The contracts for difference (CfD) Allocation Round 8 (AR8) enables developers of offshore wind, onshore wind, solar and emerging clean power technologies to submit bids. According to reports, more than 17GW of fixed-bottom offshore wind capacity is eligible for a CfD deal and a maximum strike price of £113/MWh has been set for this technology, following the decision to freeze bid ceilings that were applied in AR7. Meanwhile, more than 500MW of floating wind capacity is eligible to bid, where it will compete alongside a new ‘other deepwater offshore wind’ (ODOW) category for a maximum strike price of £271/MWh.

‘This auction represents an important step towards strengthening Britain’s energy security,’ RenewableUK Chief Executive Tara Singh said. ‘Recent global events demonstrate that the best way to reduce exposure to fossil-fuel price shocks is by generating more electricity in the UK at stable renewable prices.’

AR8 includes projects across England, Scotland and Wales, forming the largest pool of eligible renewable capacity in the history of the CfD mechanism. Beyond offshore wind, AR8 includes dedicated funding for marine technologies such as tidal stream and wave power generation. Beyond direct power generation, the auction is also designed to support UK port infrastructure, domestic manufacturing and specialised vessel installation services which would support such generation assets during construction and operational phases.

The AR8 auction commences as new Prime Minister Andy Burnham announced a complete tax cut on household electricity bills starting in October 2026. Under this measure, the government has reduced VAT on household electricity from 5% to 0%, lowering the average yearly regulator Ofgem price cap by about £45. To balance the budget, the Treasury funded the £850mn cost for 2026/2027 by cancelling the £1.8bn Digital ID programme.

Following the tax cut announcement, Prime Minister Burnham appointed Miatta Fahnbulleh as Secretary of State for Energy Security and Net Zero, replacing Ed Miliband, who was named Foreign Secretary.

Miatta Fahnbulleh, UK Secretary of State for Energy Security and Net Zero 
Photo: UK Parliament

‘The energy tax cut provides breathing room on bills and supports low-income households,’ Chancellor of the Exchequer John Healey said.

As bid evaluations for AR8 begin and the October 2026 VAT reduction approaches, energy sector trade bodies maintain that continued policy clarity across both renewable development and domestic supply chains will determine the long-term impact on overall consumer bills.

SSE Chief Executive Martin Pibworth noted that ‘cutting VAT gives immediate relief to homes and businesses and is a very welcome first step to making electricity as cheap as possible.’

Highlighting the importance of long-term investment, Offshore Energies UK Chief Executive David Whitehouse stated that government strategy must focus on ‘backing homegrown energy in all its forms, from North Sea oil and gas to offshore wind, unlocking investment and giving workers and businesses the confidence to build Britain's energy future here at home.’