Contracts for Difference (CfD) Allocation Round 7 announcement set new parameters for how future renewable generation will be financed and delivered. This includes:
- CfD-backed capacity will begin from 2028 onwards, reinforcing offshore wind growth.
- Fewer subsidy-free projects for corporate PPAs — remaining ones may command a premium.
- CfD prices set a benchmark for CPPA negotiations (£113/MWh for offshore).
- CfD projects won’t deliver until 2028+, so CPPAs offer earlier access to renewable developments seeking funding.
CfD AR7 signals government commitment to offshore wind — but also intensifies competition for unsubsidised projects.
For corporate energy buyers, these developments go beyond government policy — directly influencing the future cost, timing and availability of renewable electricity.
Understanding this notice is crucial for planning long-term procurement or sustainability strategies.
Where can I find more information?
The Allocation Round 7 budget notice can be found on the gov.uk website.
How can Inspired help?
The CfD AR7 Budget Notice reaffirms the UK’s long-term commitment to renewable energy.
For corporate buyers, the time to act is now: engage developers early to secure pricing and alignment before CfD awards are finalised.
Early action on renewable procurement — through structured CPPAs — is key to securing supply and actualising sustainability ambitions.
Our energy experts can help you navigate the changing market conditions and surround — helping businesses balance energy security with cost and carbon reduction goals.
If you would like to discuss how we can support you, please email [email protected]
Main header image credit: Bethany Swire, Inspired’s water team.
