Contracts for Difference Allocation Round 8 – The changes to be aware of

Following the 14.7 GW record-breaking capacity secured during Allocation Round 7 ("AR7") of the Contracts for Difference (CfD) scheme, the Department for Energy Security and Net Zero (DESNZ) held a consultation in December 2025 seeking views on several amendments to the CfD scheme, particularly the incoming Allocation Round 8 (''AR8''). It later published a response to this consultation on 20 March 2026.

DESNZ has announced that the application window for AR8 will open on 20 July 2026 and will close on 7 August 2026.  The timelines for the following stages have been divided by the DESNZ according to various scenarios such as if 'all applicants qualify'' (Scenario 1) which will be the shortest timeline and if ''non-qualifying applicants request a Tier 2 appeal'' (Scenario 5) which will be the longest timeline.

• The earliest date for the Publication of Notice of Auction and Budget Notice is 17 September 2026, and the latest date is 19 November 2026.
• The shortest timeline for the Sealed Bid Window is 01- 07 October 2026 and the longest timeline is 03 - 09 December 2026.
• The shortest timeline for Notification of Results to Applicants is 27 November- 01 December 2026 and the longest timeline is 15-17 February 2027.
• The shortest timeline for signing contracts and returning them to the Low Carbon Contracts Company (LCCC) is 16 - 31 December 2026 and the longest timeline is 04 - 17 March 2027.

In the meantime, DESNZ published on 1 June 2026 the allocation framework, which sets out the rules for AR8 and its eligibility requirements. This article explores some key changes introduced for AR8 and later allocation rounds.

Exclusion of applications with Gate 1 connection agreements

DESNZ will exclude projects that hold only a Gate 1 connection agreement with the exception of projects that have a Gate 1 Connection Point and Capacity Reservation (CPCR).

The rationale behind this is that Gate 1 projects do not have a confirmed connection date or point of connection and therefore there is a low delivery certainty. Gate 1 CPCR are however not excluded because they have a clear and certain route to a Gate 2 connection; they have been assigned a queue position alongside other Gate 2 projects and therefore will receive a connection date and point of connection which will remain the same when they convert their offer into a Gate 2 offer.

This exclusion also applies to Gate 1 projects which have obtained planning consent and are expecting to receive protection from clause 3a during the first CMP434 window and subsequently a guaranteed Gate 2 offer. DESNZ is of the view that, as these projects have not yet satisfied the Gate 2 criteria and have not yet been assigned a queue position, it is likely they will join the end of the queue when they do receive their Gate 2 offer. There is therefore no certainty that they will connect to the grid and deliver within AR8 applicable delivery years.

Therefore, projects must either have a Gate 1 CPCR or hold a Gate 2 connection agreement for AR8, AR9 and beyond.

A one-off exception

As a one-off exception for AR8 only and to implement the above policy, applicants must:

1. Provide the 'CMP435: Gate 2 to Whole Queue (G2tWQ) Notification' in its entirety as evidence of their Gate 1 CPCR or as evidence of their Gate 2 status, or:
2. Where they are in receipt of a Gate 1 CPCR or Gate 2 connection agreement, they will need to provide the full connection agreement.

Where applicants are not in receipt of a revised G2tWQ connection agreement, applicants will have to rely on their existing pre- G2tWQ connection agreement which will be assessed in accordance with the connection’s agreement criteria outlined in Schedule 5 of the Contract Allocation Framework.

When they later receive their new G2tWQ connection offer/agreement, they are not required to provide this to the Delivery Body at a later stage within the Contract Allocation Process. However, successful applicants may need to provide their new G2tWQ connection offer/agreement to the LCCC after CfD contract signature for other contractual reasons.

Safeguards and mitigations

As another one-time exception for AR8, DESNZ has also set out further mitigations and safeguards to help projects navigate this new requirement and the Connections Reform transitions.

Firstly, 'decelerated projects' which are waiting for a revised Gate 2 offer and have been notified of an indicative 'deceleration' will not be excluded from AR8. Where the project's new Gate 1 CPCR/ Gate 2 connection offer has been issued but not signed and countersigned, its eligibility for the CfD will be assessed based on the current connection agreement the project holds at the point of CfD application and the G2tWQ Notification.

Secondly 'accelerated projects' can use their 'requested advancement date' set out in their G2tWQ application, which must be evidenced at the point of CfD application together with an existing connection agreement and G2tWQ G1 CPCR or Gate 2 Notification status where both the Gate and Phase status will be assessed.

