What It Means for UK Energy and the Future of AD & EfW                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            

The UK government’s latest overhaul of the Contracts for Difference (CfD) scheme represents a major pivot in energy strategy: one aimed squarely at accelerating the build-out of large-scale renewables.

With contract lengths extended from 15 to 20 years for offshore wind, onshore wind, and solar, the message to investors is clear: Britain is doubling down on clean power, and doing so with long-term policy certainty.

The CfD model, already a proven mechanism for stabilising electricity prices and attracting private finance, is now being refined to attract deeper capital pools and unlock faster project delivery.

This is not just as a policy update but a signal of how the energy landscape is shifting rapidly beneath our feet. And while the spotlight remains on wind and solar, the knock-on effects for other technologies - particularly anaerobic digestion (AD) and energy-from-waste (EfW) - shouldn’t be overlooked.

The revamped CfD model lowers the cost of capital by extending price guarantees over a longer term, making capital-intensive projects like offshore wind and solar more bankable, especially in a volatile economic environment. It also includes scope for “bespoke auction pots,” offering new space for emerging or strategically important technologies to gain support.

While AD and EfW are not currently eligible for CfD support, the market conditions around them are still affected.

The renewed investor confidence and faster auction cycles will likely concentrate financing activity in supported technologies, potentially pulling attention away from decentralised, heat-led, or hybrid projects that fall outside the CfD remit.

However, the wider policy context matters; with pressure growing to decarbonise not only power but also heat, transport, and waste systems, AD and EfW could see new relevance - especially where they support circular economy goals, reduce landfill dependence, or produce biomethane and hydrogen as transport fuels.

For developers and operators in the AD and EfW space, this is a moment to act strategically.

On the one hand, the CfD revamp heightens the need to differentiate by leaning into the dispatchable, flexible, and often locally integrated nature of AD and EfW schemes. On the other, it lends focus on policy risk: with the Renewable Heat Incentive (RHI) expired, and Renewable Transport Fuel Certificates (RTFCs) under pressure, the lack of equivalent long-term frameworks for bioenergy projects becomes more glaring.

The risk is that AD and EfW projects may find themselves squeezed, not by technology failure, but by policy misalignment. Without timely intervention, they could be left competing for grid space, planning bandwidth, and investor attention in a market increasingly skewed toward subsidised clean electricity.

The UK needs megawatts from offshore wind, yes, but it also needs local, dispatchable systems that can stabilise the grid, decarbonise waste, and produce clean heat and transport fuels. As such, AD and EfW still have a seat at the table, but they need support mechanisms that reflect the complexity and diversity of their outputs.

The challenge for policymakers now is to avoid creating a two-speed market: one flush with investor confidence, and another locked in ‘policy limbo’. The answer may lie in borrowing from the CfD’s success, creating equivalent long-term strike-price or market stabilisation schemes tailored for bioenergy and waste-based fuels.

Reform UK Directly Undermines CfD Reforms

However, political uncertainty is casting a shadow over these reforms; Reform UK has issued a formal warning that, should it come to power in the next election, it would abandon subsidies for renewable energy, including Contracts for Difference awarded in the upcoming Allocation Round 7 (AR7).

This statement has raised serious concerns across the energy sector, particularly among offshore wind and solar developers who rely on policy stability to justify investment.

If such threats come to be, they could undermine the purpose of the CfD revamp: to provide long-term certainty, attract competitive bids, and accelerate delivery.

For investors, this signals heightened political and regulatory risk, potentially stalling progress at a time when policy momentum is urgently needed.

Lib Dems Weigh In On the Debate

Liberal Democrat leader Sir Ed Davey added weight to the CfD reform debate this week, calling for all legacy renewable projects currently under the Renewables Obligation scheme to be transitioned to Contracts for Difference.

Speaking on BBC Radio 4, he criticised the continued link between green electricity prices and volatile gas markets as “manifestly unfair,” and urged for a rapid shift to stable CfD pricing to help lower consumer bills and stabilise the market.

His comments highlight growing political pressure to overhaul not just future energy contracts, but the structure of existing subsidies as well.

A Significant Pivot

As the UK accelerates towards its net zero ambitions, the Contracts for Difference (CfD) revamp marks a significant pivot in how renewable and low-carbon projects are supported. While the reforms promise greater investor confidence, price stability, and a more competitive project environment, the political uncertainty introduced by parties like Reform UK - and competing narratives from figures such as Ed Davey - remind us that policy continuity is never guaranteed.

For developers and stakeholders in sectors like anaerobic digestion and energy-from-waste, staying informed and agile will be key to capitalising on emerging opportunities while mitigating the risks of shifting subsidy frameworks.