UK Onshore Wind and Solar Now 50% Cheaper Than New Gas
The UK government has made significant strides in renewable energy by securing a record 7.4 gigawatts (GW) of solar, onshore wind, and tidal power in its latest auction round. This auction, part of the seventh round for “contracts for difference” (CfDs) known as AR7a, follows the earlier auction in January 2026, where 8.4 GW of offshore wind capacity was agreed upon. Overall, AR7 marks the largest auction round in the UK’s history, totaling 14.7 GW of new renewable capacity, which is 50% larger than the previous record from the AR6 round in 2024.
Record Low Prices for Renewable Energy
In this recent auction, 157 solar projects secured contracts at a price of £65 per megawatt hour (MWh), while 28 onshore wind projects were contracted at £72/MWh. These prices are significantly lower than the operating costs of new gas power stations. Energy Secretary Ed Miliband stated that these renewable projects are more than 50% cheaper than new gas installations, highlighting the financial advantages of clean British energy.
- Solar projects: £65/MWh
- Onshore wind projects: £72/MWh
- New gas costs: £147/MWh
Impact on Gas Demand and Energy Costs
The AR7 auction is set to reduce UK gas demand by approximately 95 terawatt hours (TWh) annually, subsequently decreasing liquefied natural gas (LNG) imports by 75%. Analysts believe this will lead to lower energy bills for UK consumers, as the prices for solar and onshore wind are below recent wholesale power averages.
Details of the Auction Outcomes
In AR7a, solar capacity accounted for 4.9 GW spread over 157 projects, while onshore wind contributed 1.3 GW across 28 projects. Additionally, four tidal energy projects totaling 21 megawatts (MW) secured contracts. Notably, a significant solar project, West Burton Solar, is being developed in Lincolnshire and Nottinghamshire, marking the first large-scale project approved through the Nationally Significant Infrastructure Project process.
Comparison of Onshore Wind and Solar Projects in AR7a:
| Type of Project | Capacity (GW) | Strike Price (£/MWh) |
|---|---|---|
| Solar | 4.9 | 65 |
| Onshore Wind | 1.3 | 72 |
| Tidal | 0.021 | 265 |
Future Prospects and Job Creation
With the AR7 outcomes, the UK is expected to create around 10,000 jobs and attract £5 billion in private investments. Overall, the auction’s results support the government’s goal of achieving 100% clean power by 2030, with plans for significant increases in renewable capacity, including 27-29 GW of onshore wind and 45-47 GW of solar.
The AR7 round demonstrates a move toward a sustainable energy future that promises not only environmental benefits but also economic stability through reduced dependence on imported fossil fuels. By focusing on onshore wind and solar energy, the UK aims to establish a more secure and cost-effective energy framework that is advantageous for both consumers and the environment.
