UK: Consultation published on CfD allocation round 8 changes

AR8 consultation published

On 16 December 2025, the Department for Energy Security and Net Zero (“DESNZ”) published a consultation on proposed reform to the Contracts for Difference (“CfD”) scheme for allocation round 8 (“AR8”) and future rounds.  The proposed changes are intended to support the UK Government’s delivery of Clean Power 2030. 

Alongside the consultation document, DESNZ has published a draft AR8 Agreement and Standard Terms and Conditions.

For those wishing to submit responses to DESNZ, the consultation closes at 11.59pm on Friday 30^th January 2026.

Consultation proposals

There are a number of proposals being put forward in the consultation document, intended to provide certainty on key policy areas to give investors confidence and enable the CfD scheme to scale up in size and complexity. Key areas for consultation include:

Policy on surrendered CfD capacity

During allocation round 7, a temporary restriction was placed on projects seeking CfD support in respect of ‘surrendered capacity’, ie capacity that was previously awarded a CfD but ‘surrendered’ via the Permitted Reduction and / or the Final Installed Capacity flexibilities in the CfD Contract.  The Government is proposing to retain this restriction. If implemented, the exclusion will apply to all projects from allocation rounds 1-7.  

Hybrid metering for single technology / multiple commercial arrangements

The Government is proposing to relax the requirement for metering to take place at the BMU level for CfD and merchant facilities of the same technology (this would also apply to multiple CfD facilities of the same technology). Instead, metering would take place using sub-meters at generation level, with settlement for balancing purposes continuing at the BMU level.  This would apply retrospectively, enabling generators to introduce hybrid metering for same-technology developments, either for subsequent CfD facilities or additional merchant facilities.  Importantly, this would not apply to facilities within the same CfD allocation round (except in relation to tidal and phased offshore wind, where there are specific requirements).

Introducing a new technology category of “Other Deepwater Offshore Wind”

Currently, the CfD supports either fixed-bottom or floating offshore wind, however hybrid foundation designs are being developed, which would not fit into the existing categories.  The government is therefore proposing to introduce a new category of ‘Other Deepwater Offshore Wind’ (“ODOW”) via the Contract Allocation Framework and CfD Contract for AR8 that would apply to these novel technology designs. Such ODOW structures would have to satisfy specific conditions, including being situated in waters of at least 50m in depth. ODOW projects would be eligible for 20-year contract terms, permitted to phase, and eligible for the Clean Industry Bonus.

Excluding applications with Gate 1 connection offers

In light of NESO’s connections reform process, generators are allocated either a Gate 1 or Gate 2 connection offer. Projects that receive a Gate 1 offer have not met the readiness or strategic alignment criteria, and therefore are not considered to have made sufficient progress in being able to connect to the grid. It is proposed, therefore, that only projects with a Gate 2 offer will be eligible to apply for the CfD. Projects with Gate 1 connection offers will not be able to apply for the CfD scheme.  This will apply to both transmission connected and distribution connected projects. 

Policy Update: fixing the appeals timeline

The Government provided a policy update on its decision in relation to fixing the appeals timeline (not for consultation). While it had previously confirmed its intention to implement a fixed timeline for appeals from 2026 onwards, the Government has reviewed this has and now confirmed its decision not to amend the appeals process. 

However, the Government is consulting on amending the Regulations to allow applicants to submit new documentary evidence to support Tier 1 (NESO) appeals. The changes would be along similar lines to those introduced to the Capacity Market scheme in 2021 to correct “non-material errors or omissions”.

Further proposals

The consultation also proposes changes:

• to enable NESO to correct errors made during the assessment stage or CfD applications with the intention of improving the efficiency of the scheme
• in relation to the Longstop Period and Required Installed Capacity values for floating offshore wind, to align them with fixed-bottom offshore wind projects (noting that the same values are also proposed for ODOW projects)
• to remove the facility of allocating default bids to applicants who fail to submit a bid within the sealed bid window, but do not withdraw their application.  This would have the effect that an application that would previously have been assigned a default bid will instead be deemed to have been withdrawn
• the Unilateral Commercial Operations Notice (“UCON”) provisions, to ensure that the LCCC can receive near real-time metering information and apply the UCON provisions promptly and effectively to all generators
• to the provisions introduced in AR7, enabling the Secretary of State to view anonymised sealed bids. Although legislatively available for all technologies, it was applied just to fixed bottom and offshore wind for AR7, and the government is now seeking feedback on the merits of retaining the policy for fixed bottom offshore wind, and expanding the visibility of bids to other technologies.  Furthermore, the government proposes to limit the number of sealed bids that can be submitted to one for technology types where the Secretary of State has visibility of bids, as was the approach taken in AR7. 

Next steps

Following the deadline for submission of responses, DESNZ will review the responses received in relation to the consultation.  Although the intention is to implement all proposals being taken forward in AR8, DESNZ had indicated that it may publish its response on its scheme efficiency proposals ahead of the other policy areas covered by the consultation, and may implement further refinements to the proposals in future allocation rounds.