The government of the United Kingdom has announced an 11% increase in the guaranteed price for offshore wind projects in the next tender dedicated to renewable energy. This measure comes as the sector faces persistent inflation and major equipment supply difficulties, elements that are significantly impacting the development of new wind farms.
Inflation and supply chain constraints
According to recently published official documents, renewable technologies, especially wind, continue to face strong macroeconomic uncertainty. The increase in material costs and logistical delays continue to raise costs for developers, pushing the government to increase support conditions to attract new investment. Last year, the prices offered during the tender had already risen by 66%.
The United Kingdom has placed offshore wind at the centre of its strategy to decarbonise electricity by 2030, with the aim of reaching an installed capacity between 43 and 50 gigawatts (GW) by the end of the decade, compared to around 15 GW currently. The contracts-for-difference (CfD) mechanism, which offers a guaranteed fixed price for the electricity produced, continues to be used to ensure financial stability for investors in a volatile context.
Price revision and auction timetable
For this new auction session, called AR7, the guaranteed price for offshore wind projects is raised to £81 per megawatt hour (MWh) based on 2012 prices, compared to £73 in the previous tender. Floating wind projects, which are at an earlier stage of development, will benefit from a guaranteed price of £194 per MWh, up from the previously offered £176.
Within the framework, if the wholesale price of electricity falls below the guaranteed threshold, the government makes up the difference; conversely, if the market price exceeds the threshold, developers pay back the difference. This system aims to limit risks for investors while ensuring sustainable financing for infrastructure development.
Market impacts and industry reactions
The increase in construction costs is not specific to wind and also concerns other energy sectors. Adam Berman, director of policy and advocacy at industry group Energy UK, indicated that cost increases are being seen for both gas-fired plants and wind turbines. Application rounds for the AR7 tender will open in August, with results expected between December and the end of February 2026.
The upward revision of guaranteed prices comes as the government faces growing pressure on the economic viability of its net-zero roadmap, in a context where opposition parties are highlighting the impact on consumer bills.
