UK Government opens Clean Industry Bonus application window for Offshore Wind Developers
On Thursday, 13th February 2025, the UK government officially opened the application window for the Clean Industry Bonus (CIB), a new initiative designed to support offshore wind developers in their investment in industrial communities.
The announcement was made by the Department for Energy Security and Net Zero, signalling a significant shift in policy towards supporting the offshore wind sector. The Clean Industry Bonus is part of the UK government’s broader efforts to meet its ambitious net-zero targets while ensuring that the country’s industrial communities are not left behind in the transition.
What is the Clean Industry Bonus?
The Clean Industry Bonus is part of the UK government’s non-price factor policy for offshore wind, aimed at providing financial support to developers who demonstrate their commitment to strengthening local economies and reducing the environmental impact of supply chains. The scheme has two main components: a compulsory element for Contract for Difference (CfD) auction eligibility and an optional ‘CIB Extra’ auction, which offers additional funding opportunities.
The compulsory element requires developers to demonstrate a minimum level of investment in supply chains, particularly those based in deprived areas or those that align with the Science Based Target Initiative (SBTi). This will ensure that projects are contributing to both local economic development and global sustainability goals. The optional CIB Extra auction provides an opportunity for developers and their higher-tier supplier partners to bid for a share of the £27 million per gigawatt (GW) funding pot available for offshore wind projects.
Key Criteria for the Clean Industry Bonus
Both the compulsory and optional elements of the CIB focus on two key criteria that developers must meet in order to qualify for the financial incentives:
- Investments with Suppliers in UK Deprived Areas: This criterion is designed to direct funds toward regions that may have traditionally relied on industries such as oil and gas, with the aim of supporting a just transition for these communities. By investing in these areas, offshore wind developers will contribute to job creation and local economic revitalisation.
- Investments with Suppliers Who Are Science-Based Targets Initiative (SBTi) Compliant: SBTi is a globally recognised framework that helps companies set science-based emissions reduction targets. Developers who choose to work with suppliers that meet SBTi standards will be ensuring that their supply chains are aligned with the UK’s commitment to reducing carbon emissions and achieving net-zero goals.
Why This Matters
For offshore wind developers, the Clean Industry Bonus provides both a necessary step to secure CfD eligibility and an opportunity to access significant government funding. The £27 million per GW funding pot under the CIB Extra auction is expected to incentivise further innovation and investment in cleaner, more sustainable supply chains, making the UK a more attractive place for both developers and suppliers in the green energy sector.
The emphasis on both local investment and cleaner supply chains highlights the UK’s commitment to a green transition that benefits communities while ensuring the environmental sustainability of energy production. It also places responsibility on developers to use less polluting suppliers and encourages local job creation.
For suppliers, particularly those in the offshore wind sector, the CIB sets a new benchmark for doing business in the UK. The criteria for participation, such as meeting the £100 million per GW spend requirement and working with suppliers who are SBTi-compliant, may represent both a challenge and an opportunity. Tier 1 and 2 suppliers who are not yet aware of these requirements are urged to take proactive steps to meet the new standards, which will be crucial to staying competitive in the market.
With the Clean Industry Bonus, the UK government is reinforcing its support for offshore wind development while ensuring that economic and environmental goals are met in tandem. For offshore wind developers and their suppliers, the scheme offers both challenges and opportunities—ensuring a cleaner, more sustainable energy future while supporting communities impacted by the transition away from traditional fossil fuel industries.
Our thoughts
- Anything aimed at boosting supply in an expanding yet already supplier constrained market is a plus, as are efforts to decarbonise. It’s how we go about this that has always been the issue.
- The latest policy is UK Government’s attempt at the ‘carrot’ rather than ‘stick’ approach, which industry has been advising and asking for, for a good while now!
- Whilst in general there are high hopes for the CIB to make a positive impact and an opportunity for a much needed injection of cash into ports and other key components, the upcoming AR7 (Allocation Round 7) is very much a ‘guinea pig’ round for success.
- Project-level supply chain policies alone cannot deliver the breadth of impact required.
- There are risks of unintended, or perhaps partially intended, consequences such as: complex guidance to gain full clarity on within short submission timescales; a range of possible market changes driven by suppliers that fit the two criteria and potential impacts on procurement activity e.g. earlier contracting, potential pricing impacts, restricted (or more targeted) competition and others.
The potential impacts are nuanced. Some say these things need to happen to drive the intended policy outcomes and improvements that industry requires. To what extent and for the better or worse of the industry is the unknown. Only time will tell!
Read the Allocation Round 7: Clean Industry Bonus Allocation Framework here.
Read the Department for Energy Security and Net Zero’s press release here.
