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OFFSHORE WIND CFD EXPLAINED

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FREE GUIDE · OFFSHORE WIND · CONTRACT FOR DIFFERENCE · CFD · PROJECT FINANCE · REVENUE MODELLING

Offshore Wind CfD Explained — Free Guide to Contracts for Difference

Offshore wind is not financed on hope. It is financed on revenue certainty — and in most markets, that certainty comes from the CfD.

Offshore wind has one of the highest CAPEX per MW in renewable energy.

That means revenue risk matters more than almost anything else.

If a project is fully exposed to merchant power prices, lenders cannot size debt with confidence. EBITDA becomes volatile. DSCR becomes uncertain. Financing becomes harder, more expensive or impossible.

That is why the Contract for Difference, or CfD, is one of the most important mechanisms in offshore wind project finance.

But the CfD is often misunderstood.

It is not simply a feed-in tariff.
It is not only a price floor.
In many markets, it is a two-sided contract: when market prices are below the strike price, the developer receives the difference; when market prices are above the strike price, the developer pays the difference back.

The result is a more predictable revenue stream — exactly what lenders need to support long-tenor debt.

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Description

FAQ

The Offshore Wind CfD Explained guide gives you a clear, practical explanation of how CfDs and equivalent support mechanisms work across major offshore wind markets.

Use this free guide to understand:

  • What a Contract for Difference is

  • How the two-sided CfD mechanism works

  • Why CfDs make offshore wind projects more bankable

  • How the UK CfD AR7 mechanism works in practice

  • How offshore wind support differs across 8 major markets

  • Why the Netherlands can operate without subsidy under SDE++ / merchant structures

  • How USA ORECs and Taiwan FiTs differ from European CfDs

  • How to model CfD, PPA, merchant and balancing revenues in a financial model

  • Which risks CfDs protect against — and which risks remain with the developer

The guide includes market-by-market coverage of:

  • UK CfD AR7

  • Germany EEG Marktprämie

  • France Complément de Rémunération

  • Italy FER E Aste

  • Netherlands SDE++ / merchant exposure

  • Nordic CfD / El-certifikat systems

  • USA Offshore Renewable Energy Credits

  • Taiwan MOEA FiT / auction structure

Free PDF guide · instant download · worked numerical examples included · no payment required.

What is an offshore wind CfD?

An offshore wind CfD, or Contract for Difference, is a revenue support contract that stabilises the price received by an offshore wind project against a market reference price.

How does a two-sided CfD work?

If the market price is below the strike price, the developer receives the difference. If the market price is above the strike price, the developer pays the difference back. This keeps revenue close to the strike price for the contracted volume.

Why are CfDs important for offshore wind?

Offshore wind projects have very high CAPEX. CfDs reduce price volatility and make project cash flows more predictable, which helps lenders size debt and support project finance structures.

Is a CfD the same as a feed-in tariff?

No. A feed-in tariff usually pays a fixed tariff. A two-sided CfD settles the difference between a strike price and a market reference price, with payments potentially flowing in both directions.

Which markets are covered in the guide?

The guide covers the UK, Germany, France, Italy, Netherlands, Nordic markets, USA and Taiwan.

Does the guide explain UK CfD AR7?

Yes. It includes a worked example for UK CfD AR7, including strike price, CfD allocation, market price scenarios and revenue impact.

Does the guide explain how to model CfD revenue?

Yes. It explains how to model CfD revenue, PPA revenue, merchant revenue, balancing revenue and revenue haircut in a financial model.

What risks does a CfD protect against?

A CfD mainly protects against market price risk for the contracted volume and helps reduce refinancing risk.

Is this a full offshore wind financial model?

No. This is a free educational guide. For full offshore wind financial modelling, use the Offshore Wind Ultimate Model.

Need to model CfD revenue?

Use this free guide to understand the mechanism. When you need to calculate full offshore wind revenues, IRR, NPV, DSCR, debt schedule, CfD/PPA/merchant allocation, revenue haircut and 25-year cash flows, move to the Offshore Wind Ultimate Model.