Supply on the UK PPA market may remain limited in the short to medium-term as developers await the results of the currently ongoing AR7 CfD auction round. Long-term ambitions to promote clean power include strengthening the corporate PPA market.

Market reforms strengthen long-term developments, introduce short-term uncertainty

Throughout 2025, Power Purchase Agreement (PPA) market participants in the UK have adopted a wait-and-see approach, awaiting a decision on the Review of electricity market arrangements (REMA), new Contracts for Difference (CfD) rules and Allocation Round 7 (AR7) results.

Following the decision to maintain a single electricity market and the publication of the new rules for the CfD scheme, some planning uncertainty was alleviated. Changes to the CfD rules, including a longer contract duration of 20 years, increased administrative strike prices for wind power and a Clean Industry Bonus (CIB) for offshore wind projects, increased the scheme's attractiveness compared to PPAs. As a result, most deals in 2025 have been signed for route-to-market PPAs for projects under the CfD support scheme, while corporate PPA activity remained limited.

CfD allocation round 7 progressing with some delays

CfD remain the key tool for supporting renewable energy projects in the UK. After the announced changes to the support scheme, AR7 is currently under way.

The sealed bid window for all technologies, except offshore wind, was ongoing in end of October. Without further delays the applicants will be informed about the results by the end of November this year. For offshore wind, an adjusted timeline was published, allowing extra time for non-qualifying bids to appeal. According to the new timeline, the bid window will open in mid-November and results will be published mid-January 2025.

The clean industry bonus (CIB), an additional revenue support for fixed and floating offshore wind applicants was concluded in June 2025 with a total budget of GBP 544 million . Despite delays in timeline the awarded CIB indicates large interest in AR7 from the offshore wind sector. This represents an encouraging development following AR5 (2023), which awarded no offshore wind capacity, and AR6 (2024), which granted 5.3 GW of capacity, although the largest project — Hornsea 4 (2.4 GW) — was later withdrawn.

The recently announced budget for bottom-fixed and floating offshore wind projects was set to GBP 900 million and GBP 180 million , respectively. This translates to a minimum capacity of 2.1 GW bottom-fixed and 140 MW floating offshore wind, if awarded at the administrative strike price set at GBP 102/MWh and GBP 245/MWh, and with similar capacity factors as in AR6. Given the large amount of capacity eligible for the auction, bids will likely be more competitive resulting in a lower strike price. At a strike price similar to that achieved in AR6, the awarded capacity could increase to above 3 GW bottom-fixed and close to 200 MW floating offshore wind.

Fewer corporate PPAs and less wind power on offer

PPA statistics show continued appetite in the market. However, certain trends have emerged that indicate a reaction to uncertainty and show market participants being more risk-averse. Namely, an increasing number of route-to-market PPAs for assets under the CfD scheme and fewer deals being signed for wind power projects.

So far in 2025, 25 PPAs have been reported in the UK compared to a total of 28 last year and 20 in 2023. In terms of contracted capacity, we are looking at 2.1 GW in the first ten months of 2025 compared to 2.3 GW in 2024. However, eight out of the deals announced in 2025 were route-to-market PPAs, accounting for 1.2 GW of capacity. In 2024, three route-to-market deals were announced for 0.7 GW of capacity. On the offtaker side, corporates accounted for only 220 MW contracted capacity so far this year. In 2024 as a whole, we saw a slightly higher demand from corporates at 1.1 GW compared to utilities/traders. Of the 1.0 GW signed by utilities and energy traders, some 724 MW were again route-to-market PPAs.

In addition, while wind was the most contracted technology in past years, the majority of PPAs signed this year were for solar PV projects (18, including three multi-technology or hybrid PPAs).

European-wide efforts to promote PPAs as a way of accelerating RES build-out.

As an outcome of REMA, a further process will be initiated to explore how the corporate PPA market can be further developed in the UK. In this context, the newly established Great British Energy (GB Energy), a publicly owned, clean energy company, may play a role in the PPA market, though details of its involvement are still unclear.

Countries across Europe are taking different approaches in supporting the uptake of PPAs. As part of the Clean Industrial Deal, the EU announced a pilot scheme of EUR 500 million  for the EIB to counter-guarantee corporate PPAs. This comes on top of national initiatives for guarantees in Italy and France.

Norway has taken an approach of standardising long-term electricity contracts (fastprisavtaler) for industrial offtakers. In Greece, a PPA matching platform was recently introduced to improve market transparency and ease market access. Portugal has plans to launch a similar platform this year.

Market impact

Despite a slow Q3, we may still see a year of growth in the UK PPA market. Corporate PPAs, however, are experiencing a clear decrease amidst limited supply.

Muted activity in the market has also seen asking prices from developers adjust downwards. For example, for a 10-year pay-as-produced solar PPA, levels decreased from well above EUR 100 /MWh in spring 2025, to levels of EUR 84.9-87.2 /MWh in September 2025.

We expect many market participants, especially wind developers, to focus on AR7 rather than seeking PPAs directly. Until then, supply on the UK PPA market is likely to remain limited. Although, we could still see more route-to-market PPAs for assets that had secured CfDs in the AR6 auction.

Once AR7 is concluded, we expect projects that were not awarded to explore PPAs as an alternative option to secure long-term revenues. In addition, several projects awarded under AR7 are likely to seek route-to-market via PPAs. With ambitions to promote corporate PPAs, we expect to see continued growth in the market in the long term.

Corporate demand will be another deciding driver for PPA uptake in 2026. With REGOs providing an alternative route for companies to meet sustainability targets, the sharp decline in average spot REGO prices — from GBP 7.42/MWh in 2024 to GBP 1.30/MWh in 2025 — may have contributed to the slowdown in corporate PPA activity this year, as unbundled certificates have become a more cost-effective option. The REGO market curve has seen a consistent contango in recent months, with future vintages trading at a premium as traders and renewable generators anticipate a potential rebound in demand  long-term. However, the general market sentiment at the moment is rather bearish. Depending on the awarded volumes of AR7, we could see REGO prices move in either direction.