What has the UK learnt in 8.4GW CfD allocation round?

• The UK has backed 8.4GW of offshore wind farms in CfD allocation round 7
• RWE is leading 6.9GW, or 82%, of winning projects with financial partners
• CIP, SSE Renewables and TotalEnergies are also among the AR7 winners

The UK Government has thrown its support behind 8.4GW of offshore wind projects in its latest Contracts for Difference (CfD) tender – but has it learnt from previous rounds?

Last Wednesday (14^th January), the industry heard the results of CfD allocation round seven (AR7). The headline is that the UK awarded support for four fixed offshore wind farms and two floating wind farms totalling 192.5MW. This should help bring certainty to the country’s offshore wind industry and show other European countries once again that the CfD mechanism works.

The winning fixed-bottom projects are:

• Norfolk Vanguard (3.1GW), which will be built in East and West phases in a 50:50 tie-up between RWE and KKR, with a CfD strike price of £91.20/MWh.
• Dogger Bank South (3GW), which is being delivered in a 51:49 joint venture between RWE and Masdar, with a CfD strike price of £91.20/MWh.
• Berwick Bank (1.4GW), which is being developed by SSE Renewables and secured the lowest CfD strike price of AR7, at £89.49/MWh.
• Awel y Mor (775MW), which is being developed in a joint venture of RWE (60%), Stadtwerke München (30%) and Siemens Financial Services (10%), with a CfD strike price of £91.20/MWh.

Those strike prices are 52%-55% higher than the winning strike prices for new fixed-bottom offshore wind farms in the previous allocation round AR6 in September 2024, and this shows that developers and policymakers are now pricing projects more realistically.

Even so, the AR7 strike prices are still around 40% cheaper than building and operating new UK gas plants (£147/MWh) and around 30% lower than new nuclear (£124/MWh), according to WindEurope. The association said AR7 was “one of the most competitive offshore auctions ever held in Europe” and other countries should use two-sided CfDs.

In addition, the floating winners in AR7 were:

• Erebus (100MW), which is being developed in an 80:20 tie-up by TotalEnergies and Simply Blue Energy, with a CfD strike price of £216.49/MWh.
• Pentland (92.5MW), which is being developed in a joint venture of Copenhagen Infrastructure Partners (80%), Eurus Energy (10%) and Hexicon (10%), with a CfD strike price of £216.49/MWh.

The floating offshore wind strike prices reflect the fact that this part of the industry is less mature than fixed-bottom projects and needs to move towards commercial maturity. The UK is set to reveal winners of CfD support in sectors including onshore wind and solar next month.

Lessons learnt

With AR7, the UK Government has awarded CfD contracts to new projects and shown it has learnt the lessons from recent tender failures, including the much-maligned AR5 in September 2023 where there were no offshore bidders due to low strike prices. The substantial rise of 52%-55% from winning strike prices in AR6 shows UK policymakers are now prioritising financial viability.

But AR7 also demonstrates that size and cost are still major factors in driving offshore success. The two biggest winners are set to be 3GW-plus each, which shows that economies of scale continue to play a crucial role in offshore wind’s success.

One concern with AR7 is whether the UK has aligned itself too closely with the success of RWE. The German utility is leading three of the four winning fixed-bottom projects, totalling 6.9GW or 82% of capacity awarded in the round, and so the successful delivery of AR7 projects now rests mostly with RWE and its financial modelling. However, the honour of lowest strike price in the tender went to SSE’s Berwick Bank.

There have so far been no criticisms of RWE’s approach, and it is a highly credible and experienced player.

Even so, it is worth noting that the UK offshore wind sector has previously suffered when it has been over-exposed to individual utilities such as Ørsted and Vattenfall. This meant the UK was exposed when Vattenfall had to reassess 4.2GW of projects in its Norfolk zone in 2023 and 2024, including Vanguard, due to soaring offshore wind costs. The UK could have looked to diversify its risk by awarding AR7 wins to other parties, with a reported 24GW of projects – 15 fixed-bottom and four floating projects – involved in the bidding. This might have resulted in some higher-priced winners but also supported resilience.

This is significant because AR7 is the first test of how the UK would make good on its commitment to judge projects on more than just cost. Last week’s news suggests that cost was still the defining factor.

Institutional investment

The other major talking point has been the entry of investment group KKR into Norfolk Vanguard as a 50% partner. This shows that utilities are increasingly looking to deep-pocketed financial players with infrastructure expertise to help unlock offshore wind in the UK, and follows the move by Apollo-managed funds in November 2025 to buy 50% of Ørsted’s 2.9GW Hornsea 3. Apollo and KKR bring financial backing and experience in funding large infrastructure, but they are not conventional offshore wind players.

RWE chief executive Markus Krebber highlighted this point when he revealed the KKR partnership, as he said: “By combining KKR’s investment know-how in large, complex infrastructure projects with RWE’s extensive offshore wind expertise, we are positioned to jointly realised these major projects,” he said. The extent to which Apollo and KKR can help with the delivery of giant complexes such as Hornsea 3 and Norfolk Vanguard will only become clear with hindsight. They and their utility partners will be judged on results.

AR7 should unlock investment in UK offshore wind, but we worry too much emphasis may have been placed on the lowest strike prices rather than the resilience of delivery.

Separately, support for two floating wind farms should boost that part of the industry. Floating wind has fallen out of favour as developers have been forced to confront the immediate financial challenges at fixed-bottom schemes, which are still more likely to be delivered. The backing of big-hitters Copenhagen Infrastructure Partners and TotalEnergies for Pentland and Erebus respectively shows some are keeping the faith with floating.

But after a tough few years for offshore wind globally, AR7 brings some optimism. Other European countries will take note.