UK Government confirms refinements to CfD allocation round 8

Second response published

On 1 June 2026, the Department for Energy Security and Net Zero (“DESNZ”) published its second response to its consultation (published in December 2025) on proposed refinements to AR8 of the Contracts for Difference (“CfD”) scheme. Its initial response was published earlier this year (see our briefing: UK: Government addresses CfD efficiency improvements for AR8) covered proposed legislative changes to improve scheme efficiency. This second response provides DESNZ’s decision on the remaining aspects of the initial consultation.

In its latest publication, the Government has confirmed a package of significant reforms, including permanent restrictions on surrendered capacity, the introduction of hybrid metering, new contract terms for floating offshore wind, a new technology classification for deepwater offshore wind, removal of default bids, strengthened metering obligations for distribution-connected generators, and, importantly for those awaiting a Gate 2 offer under the Connections Reform process, alignment of CfD eligibility with grid connection reforms.

Refinements for AR8

Exclusion of Gate 1 Connection Agreements

The Government will exclude applications from projects with only a Gate 1 connection offer (or expected to receive a Gate 1 connection offer) at AR8. For AR9 and beyond, applicants will need a Gate 1 Connection Point and Capacity Reservation (“CPCR”) or Gate 2 connection agreement.

Transitional arrangements and safeguards for AR8

Given the timing of the Connections Reform process and issue of Gate 2 connection agreements, for AR8 only, transitional safeguards are being implemented, such as the provision of a ‘CMP435: Gate 2 to Whole Queue (“G2tWQ”) Notification’ in its entirety as evidence of its Gate 1 CPCR or Gate 2 status. If the project already has a connection agreement, the full connection agreement must be provided. Applicants not in receipt of a revised G2tWQ connection agreement will be assessed against their existing pre-reform connection agreement in accordance with the connection agreement criteria set out in the allocation framework. Similarly, connection offers that have been issued but not signed or countersigned will result in the relevant project being assessed on its current connection agreement and the G2tWQ Notification.

Projects waiting for revised Gate 2 offers that have been notified of an indicative ‘deceleration’ will not be excluded from AR8 on this basis. In the same vein, flexibility is being introduced for projects that have applied to the G2tWQ process on an ‘advancement’ basis and have been notified of a possible ‘acceleration’. These projects can use their ‘requested advancement date’ set out in the G2tWQ application, providing evidence of this at the point of CfD application, together with evidence of the existing connection agreement and Gate 1 CPCR or G2tWQ Notification status, at which point both the Gate and Phase status of the application will be assessed. This does not apply to projects that have requested advancement within a Phase, but have not had their Phase Notifications changed.

Further policy decisions in relation to grid delay provisions have been set out, reflecting the fact that the LCCC is due to issue a revised statement in relation to the impact of the Connections Reform process on CfD.

Surrendered CfD Capacity

DESNZ has confirmed it will maintain the restriction preventing generators from bidding previously surrendered capacity into AR8, and subsequent allocation rounds. The restriction, which applies to all projects previously awarded a CfD agreement in a prior allocation round, is designed to protect auction integrity, prevent strategic recycling of capacity at higher strike prices, and avoid delays to deployment timelines.

Hybrid Metering

The proposal to introduce optional hybrid metering for single technology / multiple commercial arrangements in the CfD from AR8 is being taken forward. This will allow CfD and merchant assets of the same technology to share metering infrastructure through Hybrid Balancing Mechanism Units (“HBMUs”). This aims to reduce costs while maintaining scheme integrity. Key safeguards include restricting CfD facilities from sharing a BMU with assets subsidised under other Government schemes, and restrictions on multiple CfD facilities from the same allocation round sharing a HBMU (with exemptions for tidal and phased offshore wind projects). Furthermore, generators holding Private Network Agreements are not eligible for hybrid metering.

Projects already awarded a CfD in an earlier allocation round can apply for hybrid metering, and it will be at the Low Carbon Contracts Company’s (“LCCC’s”) sole discretion whether this is awarded. The LCCC will publish guidance ahead of AR8 to provide clarity on requirements for hybrid metering. DESNZ also notes that it will consider whether it would be appropriate to grant an exemption for projects with staged grid connections in the future, with the issues being too complex to have addressed at this stage.

