Allocation Round 7 will have to be the biggest ever with more than 8GW of new contracts awarded to keep the UK government’s Clean Power 2030 (CP30) target of between 43GW and 51GW of installed offshore wind capacity on track, according to a new report.
In its 2025 Wind Insight report, Offshore Energies UK (OEUK) warns that, while the UK has the capacity to become a major exporter of wind energy, action is needed to address price inflation, capital cost and UK supply chain competitiveness.
As the halt to Hornsea 4 wind farm in recent weeks shows, cost inflation, finance costs and market outlook make investment in offshore wind all the more challenging, putting additional pressure on CP30 delivery, the report states.
North Sea oil and gas have provided the primary source of energy for more than 50 years and the UK will continue to need homegrown oil and gas as part of an integrated energy mix for years to come alongside the build out of renewables.
As the focus on decarbonising the economy gains momentum, electricity is expected to dominate the future low carbon energy mix.
Much of this will be generated by offshore wind installations fixed to the seabed as well as floating offshore wind (FOW) structures but unless the pace of change quickens, the UK stands to achieve only 35GW by 2030, short of the CP30 target, according to the analysis.
In 2024, the National Energy System Operator (NESO) published the Clean Power 2030 (CP30) report, setting out recommendations to the UK government on the design of a clean power grid by 2030.
With a goal to accelerate progress to net zero by eliminating emissions that currently come from electricity generation, CP30 also aims to ensure that heating, transport and industry sectors are powered by electricity.
The plan sees a huge build out of renewables including 43-50GW of offshore wind, 27-29GW of onshore wind, and 45-47GW of solar power.
Noting all renewables play important roles in delivering a clean power grid, whereby Britain will generate enough clean power to meet 95% of total annual electricity demand by 2030, NESO highlighted the critical role of offshore wind.
OEUK’s wind & renewables manager, Thibaut Cheret, said: “Meeting the government’s 2030 target of 43 and 51GW of installed offshore wind capacity means securing £15bn of private investment in offshore wind each and every year between now and 2030.
“The government’s next Contract for Difference auction in Allocation Round 7 (AR7), which incentivises new low carbon electricity generating projects, will need to secure historic levels of renewable energy procurement.
“AR7 needs to clear a record 8.4GW of offshore wind capacity to maintain the course toward CP30.
“With the flexibility to supply oil and gas installations or the national grid, Floating Offshore Wind (FOW) will become a critical tool for delivering CP30 and beyond.
“Offshore wind leasing rounds released by Innovation and Targeted Oil and Gas (INTOG) under the auspices of Crown Estate Scotland are helping decarbonise offshore oil and gas production whilst accelerating deployment of the first floating offshore wind project at commercial scale.
“As Floating Offshore Wind projects will have access to windier areas in deeper waters around the UK, it is set to become the growth engine beyond 2030 with investment in FOW likely to overtake fixed-bottom wind in 2033.
“More than 50 years oil and gas experience means that our UK supply chain is well equipped to capture a sizeable stake of the floating wind market, but a significant portion of the spend required is beyond the reach of many UK companies, which highlights the need for strategic investment in innovation, skills and infrastructure.
“Getting this right means the UK can become a market leader in wind power generation and play a major part in delivering a homegrown energy transition.”
The report recommends that development plans should be front-loaded to meet CP 2030, the timely delivery of transmission infrastructure will be essential, investment in UK energy should be to the long-term benefit of the UK economy, and energy security is as important as a predominantly renewables-based power system.