The European Commission has released the European Grids Package, including Guidance on Contracts for Difference (CfDs), a procurement model the offshore wind sector has long advocated for.
The package will serve as a basis for EU and national laws, with a Commission official stating that the Guidance on Contracts for Difference must be incorporated into national legislation by 2027.
The CfD regulation mandates that national-level support schemes for solar, wind, geothermal, and hydro be based on two-way Contracts for Difference and includes an article on minimum design requirements.
“Since last year, several Member States have introduced CfD contracts. We began discussions with them to ensure these contracts meet regulatory criteria,” a Commission official noted, explaining the new CfD guidance was necessary due to varying interpretations.
For offshore wind, CfDs are crucial for ensuring large-scale projects remain financially viable and timely amid financial pressures. Over the past year, industry groups have promoted CfD mechanisms to provide developers with predictable revenues and reduce financing risks for billion-euro projects.
In April 2025, WindEurope proposed a high-ambition plan for at least 100 GW of new offshore capacity to be auctioned over the next decade using CfD models. This approach aims to make projects bankable and drive down electricity costs through stable revenue frameworks.
Recent tenders highlight the urgency of this framework. The 1 GW Nederwiek I-A tender in the Netherlands closed without bids on 30 October 2025, prompting the Dutch government to reconsider future tender structures and support frameworks. The government is working on introducing the CfD model for future tenders.
Germany faces similar challenges, with a 2.5 GW offshore auction failing to attract bids. Industry commentary and grid operator statements have called for auction rule reforms.
Stakeholders propose introducing CfDs and longer-term agreements like Power Purchase Agreements (PPAs) to stabilize revenues and lower capital costs.
Advocates argue that indexed, two-sided CfDs, which share price risks between the state and developers, provide the predictability lenders require while maintaining market exposure.
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