Representing the offshore energy sector, Offshore Energy UK’s (OEUK) Sustainability and Policy Director Mike Tholen expressed concern that ‘though the budget is a step forward, it may still fall short of what’s needed to meet the UK’s goal of 41 to 50 GW of offshore wind energy by 2030’.

He emphasised that it will be necessary to ‘galvanise investment and continue becoming more competitive to get there, since every gigawatt of wind power matters in bringing us closer to affordable and secure homegrown energy for consumers and businesses’.

Right now, he complained that ‘companies face high costs and tough market conditions… [which] need a stable and predictable pipeline of work which can be built by domestic supply chains’. He added: ‘But this approach must carefully avoid locking in high electricity prices for people around the UK.’ Furthermore, he said: ‘In a changing world, fixed and floating offshore wind needs to continue to show it can scale up while delivering clean affordable energy to power homes, jobs and growth across the UK.’

The Contracts for Difference (CfD) scheme is the government’s main mechanism for supporting low-carbon electricity generation. The latest budget is seen to boost payments by the UK Department for Energy Security and Net Zero (DESNZ) to more than £1bn on offshore wind.  

Announced in late October, the overall CfD budget for AR7 for offshore wind and floating offshore wind projects confirms that a maximum of £900mn is available to fixed-bottom offshore wind farms for delivery between 2028 and 2031; while a further £180mn is available to floating offshore wind farms, which must be delivered between 2028 and 2030.

Renewable energy developers entered their bids for funding through the CfD earlier this year and are set to discover whether they have been successful in mid-January 2026.  

Through the CfD scheme, renewable energy developers are guaranteed a set price per MWh for the electricity they produce – known as the strike price. When the strike price is higher than the market price, the government-owned Low Carbon Contracts Company subsidises the developer. When the market price is higher than the strike price, the developer pays back into the public purse.

Fixed bottom offshore wind has been set a £113/MWh administrative strike price (ASP), while the floating wind ASP is set at £271/MWh for AR7, based on 2024 prices. Both are significantly higher than those offered in the previous CfD allocation round (AR6), under which the government worked off 2012 prices. It’s worth bearing in mind that the 2023 CfD round, AR5, attracted no successful bids from offshore wind developers. Hence the industry rebuked DESNZ for setting maximum strike prices that were far too low to cover rising supply chain costs.

The Energy and Climate Intelligence Unit’s Head of Energy Jess Ralston said billpayers should not be spooked by the increased ASPs. ‘The amount quoted is highly unlikely to be added to bills. It is based on a set of outdated estimates for future power prices that are very different from expert forecasts,’ she remarked. ‘British wind and solar is already lowering the cost of wholesale electricity by around a quarter, or £25/MWh, a trend which [is anticipated] will continue as more is built and older, less efficient gas plants are pushed out of the market,’ she insisted.