‘Double-edged sword for marine energy sector’: UK releases Allocation Round 7 notices

July 25, 2025, by Zerina Maksumić

The UK’s Department for Energy Security and Net Zero has issued the statutory notices for Allocation Round 7 (AR7) and Allocation Round 7a (AR7a) on July 23, 2025, confirming changes to pricing and contract structure under the Contracts for Difference (CfD) scheme.

llustration/Morlais Demonstration Zone (Archive/Courtesy of Marine Energy Wales)

For the first time, separate indicative timelines have been introduced to allow AR7 results to be announced as soon as possible.

According to Marine Energy Wales, CfD prices have increased across key marine energy technologies. Tidal stream rises from £261 (approximately $351) to £266 per MWh, or from £364 to £371 in 2024-adjusted terms. Wave energy increases from £257 to £277 per MWh, or from £358 to £386 in 2024 prices.

AR7 also extends the CfD contract length from 15 to 20 years for solar, onshore wind, offshore wind, and floating offshore wind.

“The CfD AR7 Contract Allocation Framework, published today, represents a double-edged sword for the marine renewable energy sector. On one hand, the introduction of phased commissioning and flexible bidding provides long-overdue recognition of the complexity of delivering floating offshore wind, enabling developers to better manage risk and improve project bankability,” said Jay Sheppard, Project Manager at Marine Energy Wales.

“On the other, tidal stream remains at the mercy of political will. Without a ringfenced budget, it faces the very real threat of being priced out by lower-cost technologies in Pot 2. If the Government is serious about building a diverse and resilient clean energy system, then it must back that ambition with dedicated support for emerging technologies like tidal stream. The Contract Budget Notice will be the true litmus test of that intent.”

In September 2024, the UK government unveiled the results of Allocation Round 6 (AR6) of the contracts for difference (CfD) renewable auction, with six projects across five sites securing contracts to deliver 28 MW of tidal stream capacity at a rate of £172/MWh (approximately $225/MWh).

UK awards six tidal stream projects with Contracts for Difference in Allocation Round 6

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According to research by Offshore Renewable Energy (ORE) Catapult and Imperial College London (ICL), tidal energy has the potential to provide 11.5 GW to the UK energy system, 11% of the UK’s electricity demand, and tidal stream projects could contribute up to £17 billion to the UK economy by 2050.

In June, the UK launched the Marine Energy Taskforce (MET), a new initiative aimed at developing a roadmap to realise the country’s marine energy potential. Supported by The Crown Estate and Crown Estate Scotland, the 12-month project will focus on accelerating wave and tidal stream energy deployment while maintaining high levels of UK supply chain content.