CfD Clean Industry Bonus Scheme Reforms – outcome and implementation

Following the publication of the Government response on the Clean Industry Bonus (CIB) policy framework (the “Response”) on 4 February 2026, the Department for Energy Security and Net Zero (“DESNZ”) has now launched a consultation on proposed amendments to the Contracts for Difference (CfD) contract ahead of Allocation Round 8 (“AR8”) (the “Consultation”).

The Response follows DESNZ’s consultation in August 2025 (see DESNZ Consultation on Clean Industry Bonus Scheme Reform for more information), setting out the final policy framework for the CIB scheme.  DESNZ’s latest Consultation now outlines essential proposals as to how CIB commitments will be evidenced, delivered, and paid for, ensuring alignment between contractual obligations and the policy objectives established in the Response. This is a critical step in refining the CfD framework to support the Government's clean energy ambitions and operational improvements identified in previous Allocation Rounds.

We set out below a summary of the final policy positions contained in the Response and look at the key proposed changes to the CfD contract terms proposed in the Consultation.

CIB Policy Framework  

The CIB framework aims to improve scheme operability and strengthen social and economic outcomes from offshore wind supply-chain investment from AR8 onwards (whilst deferring some expansion choices to later rounds).  As a reminder, we set out below a brief overview of the final policy positions adopted:

• Workforce protection: CIB participants will be required to sign up to an interim Offshore Wind Fair Work Charter (“Fair Work Charter”) (as has already been agreed on) as part of the CIB minimum standards in AR8.  Suppliers nominated in a generator’s Criterion 1 (shorter supply chains) CIB bids must also sign the Charter, with specific exemptions put in place for small businesses and new facilities that have yet to commence commercial production. 
• Skills: DESNZ will establish a collaborative, industry‑wide skills investment fund (rather than the alternatively proposed project‑level approach), to be administered by a third party (potentially the Offshore Wind Growth Partnership (“OWGP”) or a different body).  DESNZ states that it aims to have an operational fund in place in 2027. 
• Onshore wind: The CIB will not expand to onshore wind for AR8 but will expand from AR9 onwards.  For onshore wind, minimum standards (£25m/GW) would apply only to projects seeking CIB top‑up funding; projects entering a CfD without applying for CIB would not need to meet the minimum standards.
• Process/regulatory improvements: DESNZ will amend regulations to improve delivery, including statutory timeline changes, applications per project, formal powers for different budget structures, clarification of force majeure, extension of the scheme’s sunset clause, introduction of “payment on delivery”, and aligning Contract Budget Revision Notice publication with the first CfD notification. 

Implementation of the CIB framework 

The Consultation proposes to amend the CfD Contract to give effect to three core CIB reforms for AR8: (i) enabling project-level CIB bids, (ii) incorporating new minimum standards covering skills and workforce protection, and (iii) implementing ‘payment on delivery’. 

The drafting is intended to align contractual obligations with the CIB Allocation Framework and CIB Guidance (both in draft form at the time of writing), and to support operational improvements.  Key proposals are:

• Project-level CIB bids: The Consultation proposes a contractual route for offshore wind applicants to submit a single CIB application at project level, addressing the duplication that arose where projects comprised multiple CfD Units. This should reduce administrative friction but increases the importance of internal governance and interface management across project packages (turbines, foundations, ports, logistics and O&M), because delivery will be assessed against a consolidated set of commitments.
• Financial vs non-financial minimum standards: The proposed drafting introduces clearer separation between ‘CIB Financial Minimum Standards’ and ‘Non-Financial CIB Minimum Standards’. The financial component remains linked to consequences where delivery falls short, including performance-related adjustments. The non-financial component is intended to capture workforce-related requirements (such as Fair Work Charter commitments), with a different consequence set focused on bonus eligibility rather than adjustment of core CfD payments.
  
  The table below illustrates how each standard operates in practice:

• ‘Extra investment’ becomes ‘extra commitment’: To reflect that rewarded obligations may not always be purely financial investments, DESNZ proposes to update terminology from ‘CIB Extra Investment’ to ‘CIB Extra Commitment’, supporting a wider set of eligible actions within the contractual architecture and improving consistency with the policy intent.
• Schedule 2 applicability and futureproofing: DESNZ proposes to align Schedule 2 applicability with whether the CIB is expressed to apply in the CfD Agreement, rather than limiting it by reference to offshore wind. This is designed to enable extension of the CIB to other technologies in later rounds (e.g. onshore wind from AR9).
• Payment on delivery mechanics: The move to ‘payment on delivery’ is reflected in drafting that enables certain CIB payment steps to occur before the CfD Start Date, linked to issuance of an Implementation Statement. In commercial terms, this can pull forward cashflow timing, but it places additional emphasis on clear, auditable delivery evidence and timely engagement with the applicable determination and verification processes.