Accelerated projects are projects that have been applied into the G2tWQ process on an 'advancement' basis, requested an earlier connection date and have then been notified of a possible 'acceleration'.

Hybrid metering for single technology/multiple commercial arrangements

DESNZ has proposed an optional hybrid metering for single technology/multiple commercial arrangements.

Generators who wish to partake in this will have to give notice to the LCCC to approve for the CfD facility to become part of a Hybrid Balancing Mechanism Unit (HBMU) after contract signing. The LCCC will publish the approval conditions to join the HBMU before AR8 opens.

Generators who already have a CfD agreement (from previous Allocation Rounds) can request hybrid metering; however, approval is at the LCCC's sole discretion.

Also, CfD facilities can share an HBMU with merchant assets, including those with a Power Purchase Agreement. However, they will only be permitted to share an HBMU with a merchant asset that supplies an industrial or corporate offtaker if the offtaker is separately registered and metered with a separate Balancing Mechanism Unit. The LCCC’s guidance will set out further details on permitted arrangements.

Exclusions

• CfD facilities will not be permitted to share an HBMU with facilities already subsidised under other Government support schemes.

• Multiple CfD facilities from the same allocation round will not be permitted to use hybrid metering with the exception of tidal and phased offshore wind projects.

• Generators which hold Private Network Agreements are not eligible for hybrid metering.

DESNZ has also addressed contract amendments previously consulted on earlier this year in relation to hybrid metering. It confirmed that the proposed contract amendments will be taken forward, with minor amendments to reflect feedback received.

Contract changes for floating offshore wind (Flow)

DESNZ proposes to amend the CfD Standard Terms and Conditions to extend the Longstop Period for new FLOW projects to 24 months and reduce the Required Installed Capacity (RIC) to 85%. These changes will de-risk construction and support deployment at scale.

Offshore wind with innovative 'Other Deepwater' foundations - A new technology category

DESNZ proposes to introduce a new 'Other Deepwater ' offshore wind technology classification in AR8 to capture offshore wind projects which do not technically float and therefore would not be considered eligible as 'floating foundations' under the legal definition of 'floating offshore wind'. The definition of 'Other Deepwater' offshore wind is provided in the Draft Contract Allocation framework.

This new category opens the CfD scheme to innovative offshore wind technologies, thereby unlocking cost-effective commercial deployment of offshore wind in deeper waters.

Removal of default bids

DESNZ proposes to remove the rule and facility to assign default bids at the Administrative Strike Price (ASP) to qualifying applications who do not submit a sealed bid during the sealed bid window.

This policy will also apply to 'Pending Applicants' who can submit a 'Pending Bid' during the sealed bid window.

If any Applicant, including any Pending Applicant, does not submit a bid during the sealed bid window, then that Applicant’s application will be treated as withdrawn by the Delivery Body.

The removal of default bids will encourage bidders to bid their true value within the sealed bid window and ensure better competition among bidders.

Specific separate clearing prices

Although this was not a proposal by DESNZ, DESNZ has decided to apply separate clearing prices to technologies in the CfD auctions without any minima or maxima and based on the following categories:

1. Technology specific clearing rules
2. Locational specific clearing rules
3. Repowering specific clearing rules
4. Project size specific clearing rules

The rational for separate clearing prices is to prevent overcompensation which occurs when large cost differences lead to projects receiving a clearing price that is a significant premium on their actual costs.

Visibility of sealed bids and sealed bid changes for technology types with sealed bid visibility

DESNZ proposes to extend the visibility of anonymised sealed bids to solar and onshore wind, having previously used this approach for fixed-bottom offshore wind. The same terms as those used for offshore wind will be used. Therefore, anonymised bids will only be viewed if they are above the relevant budget and applications will be limited to one sealed bid each.

This extension will reduce the risk of budget underspends from the increasing participation of significantly larger solar projects in the CfD auctions and will reduce the risk of just missing out on good-value solar and onshore wind projects that could deliver for 2030.

Next Steps

DESNZ is of the view that these changes will improve CfD scheme efficiency, enable innovative technologies and support timely deployment for AR8. Given the success of AR7 capacity wise, there is curiosity among stakeholders concerning the impact of the above changes in the success of AR8, and it is hoped that AR8 will break the record set by AR7.