Meeting UK offshore wind target ‘cost neutral’ with right strike price

Research by Aurora Energy Research, commissioned by RWE, indicates that achieving a 43 GW offshore wind goal by 2030 can be cost-neutral for billpayers over the next decade, assuming a £94/MWh strike price, compared with a scenario in which no additional offshore wind capacity is procured.

On 27 October 2025, the government revealed that the budget for the Contracts for Difference (CfD) Allocation Round 7 (AR7) auction will be £900M for fixed-bottom offshore wind projects, a 42% decrease from last year. Aurora closely examined AR7 from the perspective of UK taxpayers and found that the government could increase the AR7 budget to purchase any amount of capacity priced below £94/MWh without adding costs for billpayers.

The analysis found that increasing offshore wind deployment leads to lower wholesale electricity prices. As a result, this reduction offsets the rising costs of CfD levies, keeping household energy bills effectively neutral through to 2035.

Aurora points out in its study that the amount of eligible capacity in AR7 is considerable, making it a clear opportunity to achieve both value-for-money and capacity goals. 15 GW of fully consented capacity sits waiting to be built, with 24 GW eligible to participate. A significant AR7 procurement would allow projects to build on track for a commercial operational date near 2030. At least 15 GW of additional offshore wind capacity across AR7, AR8 and AR9 are needed to hit the 43 GW 2030 capacity target.

Beyond the consumer impact, Aurora highlighted the wider economic and strategic gains expected from delivering 43 GW of offshore wind, including 45,000 new jobs, a 44% reduction in gas reliance, and a 45% cut in grid carbon emissions by 2035.

Aurora Energy Research project leader Nick Civetta said, “We have determined that, relative to buying no further offshore wind, delivering on government offshore wind targets is possible at no additional cost to the consumer at a strike price of up to £94/MWh, which is over £10 above last year’s allocation round. 

“The Secretary of State can increase the budget to any level up to this strike price with confidence that consumers will not see an increase in cost,” said Mr Civetta. 

“The key takeaway is that the expansion of the UK offshore wind industry to hit long-stated targets is possible at a price that will not adversely affect billpayers. 

“Not only will hitting a 43 GW wind target be cost neutral, but it will also create additional jobs and almost halve our reliance on gas and the carbon intensity of energy production in the coming decade.”

Responding, RWE UK country chair Tom Glover said, “We welcome this new analysis from Aurora demonstrating that the UK’s offshore wind ambitions can be met while adding no additional cost to consumer bills. 

“As the UK government prepares to take critical decisions over its level of ambition for offshore wind at AR7, this research provides helpful clarity that they can unlock billions of pounds of investment in UK jobs and supply chains at the same time as delivering value for money for consumers. There are no trade-offs required, this can deliver for billpayers, economic growth and clean power at the same time.”