Renewable energy auctions: the price formula decides what a winning bid is worth

A renewables support auction does not buy a power plant. It awards revenue support: in Great Britain a contract for difference settled against a strike price, in Germany a market premium calculated from an award value. The bid sets one number in a formula, and the formula decides what that number is worth.^{1, 2, 6, 7}

The two schemes part company over a high market price: under a contract for difference the generator pays back the difference whenever the reference price is above its strike price, while under the German premium, as the Act stands, nothing is paid back. Both measure the payment against a market price rather than what the plant itself sells for, but on very different clocks: in Britain, for wind and solar, the day-ahead price hour by hour; in Germany, the technology’s average over a whole year. And in both, recent contracts and awards earn no support while prices are below zero, though Germany adds the lost quarter-hours to the end of the payment period.

A German government bill proposes to add a repayment above the award value for awards from bid dates in 2027 onward, which would make the German premium two-sided too. Feed-in tariffs and site or seabed leasing are outside this guide’s scope.¹¹

Under a contract for difference, the generator is paid the difference between its strike price and a market reference price; when the market price exceeds the strike price, it pays the difference back. Under the Allocation Round 7 terms, for a contract for an intermittent technology, a class that includes offshore and floating offshore wind, onshore wind and solar PV above 5 MW, and tidal stream, the reference price is the GB day-ahead price for each hour. So the contract fixes a generator’s revenue per MWh at the strike price only for power sold at that hour’s day-ahead price: power sold below it leaves a gap no difference payment fills, and power sold above it keeps the difference.^{1, 2, 3, 4}

Nor does the top-up cover every hour: from Allocation Round 4 contracts onward, generators have not been paid difference payments when day-ahead prices are negative. The formula also runs longer than it did: for Allocation Round 7 the government lengthened new contracts from 15 to 20 years for fixed-bottom and floating offshore wind, onshore wind and solar, keeping their indexation to the Consumer Price Index.⁵

Under Germany’s Renewable Energy Sources Act, the award value is the basis for the market premium. For a plant put into operation and awarded from 1 January 2023 on, the premium is the award value minus the technology’s annual market value, and never less than zero; for a plant put into operation, or awarded, before that date the premium is, as a rule, calculated against the monthly market value.^{6, 7}

For onshore wind, the annual market value is the year’s average spot price weighted, quarter-hour by quarter-hour, by the output of all onshore wind turbines, as the transmission system operators estimate it from a representative sample of measured reference plants. The benchmark belongs to the technology and the year, not to the wind farm: a farm whose output falls more heavily than the fleet’s in low-price hours earns less per kWh than the annual market value and carries that gap itself. A British wind farm, settled against each hour’s day-ahead price, carries little of that risk of producing at the wrong times; a German one carries it in full.⁷

For a plant whose award value was set at a bid date from 25 February 2025 on, the award value falls to zero for any period in which the spot market price is negative, and the lost quarter-hours are added to the end of the payment period (for solar installations, half as many).^{8, 9, 10}

The government’s bill to reform the Act, printed by the Bundestag on 7 September 2026, proposes a two-sided contract-for-difference model, which it says Union law also requires. Under the proposal the premium would stay, and the operator of a plant of 100 kW or more with an award would pay a refinancing contribution, the annual market value minus the award value, on each kWh fed in during any calendar year in which the annual market value exceeds the award value. In low-price quarter-hours the proposed contribution would be cut so that the plant keeps a minimum revenue, and biomass plants, other than sewage and landfill gas plants, would be exempt.¹¹

As drafted, the bill would keep the current Act for plants whose award value was set at a bid date before 1 January 2027, would enter into force on that day, and would let its payment rules be applied only after, and as far as, the European Commission approves them under state-aid rules. As of 22 October 2026, the Bundestag’s documentation system gives the bill’s stage as referred to committee, after its first reading in the Bundestag on 24 September 2026 and the Bundesrat’s first passage on 25 September 2026, with no later stage.^{11, 12, 13}

If the bill passes as drafted and the Commission approves it, what a German bid buys depends on its bid date: an award from a bid date before 2027 keeps the one-sided premium, while an award from a later bid date settles in both directions, year by year, against the technology’s annual market value.

In Allocation Round 7, successful applications received the clearing strike price set in the auction, capped at the administrative strike price. The caps were GBP 113 per MWh for offshore wind and GBP 271 for floating offshore wind, in 2024 prices. The offshore results, published on 14 January 2026, cleared offshore wind at GBP 91.20 per MWh, offshore wind in Scotland at GBP 89.49 and floating offshore wind at GBP 216.49, in 2024 prices, for 8,437.50 MW in total. By DESNZ’s figures, those prices cleared 19.29% (offshore wind), 20.81% (offshore wind in Scotland) and 20.11% (floating offshore wind) below the administrative strike prices.^{14, 15}

Allocation Round 7a, published on 10 February 2026, cleared solar PV at GBP 65.23 per MWh, onshore wind at GBP 72.24 and tidal stream at GBP 265.00, in 2024 prices, for 6,232.09 MW in total. The government publishes these results as contracts offered to the successful applicants.^{16, 17}

At Germany’s onshore wind bid date of 1 August 2026, the Bundesnetzagentur awarded 237 bids for 2,523,346 kW at a volume-weighted average award value of 4.79 euro cents per kWh, and set each award at the bid’s own price, from 4.49 to 4.98 euro cents. It had set the maximum value for the 2026 onshore wind bid dates at 7.25 euro cents per kWh. A British winner’s strike price is the clearing price for its technology in its round; a German winner’s award value is the price it bid.^{18, 19, 20}

Both countries want a project that is already well advanced before it may bid.

