The UK’s seventh clean power auction, Allocation Round 7 (AR7), has set new records for offshore wind and investment, marking a major milestone in the transition to net zero. But what does AR7 really mean for the energy market – and for Northern Ireland? In this edition of Policy Unpacked, Judith Rance breaks down the top five questions you need answered: from what AR7 is, to how Contracts for Difference (CfDs) work.
The renewable news today is filled with commentary on the success of AR7, but for many in Northern Ireland there has been litter build up to today’s announcement and you may be asking yourself a few questions. At RenewableNI we know that helping people understand the meaning behind technical terms and policy, fosters greater support for renewable energy.
What is AR7?
Annual clean power auctions, known as Allocation Rounds (AR), are the primary way the UK Government unlocks investment in new offshore and onshore wind, solar and tidal energy projects. Successful projects are awarded ‘Contracts for Difference’ (CfDs) to generate clean power.
AR7 is the seventh auction round. The results were published on Wednesday 14 January 2026.
What are the results of AR7?
Published on Wednesday 14 January, the Department for Energy Security and Net Zero (DESNZ) called AR7 results a ‘monumental step towards ending the country’s reliance on volatile fossil fuels’.
Their headline figures:
- Record 8.4GW of offshore wind secured in Europe’s biggest ever offshore wind auction – enough clean electricity to power the equivalent of over 12 million homes.*
- Price for offshore wind agreed at around 40 per cent lower than the cost of building and operating a new gas -fired power plant.
- The auction will unlock around £22billion in private investment, supporting around 7,000 jobs.
Strike prices for fixed bottom offshore wind is £91.20/MWh for England and Wales and £89.49/MWh for Scotland, coming out at a blended average of £90.91/MWh. The strike price for floating offshore wind is £216.46/MWh.
In their release, DESNZ said:
“These results show offshore wind is cheaper to build and operate than new gas. In new figures published today using the LCOE industry metric, the cost of building and operating a new gas fired power station is £147 per megawatt hour. By contrast, the results for fixed offshore wind in today’s auction were £90.91 per megawatt hour on average —or [£65.25] in the commonly used benchmark of 2012 prices – 40 per cent cheaper than the cost of building and operating new gas.”
You can read the full release at https://www.gov.uk/government/news/record-breaking-auction-for-offshore-wind-secured-to-take-back-control-of-britains-energy
Detailed results are available at https://www.gov.uk/government/publications/contracts-for-difference-cfd-allocation-round-7-results
What is the CfD scheme and how does it connect to AR7?
The Contracts for Difference (CfD) scheme is the UK Government’s main mechanism for unlocking investment in low-carbon electricity generation. It’s essentially an auction for power contracts between generators and Government. Since its introduction in 2014, the CfD scheme has been hugely successful in supporting the expansion of homegrown clean energy, driving down costs to consumers and incentivising technological innovation.
In GB, the 20-year CfD contracts awarded via the auction (most recently AR7) are between a low carbon electricity generator (e.g. a developer of a solar farm) and the Government-owned Low Carbon Contracts Company (LCCC). Developers of new clean energy projects bid in a competitive auction to receive a contract which guarantees a fixed price for the electricity they generate.
How do CfDs benefit consumers?
The electricity market is highly volatile and the market price can change dramatically, so a mechanism to ensure stability is desirable to both protect consumers and provide a stable revenue stream for investors. CfD contracts address this by agreeing a fixed ‘strike price’, which represents the price the project will receive for each megawatt hour (MWh) of electricity it generates during the contracted period.
This strike price is then measured against the market price of electricity over the course of the contract. When the market price is higher than the strike price, the generator pays back the difference to the consumer via the LCCC. When it is lower, the LCCC tops up the generator via electricity bills.
By fixing prices, CfDs also significantly reduce the risk investors are exposed to. This reduction in risk lowers the costs of financing projects by enabling capital to be borrowed on more favourable terms, making wind farms cheaper than they would be otherwise. This is vital as a huge amount of the costs of renewable energy projects are up-front capital costs, with remaining costs over the lifetime of the project much lower than other sources of generation.
What does AR7 mean for Northern Ireland?
AR7 does not include Northern Ireland. The CfD scheme applies to GB only, with the Republic of Ireland operating its their own Renewable Electricity Support Scheme (RESS).
Northern Ireland is currently without a support scheme, but the final scheme design for the Renewable Electricity Price Guarantee (REPG) was published in September 2025.
The AR7 results demonstrate how stable policy and competitive auctions can unlock investment, reduce costs, and support jobs, outcomes that are equally achievable here through the REPG. The first Northern Ireland auction is expected in Quarter 1 2027. You can find out more about it in Renewable Electricity Price Guarantee – shedding some light on the long-awaited scheme.
RenewableNI will be continuing to engage with the Department for the Economy (DfE) over the coming months to ensure a timely delivery of REPG. The success of AR7 allows Northern Ireland to learn from this auction round, particularly in comparison to previous GB auctions which underdelivered and failed to attract sufficient investment.
Electricity prices for GB and Northern Ireland consumers are not directly linked. In GB the quarterly energy price cap is set by Ofgem, while in Northern Ireland it is managed by the Utility Regulator. They review and approve domestic electricity tariffs for Power NI, which remains the only price controlled supplier here.
The wholesale price for Northern Ireland is linked to the all-island market, not GB. You can view the Baringa report on how onshore wind saved money in NI at Wind energy saved over €1.2 billion on gas in 2024 in NI and Ireland. The report for the 2025 year is not available, but Renewable Rewards demonstrated the benefits of achieving 80 per cent by 2030.
There will be benefits for Northern Ireland companies that are part of the GB renewable energy supply chain. This will be examined as part of the upcoming RenewableNI Smart Energy conference on 26 March in Belfast.
