In this article, Josh Cornes, analyst at Solar Media Market Research, discusses the results of AR7 from the government’s Contracts for Difference program, announced yesterdayin which both the awarded projects and the developers are discussed.
The UK government’s Contracts for Difference (CfD) program has been a driving force behind UK solar, with 60% of capacity built over the last three years receiving a CfD. More than 70% of Allocation Round 4 (AR4) is now under construction or operational and more than half of AR5 is in the same phase. AR7 has become the most successful round ever, with two award-winning projects already completed and three more already under construction.
In AR7, 76 different developers received a CfD, over 60% more than the 47 involved in AR6.
The decrease in average capacity per project this year is striking. Where previously project sizes increased each auction, with AR6 averaging almost 47 MWp, AR7 saw an average size of just 43.5 MWp.
This is largely due to the lack of awarded Nationally Important Infrastructure Projects (NSIP). Seven NSIP projects were eligible this round, but only West Burton solar farm receive a CfD. Admittedly, this was the largest solar project to receive a CfD to date, with the entire 480 MW project awarded a contract across three sites (so only 155 projects received a contract, while 157 contracts were awarded).
Previously, three NSIPs had been awarded contracts: Longfield and Little Crow Solar Farms in AR6 and Cleve Hill Solar Farm in AR4, which is now fully operational.
The capacity of the 50-100 MWp, high-value Local Planning Authority (LPA) projects has increased significantly, from 2.3 MWp to 3.6 MWp; however, there were 31 projects with a size of 5-20 MWp, triple that of AR6, another major reason for the sharp decline in average project size. Source: solar energy market research.
With the strike price being remarkably low at just £65.23/MWh, developers of large-scale projects have clearly not seen any feasibility in their implementation given the additional costs required at that scale. Another reason may be related to the electricity grid, with several NSIPs being postponed from the originally planned connection dates in 2027/2028 to 2029/2030.
Previously, only one project was known to decline a CfD after originally winning the contract, and with capital expenditure rising, this is something to keep an eye on this round. Module prices rose sharply in 2026, with the price of silver and copper rising; it’s certainly food for thought for developers over the next twelve months.
As always, the grid will be a stumbling block. While most projects that won contracts are in Gate 2 Phase 1 (grid connection dates before 2031), some projects are in Phase 2 (2031-2035). As the projects for this CfD round have delivery dates of 2027/2028 or 2028/2029, the longstop date would still be in phase 1 at the latest (unless developers can get an extension agreed with the Low Carbon Contracts Company (LCCC)).
Progress is therefore crucial for these developers, otherwise they risk having their contracts terminated. The issue of progress and acceleration did not appear in the first round of notifications from NESO, much to the frustration of countless developers.
Developers who won in AR7
As mentioned earlier, 76 developers won a contract in this round. Eight received five or more, and one received nine, similar to the nine Low Carbon won in AR5.
Elgin Energy (eight sites) and Innova Renewables (nine sites) were the biggest gainers in terms of capacity (excluding Island Green Power with 480MW for West Burton) and number of projects. Twenty developers won more than 100MWp.
Pathfinder Clean Energy (PACE) was the other company with eight projects; however, theirs were generally smaller, with an average of ~30 MWp.
Looking deeper into what people plan to do with the awarded projects, 2025 was the busiest year for mergers and acquisitions in the market and there were clear shifts in developer tactics. Elgin moved to an independent power producer (IPP) business model, where previously they were a well-known greenfield developer. Other developers went the other way, such as when Voltalia sold Rainsbrook Solar Farm to Liberty Global.
According to the Solar Media Market Research database, there are 50 projects in this round totaling 1.8 GWp that companies may want to divest at some point in the Ready to Build (RTB) phase, which makes sense as a significant number of projects with CfDs have historically changed hands before construction.
A perfect example is the TotalEnergies portfolio, which it bought from Low Carbon: Five of the eight projects they bought had CfDs and the remaining three won contracts in this round. Enviromena has also previously been attracted to CfDs, purchasing three AR6 projects in 2025 and winning a further two contracts in AR7.
CfDs have been the backbone of solar success in Britain over the past three years. AR7 can be seen as a success at first glance, with the highest number of projects and the highest total capacity.
Digging deeper, just one NSIP winning a contract is cause for concern as it highlights the potentially unattractive strike price for developers. There are several other factors that play a role. With rising capital expenditure, network constraints and tender timelines, this round will be interesting to watch.
If you would like to access the data for all 155 projects, including project name, real developer, extended grid information and audit trail, please contact [email protected].
