GBContracts for Difference Allocation Round 5
Also known as: UK AR5, AR5, Allocation Round 5, Allocation Round 5 (AR5), CfD AR5, UK CfD AR5, Contracts for Difference (CfD) Allocation Round 5, Contracts for Difference Allocation Round 5, Fifth Contracts for Difference Allocation Round
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AR5 opened in March 2023 as the first annual CfD round under the British Energy Security Strategy's 50 GW offshore-wind and 5 GW floating-offshore-wind-by-2030 targets, just after the BEIS-to-DESNZ departmental split. It was designed against the celebrated but already fragile AR4 offshore-wind benchmark, while developers were facing the post-2022 inflation shock, tighter supply chains, and a much higher cost of capital. That mismatch left AR5's offshore-wind ASPs commercially unviable, producing the round's defining outcome: coordinated abstention and zero offshore-wind awards, which in turn drove the structural reforms adopted for AR6.
0 → 0 → 0
Sealed · single-round
Contract for Difference (CfD) Agreement
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Target Commissioning Window is technology-specific. For Offshore Wind and Floating Offshore Wind it can be up to 1 year; shorter windows apply to some other technologies. AR5 also tightened the rule that, except for later phases of Phased Offshore Wind CfD Units, the Target Commissioning Date must fall within the Delivery Years.
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15 years
CPI
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For any Settlement Unit in an Intermittent Negative Price Period, the Intermittent Difference Amount is zero.
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Curtailment provisions in the standard terms provide compensation for qualifying curtailment and qualifying partial curtailment under the detailed contract formulas.
If Operational Conditions Precedent are not fulfilled or waived by the Longstop Date, the CfD Counterparty may terminate the contract. Where the relevant Supply Chain Plan Operational Condition Precedent is not fulfilled by the end of the Target Commissioning Window, the 15-year CfD payment term is reduced until fulfilment.
Single award component: a 15-year two-way Contract for Difference revenue-support contract between the eligible generator and Low Carbon Contracts Company Ltd under the Energy Act 2013 / CfD framework.
→ If not fulfilled or waived in time, the CfD Counterparty may terminate by Pre-Start Date Termination Notice.
→ If the Milestone Requirement is not evidenced by the Milestone Delivery Date, the CfD Counterparty may terminate, subject to the milestone assessment response process.
→ If not fulfilled or waived by the Longstop Date, the CfD Counterparty may terminate. If the relevant Supply Chain Plan Operational Condition Precedent is not fulfilled by the end of the Target Commissioning Window, the 15-year payment term is reduced until fulfilment.
TCW: Target Commissioning Window is technology-specific. For Offshore Wind and Floating Offshore Wind it can be up to 1 year; shorter windows apply to some other technologies. AR5 also tightened the rule that, except for later phases of Phased Offshore Wind CfD Units, the Target Commissioning Date must fall within the Delivery Years.
Late delivery: If Operational Conditions Precedent are not fulfilled or waived by the Longstop Date, the CfD Counterparty may terminate the contract. Where the relevant Supply Chain Plan Operational Condition Precedent is not fulfilled by the end of the Target Commissioning Window, the 15-year CfD payment term is reduced until fulfilment.
Single-round sealed-bid, pay-as-clear CfD allocation process with technology-specific Administrative Strike Prices acting as bid caps. Applicants could submit up to four bids per application, with up to two in the same Delivery Year, and flexible bids were interleaved during the allocation walk.
Reserve: — Technology-specific Administrative Strike Prices acted as reserve prices / maximum bid caps. For offshore-wind technologies in scope: Offshore Wind = 44 GBP/MWh and Floating Offshore Wind = 116 GBP/MWh, both in 2012 prices.
Applicants had to evidence all applicable planning consents sufficient for the relevant CFD Unit, including the relevant planning decision notices and supporting evidence where needed.
Applicants had to provide actual connection agreement(s); where a Direct Connection applied, secured or permitted connection capacity had to be at least 75% of the Initial Installed Capacity Estimate, with analogous evidence for Partial Connection or Private Network arrangements.
A Secretary of State Supply Chain Plan approval statement was required for all projects with Installed Capacity of 300 MW or more and for all Floating Offshore Wind projects regardless of size.
For Offshore Wind and Floating Offshore Wind, applicants had to evidence the relevant Crown Estate or Crown Estate Scotland seabed right through a lease or agreement for lease covering the CFD Unit location.
Phased Offshore Wind units had to satisfy the phased-unit capacity and sequencing rules, including total completed capacity not above 1500 MW, phase-1 share and timing requirements, and final-phase timing relative to phase 1.
Floating Offshore Wind units had to satisfy the floating-specific conditions, including floating foundations, minimum 45 m water depth, non-phased status, and the required director-signed declaration.
No application could be made for a CFD Unit that was or formed part of a generating station that had already been commissioned.
Applicants had to satisfy the non-excluded-application and applicant-eligibility rules, including no conflicting support arrangements or other disqualifying status under the CfD framework.
Method: quantitative formula
Unit: GBP/MWh (2012 prices)
- closest envelope fit — Where tied applications could not all be admitted without breaching the relevant budget or minimum constraint, the Delivery Body selected the application or combination that came closest to filling the relevant envelope without breach.
- electronic random assignment — If multiple alternatives were equally close to the relevant envelope, the Delivery Body chose between them using a deterministic electronic random-assignment process.
Legal basis: Continuing authority under the Energy Act 2013, the Contracts for Difference (Allocation) Regulations 2014, and the Contracts for Difference (Standard Terms) Regulations 2014. Core Parameters were still published under BEIS branding before the February 2023 departmental split; subsequent AR5 notices were issued under DESNZ.
Legal basis: Operative EMR Delivery Body for AR5 under the Energy Act 2013/CfD framework; ran qualification, valuation, sealed-bid administration, and applicant notifications.
Legal basis: CfD counterparty under the Energy Act 2013 framework; entered into awarded CfD agreements and administered post-award contract performance.
Legal basis: Authority for qualification appeals under the AR5 Allocation Framework.
Legal basis: Independent audit function required under Regulation 36 to audit the valuation/allocation calculations and report to the Secretary of State.
AR5 ASP methodology used a supply-curve approach targeting 50% of the estimated offshore-wind pipeline; the resulting Offshore Wind cap was 44 GBP/MWh in 2012 prices.
AR5 ASP methodology used the same supply-curve approach targeting 50% of the estimated floating-offshore-wind pipeline; the resulting Floating Offshore Wind cap was 116 GBP/MWh in 2012 prices.