Summary

The UK’s tidal stream energy sector continues to progress following the announcement of 20.9 MW of new capacity being awarded Contracts for Difference (CfD) in Allocation Round (AR) 7a, increasing the overall pipeline to in excess of 140 MW. This follows the record amount of offshore wind capacity announced last month in the AR7 results.

When the AR7a budget notice was published in December 2025, there was disappointment in the sector that tidal stream would not benefit from a ringfenced budget, as it had done in the previous 3 ARs. This meant that tidal stream projects would have to directly compete with more mature technologies that also sit within Pot 2, including geothermal, which have lower administrative strike prices. However, tidal stream was the only successful Pot 2 technology type in AR7a, potentially suggesting that developers of the other technologies did not bid in this round. Tidal stream also no longer shares a pot with floating offshore wind, which now has its own dedicated pot.

In spite of claiming the entire Pot 2 budget, the 20.9 MW awarded does mark the lowest annual capacity awarded to tidal stream projects in all successful ARs (Figure 1). The relatively low capacity for tidal may not come as a surprise to the industry, as it is a result of the lowest budget offered to tidal energy since AR4. A maximum budget of £15 million was available for tidal, while a minimum of £13.9 – 27.8 million was ringfenced exclusively for tidal across each of the last three auctions. This includes AR5, where tidal stream had a £13.9 million ringfence but benefited from the absence of bids from floating offshore wind projects and secured additional budget. The lower budget available in AR7a marks an increased focus on established technologies as the Government strives to meet its Clean Power 2030 targets.

 

Figure 1 – Support for tidal projects in auction rounds four to seven, including strike prices and capacity awarded.

The AR7a strike price of £265/MWh (in 2024 prices) given to the four tidal developers is 10% higher than that of AR6, but again this should not be unexpected given the real terms budget cut and external market pressures which have also affected offshore wind. The AR7a strike price is broadly consistent with previous rounds and is still lower than the price given in AR5.

There is currently around 10MW of tidal power operational in the UK, which means that the 21 MW awarded significantly adds to the pipeline of tidal projects in development. As a result of the last four auction rounds, over 140MW of tidal energy is expected to be commissioned through 2030, bringing the UK to a total of over 150 MW installed (Figure 2). The majority of this is expected to come online during 2027 and 2028 due to the large capacities awarded in AR4 and AR5.

 

Figure 2 – Tidal project pipeline and expected capacity through 2030.

While the results ensure that momentum within the UK’s leading tidal stream sector continues, there is a need to provide further support to enable the industry to scale-up and move faster. Otherwise, it will be challenging for tidal stream to play a meaningful role in the future UK energy system, and consequently the wider benefits of this entirely predictable renewable energy source, including its potential for high socio-economic value, will not be realised.

AR7a Projects

A total 20.9 MW of new tidal stream CfDs were awarded to four separate developers in AR7a, with the majority (18.5 MW) being at the Morlais project in Wales. This includes HydroWing, who were the biggest winners in this round by securing 10 MW, and means that they have now been awarded CfDs for the full 30 MW at their Morlais berth.

There was also a new entrant in the AR7a results, Tidal Technologies, who were awarded 3 MW for their Morlais berth. This marks the first time that a CfD has been awarded to a developer of a vertical-axis tidal turbine technology.

Elsewhere, Orbital Marine Power secured an additional 2.4 MW for their project at the European Marine Energy Centre (EMEC) in Scotland, which now totals 16.8 MW. This builds on the announcement late last year where Orbital Marine Power were selected as the sole awardees of new tidal energy licences in Canada for a project of a similar scale.

In total, the tidal stream CfD pipeline now sits at just over 140 MW, split across 3 project sites and 9 project developers. As in previous rounds, no capacity was awarded to the Perpetuus Tidal Energy Centre (PTEC) project off the Isle of Wight, meaning that England remains without a tidal stream project with CfD.

 

Table 1 – Tidal developers and projects awarded capacity across CfD auction rounds.

Project	Location	Developer	AR4	AR5	AR6	AR7a
EMEC	Scotland	Magallanes Renovables		1.5	3
		Nova Innovation			6
		Orbital Marine Power	7.2	7.2		2.4
MeyGen	Scotland	MeyGen	28	21.94	9
Morlais	Wales	HydroWing		10	10	10
		Magallanes Renovables	5.62	3
		QED Naval		4.5		5.5
		Tidal Technologies				3
		Verdant Isles		4.9
Total Awarded Capacity [MW]			40.82	53.04	28	20.9

 

What do the outcomes mean for the marine energy sector?

Despite tidal stream securing the entirety of the Pot 2 budget, the results suggest that the Government is taking a cautious approach to marine energy. The £15m allocated to Pot 2 represents a real terms budget cut relative to previous rounds and has led to a lower amount of tidal stream capacity being awarded this year. This is in contrast with the AR7 offshore wind results where a record amount of capacity (8.25 GW) was announced last month.

There is an estimated potential of 11.5 GW of tidal stream energy in the UK and previous analysis by ORE Catapult forecasts that it will become cost competitive with established low carbon technologies at just 1 GW of cumulative capacity. The AR7a announcement, together with the results from previous rounds, suggest that it will take some time before tidal stream achieves either of these figures, meaning that the UK risks missing out on adding a dependable renewable energy source that would significantly support grid balancing in an energy system that is becoming increasingly underpinned by non-dispatchable generation.

Support for the sector needs to go beyond the CfD scheme. Unlike offshore wind, the developers behind tidal stream projects are typically not large companies.. Instead, they are often SMEs who are first and foremost developers of novel technologies, yet at present they are required to simultaneously develop projects to establish a market for their technologies. These companies do not have large balance sheets and raising the required finance for these pre-commercial projects presents a significant challenge and delivery risk. There is already evidence of some delivery failure within the CfD scheme, with almost all of the contracts previously awarded to advanced conversion technologies (another emerging technology that sits alongside tidal stream in Pot 2) being terminated.

In 2025 an industry-led Marine Energy Taskforce was launched to develop a roadmap that will identify the key actions that need to be taken to address sector challenges, enabling the UK to realise its full marine energy potential. Chaired by the Marine Energy Council, the Taskforce findings are due to be published in summer 2026. It is expected that this will include a focus on the CfD scheme and how it can evolve to become a more supportive mechanism for emerging marine energy technologies.

One final point to note is that no wave energy projects have been successful in the CfD scheme so far. Like tidal stream, wave energy sits in Pot 2 but it has not benefited from a ringfenced budget in any of the previous ARs. This is something that the industry is calling for with developers like CorPower Ocean being in a position to develop UK projects but without a route to market. Wave energy is the world’s largest untapped renewable energy source and despite the UK being considered a leader in this sector, the market conditions have become increasingly challenging.