This consultation response also addresses the contract amendments previously consulted on in relation to hybrid metering, and confirms the proposed contract amendments will be taken forward, with minor amendments to reflect feedback received.

Contract changes for Floating Offshore Wind (“FLOW”)

The Longstop Period for new FLOW projects will be extended to 24 months, and the Required Installed Capacity (“RIC”) will be reduced to 85%, in line with fixed-bottom offshore wind. Feedback was also received that there should be further increases to the construction flexibilities, and DESNZ has confirmed it will keep this under consideration for future rounds.

A new technology category: Other Deepwater Offshore Wind (“ODOW”)

AR8 will see the introduction of a new technology classification for Other Deepwater Offshore Wind, enabling innovative foundation designs for deepwater sites to compete for CfD support. The ODOW classification will be defined in the Allocation Framework, and has been drafted with the aim of removing the barrier to CfD support while minimising the risk of adverse outcomes. This is clearly an area that is likely to develop further, and DESNZ will keep the range of technical solutions that could enable cost effective deployment of offshore wind in deeper waters, and the definition of ODOW, under review. The Government response clarifies that, for the Clean Industry Bonus (“CIB”), ODOW projects will need to meet the FLOW minimum standards, and ODOW foundations will count as ‘floating foundations’ in the CIB components list.

Removal of Default Bids

The facility to assign default bids at the Administrative Strike Price (“ASP”) stage to qualifying applications that do not submit sealed bids will be removed. Applications that do not submit a sealed bid within the sealed bid window will be treated as withdrawn from AR8. This will also apply to applicants classed as ‘Pending Applicants’ (who are able to submit a ‘Pending Bid’ during the sealed bid window).

Strengthening UCON provisions for distribution-connected generators

The consultation proposed changes to the CfD to strengthen the Unilateral Commercial Operations Notice (“UCON”) provisions through the introduction of measures that will enable the LCCC to obtain near real-time metering information for distribution-connected generators. The ability of LCCC to obtain near real-time metering information will form part of the wider assessment carried out by the LCCC in identifying whether commercial operations have commenced. Forming part of a risk-based monitoring and engagement approach, this updated approach enables the LCCC to enforce the existing UCON expectations effectively. The provisions around the application of Default Interest on any Reconciliation Amount payable to the LCCC are considered by the Government to represent a proportionate lever within the existing contractual framework.

Visibility of Sealed Bids

The Government will extend the visibility of anonymised sealed bids to solar and onshore wind (including remote island wind) for AR8, having previously piloted this approach for fixed-bottom offshore wind. Applicants will be limited to submitting one sealed bid for any technology type where the Government has visibility, and only those anonymised bids that are above the relevant budget will be viewed. At this stage, the extension of the visibility of anonymised sealed bids is being limited to onshore wind and solar as these are considered to be key to the Government delivering its Clean Power 2030 ambitions.

Minor and Technical Changes

DESNZ has confirmed two minor technical amendments. First, the “Base Year CPI” definition in the CfD Standard Terms and Conditions will be updated to mean the full-year 2024 CPI (the value of which is 133.9), aligning the methodology used for Administrative Strike Prices, reference prices and stroke price bids with those used by the LCCC for the annual strike project adjustment.

Secondly, the definition of “Inside Information” will be amended (with Condition 72.6 being updated) to reflect the replacement of the Financial Services and Markets Act 2000 framework with the UK Market Abuse Regulation (“UK “MAR”).

Separate Clearing Prices

Although not included in the original consultation, DESNZ has signalled its intention to make greater use of specific separate clearing prices in AR8 and future rounds, in response to increased cost divergence between and within technologies. This measure allows projects to compete in the same auction pot but prevents one category of project from having its clearing price driven up by another.

Next steps

Alongside its second response, DESNZ has published the draft Allocation Framework for AR8, reflecting the changes set out in its response document. It has also separately published Schedule 5 to the Allocation Framework which sets out the criteria to be met by applicants to AR8.

AR8 is expected to open in July 2026.

Further reading on CfD AR8

UK: Government addresses CfD efficiency improvements for AR8
UK: Consultation published on CfD allocation round 8 changes | Eversheds Sutherland