Hybrid metering

As set out in our previous briefing CfD Allocation Round 8 and beyond – proposed changes to the scheme, DESNZ is also consulting on a limited hybrid‑metering model for same‑technology assets operating partly under the CfD and partly on a merchant basis. DESNZ has not confirmed whether the proposals set out in its December 2025 consultation will be taken forward (but states that it will do so “in due course”), however the Consultation proposes amendments to the CfD contract to enable generators to combine CfD-supported and non-CfD assets within a single metering configuration, subject to clear approval and operational requirements. The key proposed amendments include:

• Formal Approval Mechanism: Introduction of a process for generators to request approval for hybrid metering through a "Hybrid Metering Notice", detailing the Adjusted Facility Description and Related Facility. The LCCC will assess submissions against defined criteria to ensure operational integrity, accuracy in payment calculations, and risk mitigation.
• Transition and Commissioning Requirements: Amendments set out the steps for transitioning to hybrid metering, including a minimum six-month lead time post-approval, and the need to fulfil Hybrid Metering Conditions (HMCs) before implementation. These conditions cover measurement accuracy, data communication, and operational integrity.
• Payment and Settlement Safeguards: The LCCC may suspend CfD payments during the commissioning window, releasing them once compliance is confirmed. Payments may also be suspended or terminated for non-compliance with metering and monitoring requirements.
• Separation and Audit Controls: Additional undertakings require generators to keep CfD and Related Facility assets clearly separated for metering, monitoring, and settlement. Unapproved changes to the Related Facility can trigger contract termination.
• Relief and Compensation Provisions: Amendments ensure that compensation and relief apply only to CfD Facility assets, excluding Related Facility costs and revenues from such calculations.
• Phased Project Arrangements: For phased offshore wind projects, enhanced metering and monitoring requirements are applied from contract commencement, allowing for hybrid metering and accurate apportionment across phases and Related Facility assets.
• New Definitions: A suite of new and updated definitions is proposed to clarify terms relating to hybrid metering, facility descriptions, monitoring systems, and output calculations, enhancing contract clarity and consistency.

What this means for developers

The payment-on-delivery mechanism will improve the certainty and timing of bonus payments but also increases scrutiny on project deliverability. Developers must provide clear evidence of delivery to qualify for bonuses and manage risks related to financial shortfalls or unmet workforce requirements. Effective risk management requires careful planning and robust evidence strategies.

For AR8 participants, CIB commitments should be integrated into bid strategies and aligned with procurement milestones, ensuring obligations are realistic and mapped to key stages. Strong governance and proactive supplier engagement are crucial; developers must maintain credible relationships and verifiable evidence throughout the supply chain to meet CfD contract requirements.

Given that the skills fund administrator has not yet been confirmed and operational readiness is targeted for 2027, developers preparing AR8 bids should consider building flexibility into their skills-related commitments including:

• structuring bid commitments to accommodate alternative delivery mechanisms should the OWGP or designated administrator not be operational in time; 
• establishing direct relationships with training providers and educational institutions as a contingency;
• ring-fencing skills investment funds internally pending clarity on the fund's governance and disbursement procedures; and 
• engaging early with DESNZ and the anticipated administrator to understand likely contribution structures, timelines, and reporting requirements. Developers should also factor potential delays into their project timelines and ensure that any skills-related commitments in their CIB bids are not contingent on the fund being operational by a specific date.

Developers considering hybrid metering arrangements should implement robust risk mitigation strategies to address the potential for payment suspension and contract termination. Key measures could include:

• engaging with the LCCC early in the approval process to ensure the Hybrid Metering Notice and Adjusted Facility Description are comprehensive and address all likely assessment criteria; 
• building the minimum six-month lead time into project schedules with appropriate buffer periods to account for any delays in meeting Hybrid Metering Conditions;
• investing in metering infrastructure that exceeds minimum accuracy and data communication requirements, reducing the risk of compliance failures during commissioning;
• establishing clear internal governance protocols to prevent unapproved changes to Related Facility assets, including approval workflows and change control procedures;
• maintaining strict physical and operational separation between CfD and Related Facility assets from the outset, with documented audit trails; and
• ensuring that financing arrangements and cash flow projections account for the possibility of payment suspension during the commissioning window, including maintaining adequate reserves or standby facilities to bridge any gap.

Next steps

The consultation closes on 1 April 2026. A government response and final CfD contract drafting are expected ahead of the CIB application window, currently scheduled for 13–21 May 2026 and a supporting statutory instrument is expected to take effect in mid‑April.

If you need any assistance navigating these new policies, please do get in touch with a member of the team.