Contracts for Difference Bumped Up to EU Level as Commission Releases New Grids Package

The European Commission has just published a European Grids Package that includes Guidance on Contracts for Difference (CfDs), making the offshore wind industry’s much-sought-after procurement model soon to be mandated by the EU.

While the new package has yet to be adopted and will serve as a foundation for EU and national legislation moving forward, a Commission official revealed ahead of its publication that the Guidance on Contracts for Difference will need to be translated into national legislation by 2027.

The CfD regulation, which will require national-level support schemes for solar, wind, geothermal, and hydro to be based on two-way Contracts for Difference, also comprises an article on minimum design requirements.

“Since last year, we have seen quite a few Member States coming with CfD contracts. We then started a discussion with the Member States to see whether it fits the regulation criteria”, a Commission official said, adding that the new CfD guidance was introduced as the Commission realised that there were different interpretations of the way CfDs are being awarded, and it decided to highlight the best practices.

For offshore wind, where CfDs have moved to the centre of conversations about how to keep large-scale projects bankable and on schedule as the industry faces financial pressure, this could be a significant step forward. Over the past year, industry actors and trade groups have repeatedly promoted CfD-style mechanisms as a way to give developers predictable revenue streams and reduce financing risk for multi-billion-euro projects.

In April 2025, WindEurope set out a high-ambition proposal calling for at least 100 GW of new offshore capacity to be auctioned over the next decade under de-risked, CfD-based models. The organisation framed such an approach as a way to make projects more bankable and to help drive down the levelised cost of electricity over time through predictable revenue frameworks.

Tenders in core markets have underlined the urgency of the debate. The 1 GW Nederwiek I-A tender in the Netherlands closed without any bids on 30 October 2025, an outcome that prompted the Dutch government to review how upcoming rounds are structured and how support frameworks might be adjusted to restore developer interest. The government has already been working on introducing the CfD model in future tenders, not least as the industry had specifically called on the government to introduce the model, or the national target would likely not be met.  

Germany has seen the same pressure, as a 2.5 GW offshore auction this year failed to attract bids, and subsequent industry commentary and statements from grid operators called for a redesign of auction rules.

Among the changes proposed by stakeholders were the introduction of CfDs and longer-term commercial arrangements such as Power Purchase Agreements (PPAs) to stabilise revenues and reduce the cost of capital.

Proponents of the CfD model across European countries tapping into their offshore wind resource argue that indexed, two-sided CfDs in particular, which share upside and downside price risks between the state and developers, can provide the predictability lenders need while retaining market exposure.

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