UK Offshore Wind AR7

This week the UK offshore wind AR7 auction results will be announced. While there are many intricacies to Contracts for Difference (CfD), this milestone will impact nearly every stakeholder in offshore wind including T&I and engineering consultancies like ourselves.

We have supported clients with reliable offshore engineering, construction, and O&M insights to help offshore developers submit competitive, low-risk bids for current and future allocation rounds.

However, what is the significance of  “AR7” and “CfDs” really mean, and why does it matter?

🔷 What is a CfD?

A Contract for Difference (CfD) is the UK government’s primary support mechanism for low-carbon electricity. It provides revenue certainty, reduces investment risk, and supports Final Investment Decision (FID) allowing the project to moves to execution and construction. In practice: no CfD means no FID for most UK projects.

🔷 What is AR7?

AR7 is the latest competitive auction for awarding CfDs. Previous rounds have been challenged by cost inflation, higher interest rates, price caps, and supply-chain constraints. This is something that we help clients understand and quantify for offshore construction and operations.

🔷 Why AR7 matters

If strike prices and budgets are set too low, projects either won’t bid, or will win but fail to reach FID. If AR7 is successful, it unlocks the next major wave of UK offshore wind construction. But balance is critical.

A low strike price squeezes margins, pushes risk down the supply chain. A too-low strike price risks repeating past mistakes, where aggressive “must-win” bids lead to renegotiation once costs reality hits. We have worked closely with our clients to ensure that best balance can be achieved with respect to being competitive, profitable and understanding risk before and after allocation rounds.

🔷What this means for the supply chain.

Strike prices must reflect reality to enable balanced risk sharing and long-term supply-chain resilience.

No CfD = No projects = No contracts.

And contracts mean UK jobs, investment, engineering work and long-term service opportunities.

A weak or failed AR7 would stifle innovation, reinforce conservative delivery models, and further challenge floating offshore wind, where costs are already significantly higher than fixed-bottom. In that scenario, suppliers focus on survival, not improvement, leaving gaps across vessels, foundations, ports, cables, and offshore construction capacity.

🔷 Successful award of CfD is the beginning not the end

When a CfD is awarded, projects will be working in anger to deliver projects for the awarded strike price. A huge effort will be going into engineering, tendering and contract negotiations while managing industry wide risks.

This is where Scott Marine provide their expert engineering and owners engineering skills to support projects ensuring robust and realistic execution plans to secure FID.

We would like to wish everyone in the industry the best of luck.