BHA Latest News: Contracts for Difference Auction Round 7 Hydropower Participation

This article is an excerpt from the BHA Latest News that was released on March 6th 2026. To read more articles like this, become a member today.

Allocation Round 7 (AR7) marked the first time a hydropower project has ever been submitted into a Contracts for Difference (CfD) auction. While the project did not secure a contract, its participation represents an important milestone for the sector. 

Despite a welcome uplift in the Administrative Strike Price for hydropower, projects remain unable to clear while competing in Pot 1 against lower-priced solar and wind. This highlights a structural issue rather than a question of project viability or system value. 

Following the results, we have engaged directly with DESNZ and submitted proposed changes for Allocation Round 8 (AR8). A copy of these proposals was also handed to Minister Shanks. Our recommendations focus on: 

• Moving hydropower into Pot 2 or creating a dedicated low-carbon dispatchable pot; 
• Introducing an energy-based eligibility parameter (GWh) rather than relying solely on installed capacity (MW); and 
• Ensuring the CfD better recognises dispatchable generation that can reduce reliance on gas at the margins. 

We will continue to push for refinements to AR8 which will enable hydropower to compete successfully and play its full role in delivering Clean Power 2030.