UK Awards Record Offshore Wind Contracts to Power 12 Million Homes

Historic Contracts Awarded in Allocation Round 7

Great Britain has taken a significant step towards its clean energy goals with the awarding of contracts to eight new offshore wind farms. The latest Contracts for Difference (CfD) Allocation Round 7 (AR7) has secured a record 8.4 gigawatts (GW) of offshore wind capacity, marking the largest single procurement of offshore wind energy in British and European history. This monumental achievement is projected to generate enough clean electricity to power the equivalent of 12 million homes across the country by the end of the decade.

The successful auction round is anticipated to unlock approximately £22 billion in private investment and create around 7,000 skilled jobs throughout the UK.

Key Projects and Developers

The awarded contracts encompass a mix of fixed-bottom and floating offshore wind technologies, spanning various regions including the North Sea, the Irish Sea, and the Celtic Sea. Major developers securing contracts include:

• RWE: The German energy producer emerged as a significant winner, securing contracts for almost 7 GW of offshore wind projects. This includes the Norfolk Vanguard East and Norfolk Vanguard West projects (combined 3.1 GW) located off the coast of Norfolk, and two Dogger Bank South projects (combined 3 GW) approximately 100 km off the northeast coast of England. RWE also secured a contract for the Awel y Môr project (775 MW or 0.8 GW) in the Irish Sea.
• SSE Renewables: The company won support for Berwick Bank Phase B, a 1.28 GW project in the North Sea, marking the first new Scottish project since 2022.
• Floating Wind Projects: Demonstrating progress in emerging technologies, contracts were also awarded to two floating wind projects: Erebus (100 MW) in the Celtic Sea and Pentland (92.5 MW) off north Scotland.

Financial Details and Market Rebound

The Contracts for Difference scheme guarantees a fixed price for each unit of electricity generated, providing developers with revenue stability. The average strike price for fixed-bottom offshore wind projects in this round was approximately £90.91 per megawatt-hour (MWh) in 2024 prices. Specifically, projects in Scotland secured a price of £89.49/MWh, while those in England and Wales were awarded £91.20/MWh. The two floating wind farms received a higher strike price of £216.49/MWh.

This successful round represents a significant rebound for the UK's offshore wind sector, especially following the previous Allocation Round 5 in 2023, which failed to secure any new offshore wind projects due to what developers considered to be insufficient strike prices. The government addressed these concerns by increasing the budget for AR7, demonstrating a renewed commitment to the sector.

Towards the 2030 Clean Power Target

The outcome of AR7 is a crucial step towards the UK government's ambitious target of achieving 50 GW of offshore wind capacity by 2030, including up to 5 GW from innovative floating technology. Energy Secretary Ed Miliband hailed the auction as a 'historic win,' emphasizing that the price achieved is approximately 40% lower than the cost of building and operating a new gas power plant, reinforcing the economic viability of offshore wind. This development is expected to bolster the UK's energy independence and contribute significantly to lowering energy bills and meeting net-zero commitments.