Great Britain

• The applicant must be an eligible generator: the person who intends to run the station or, under conditions, its operator or an associated company. A project in Northern Ireland or its waters cannot apply.^{21, 22}
• The application includes the project’s planning consents, a copy of its grid connection agreement, with transmission entry capacity for at least 75% of its estimated capacity where it connects to the transmission network, and, offshore, a seabed lease or an agreement for lease.^{21, 23}
• In Allocation Rounds 7 and 7a, a unit of 300 MW or more also needed a supply chain plan statement, unless it was offshore wind: an offshore wind unit, fixed-bottom or floating, gave a copy of its Clean Industry Bonus statement instead.^{21, 23}
• The Allocation Round 7 framework let fixed-bottom offshore wind apply before it had planning consent, provided no relevant consent had been refused.¹⁴ The Allocation Round 8 framework keeps that route.²⁴

Germany, onshore wind

The turbines’ permits under the Federal Immission Control Act must be granted, and the turbines registered, four weeks before the bid date, and the bidder posts security of EUR 30 per kW bid.^{25, 26}

In the Allocation Round 7 generic contract, the generator must show, within 18 months of signing, that it has spent at least 10% of its total pre-commissioning costs or met its project commitments; if it does not, the contract counterparty may terminate the contract.^{3, 27} A generator whose offer lapses, or whose contract is terminated before its milestone delivery date or for missing its milestone, may not apply for the same site in the next two allocation rounds, unless one of the regulations’ exceptions applies, such as an exemption certificate provided with the application.²¹

In Germany, an onshore wind award lapses 36 months after it is announced for turbines not yet in operation. On an application made in time, the Bundesnetzagentur extends that period in two cases only, a third party’s challenge to the permit after the bid or insolvency proceedings over the maker of the generator or another essential component, by up to 18 months on each ground and, as a rule, not beyond the permit’s validity. A turbine put into operation more than 30 months after the award is announced triggers a penalty, calculated on the awarded capacity not in operation within 30 months at EUR 10 per kW, within 32 months at EUR 20 per kW, or within 34 months at EUR 30 per kW.^{28, 29}

In both countries, then, a winning bid is also a delivery commitment, with a clock that starts at signing in Britain and at the award’s announcement in Germany: 18 months to the British milestone, 30 months before a German turbine’s late start draws a penalty.

Source: the government’s and the Bundesnetzagentur’s rules, contract terms and results, the Act and the government’s bill, cited below.^{1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 14, 15, 16, 18, 19}

Where the rounds are announced

• Great Britain: the government’s contracts for difference collection, its page for the eighth allocation round and the allocation round portal.
• As of 22 October 2026, Allocation Round 8 had passed its contract application window, which ran from 20 July to 7 August 2026, and the government’s page for the round listed no results.^{30, 31}
• Germany: the Bundesnetzagentur’s auctions page, with the bid dates and its onshore wind pages.
• The Act sets four onshore wind bid dates in each year from 2023 to 2028: 1 February, 1 May, 1 August and 1 November.³²

• 12 October 2026: This guide said that in Great Britain a unit of 300 MW or more, or floating offshore wind, also needs a supply chain statement when applying for a contract for difference. That was wrong for offshore wind: Schedule 5 of the Allocation Round 7 and 7a framework says the supply chain plan statement “does not apply to an Offshore Wind CFD Unit”, fixed-bottom or floating, and asks offshore wind units for a copy of their Clean Industry Bonus statement instead. The Qualification section now says this. Since 13 October 2026 this is under ‘What it takes to bid’.
• 22 October 2026: This guide said that Germany’s market premium is the award value minus the monthly market value. Under annex 1 of the Renewable Energy Sources Act, the monthly value applies only to plants put into operation, or awarded, before 1 January 2023; for other plants, including those awarded at the onshore wind bid date of 1 August 2026 that this guide cites, the premium is calculated against the technology’s annual market value. The Germany section and the reference table now say this.
• 22 October 2026: This guide said that a German onshore wind award lapses 36 months after it is announced “unless extended on application”. The Act allows that extension only where a third party has challenged the turbines’ permit after the bid, or insolvency proceedings have been opened over the manufacturer of the generator or another essential component, by up to 18 months on each ground. ‘What winning commits a project to’ now says this and gives the penalty amounts.

ListingMinds, “Renewable energy auctions: the price formula decides what a winning bid is worth”, 3 October 2026, updated 22 October 2026. https://www.listingminds.com/energy/guides/renewables