23/07/2026
Written by Tim Kittow and Joseph Halawin.
On 6 July the Government released the highly anticipated terms and conditions to the Contracts for Difference (CfD) Contract giving interested parties certainty on the changes referred to during the consultation periods earlier this year. Whilst Allocation Round 8 (AR8) has largely followed the approach set out in AR7, there have been significant amendments and greater allowances for wind technologies. This article sets out the now confirmed key changes in AR8 and the possible direction of travel for future rounds.
Surrendered capacity
AR8 applicants are no longer allowed to ‘surrender’ part of their capacity and resubmit the surrendered capacity for future allocation rounds. The Government has made the temporary ban on resubmitting surrendered capacity (established in AR7) permanent to ensure energy generation targets are met. Participants are allowed to surrender capacity, but the capacity surrendered will be blacklisted from all future allocation rounds.
Gate 2 connections
Applicants who have obtained a Gate 1 connection agreement will no longer qualify for AR8 with an exception for projects who hold a Gate 1 Connection with a Connection Point and Capacity Reservation (CPCR). The Government confirmed that Gate 1 connection agreements no longer provide enough certainty that the project will progress to Gate 2 and connect to the grid within the required timeframes. The CPCR exception is also likely to be a ‘one-off’ exception for AR8 as it is intended as a transitionary measure between AR7 and AR8.
Single Sealed Bids and Secretary of State Bid Visibility
AR8 has followed the approach set out in AR7 where Fixed Offshore developers were restricted to submitting a single sealed bid. Applicants for Solar PV and wind technologies (Onshore, Offshore Fixed and Floating, remote island, and Other Deep Water Offshore Wind) now must only submit one sealed bid. Flexible bids are also no longer permitted and are explicitly banned within the CfD Allocation Framework for most technologies. This is to give the Government greater certainty on budgets and prevents developers from artificially inflating clearing prices by submitting both safe high and aggressive low prices during the bidding process.
Additionally, the Secretary of State's visibility of sealed and anonymised bids will be extended to Solar PV and Onshore Wind for AR8 if the bids are above the relevant budget to prevent Government underspends.
Deep Water Offshore Wind
Deep Water Offshore Wind has been included as a new technology category. This category is intended to cover offshore wind technologies that do not float within the ‘floating offshore’ definition under the CfD Allocation Framework but use buoyancy within the structure and are fixed to the seabed in depths between 50m to 150m. Systems such as ‘Tension-Leg Platforms’ which use a buoyant hull to reduce structural loads and are firmly fixed to the seabed would not fit into either the fixed or floating definitions under the Framework are now are included in a separate category. Deep Water Offshore Wind sits within pot 4 under AR8 alongside Floating Offshore Wind and wording has been included in the standard terms and conditions.
Non-Delivery Disincentive
Further reforms have been considered for Floating Offshore Wind to allow for an extended 24-month longstop/grace period and a requirement that only 85% of estimated capacity needs to have been installed within the target commissioning window (previous AR7 rules required 12 months longstop and 95% installation). This is to facilitate greater alignment between Floating Offshore Wind with Fixed Base Offshore Wind.
Clean Industry Bonus
Building off the success in AR7, the Clean Industry Bonus (CIB) now applies for all offshore wind technologies. This will allow Fixed and Floating Offshore developers to apply for additional CfD support when opting for more sustainable supply chains early in the application process. Successful applicants who meet the CIB criteria will now receive payments “on Delivery” meaning CIB payments will be made when the criteria have been met as opposed to the 1 to 3 years wait under AR7. Onshore wind is also likely to be included in AR9 but has not been confirmed.
The changes in AR8 demonstrate that the Government is demanding greater certainty from applicants in terms of pricing and timelines. There has also been a considerable focus on the inclusion and regulatory alignment of existing and new wind technologies, reflecting the Government’s commitment to achieve its considerable targets of up to 126 GW for combined wind generation by 2035. Whilst AR8 has focused more on Offshore developments, AR9 is likely to bring a greater change to Onshore technologies, reflecting both market and regulatory changes.
If you would like to discuss any of the upcoming changes further, please do get in contact with our Energy and Resource Management team for more details.
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