UK Government Moves to Extend Clean Energy Contracts in Bid to Boost Renewables

The UK Government has introduced a wave of reforms to its flagship clean energy subsidy program, known as Contracts for Difference, as it prepares for the next auction round in August. These changes aim to provide investors with greater confidence and accelerate the rollout of renewable energy projects nationwide.

One of the most notable changes is the extension of contract lengths from 15 to 20 years for offshore wind, onshore wind, and solar projects. By giving developers more time to recover their costs, the government hopes to make large-scale renewable investments more financially sustainable. Longer contracts also provide developers with more predictable revenue streams over time.

In another significant shift, offshore wind developers will now be allowed to participate in the auction process even if they haven’t secured full planning consent. This applies specifically to fixed-bottom offshore wind projects. The government believes this change could shorten delivery timelines and increase competition, which in turn may lead to lower energy costs for consumers.

There’s also a significant update to how auction budgets are determined. For the first time, the Energy Secretary will have the authority to review developer bids before setting the final budget. The idea is to give the government more control over how much capacity is procured and to ensure public funds are used more efficiently.

Energy Secretary Ed Miliband said: “We need to go further and faster to make Britain a clean energy superpower, end our reliance on volatile global gas prices and make working people better off with homegrown power we control.

“These reforms will give developers the certainty they need to build in Britain, helping deliver more clean power projects and supporting thousands of jobs – all part of the mission to bring bills down for good through our Plan for Change.”

Since its introduction in 2015, the Contracts for Difference scheme has played a key role in supporting the development of 10 gigawatts of clean energy. An additional 23 gigawatts are currently under contract and are expected to come online by 2030.

The upcoming auction, known as Allocation Round 7, will be the first to operate under the new rules. Results are expected to be published before the end of the year.

Last year’s round, AR6, featured a record-setting £1.5 billion budget. This increase was part of a broader push by the Labour Party to speed up the UK’s energy transition and decarbonise the grid. A total of 131 projects secured funding in that round, with the combined capacity expected to power up to 11 million homes once operational.