International Quarterly — Issue 42

Winds of Change: legal and market developments shaping the global offshore wind sector

By Layla Blair, Associate, and Freddy Ashe, Trainee Solicitor

This year marks the 25^th anniversary of the first offshore wind farm commissioned in the UK. The 4-megawatt Blyth project in Northumberland was commissioned in December 2000 and generated enough power for around 3,000 homes. Since then, the UK’s offshore wind sector has grown dramatically. By 2025, offshore wind farms were generating enough electricity to power around 80% of UK homes.1

The global trend of increased offshore wind capacity and reliance on wind farms as a source of renewable energy can be seen nowhere more clearly than in China. China now accounts for around 52% of global operational offshore wind capacity,2 and for the fifth consecutive year has delivered more than half of the world’s annual offshore wind installations.3 However, forecasts for 2026 predict that increased output from the UK, Germany and Taiwan may reduce China’s share.4

Against this backdrop, this article explores recent developments in the UK and in other countries that are shaping the global offshore wind sector. In the UK, we focus on Allocation Round 7 (“AR7”) under the government’s Contracts for Difference Scheme (“CfD”). Globally, we highlight key updates to China’s arbitration laws. We also consider the recent case of Kingdom of Spain v Infrastructure Services Luxembourg S.A.R.L and Republic of Zimbabwe v Border Timbers Ltd [2026] UKSC 9 which may have important implications for developers and investors operating across the sector globally.

UK Legislation Updates

The UK continues to commit to expanding its offshore wind industry. The UK’s CfD AR7 is a major 2025/2026 government auction aimed at securing renewable energy projects. CfD is the UK’s main mechanism for supporting low-carbon electricity generation, and operates by giving renewable energy generators a long-term contract with a fixed “strike price” for the electricity they produce.5 The fixed price gives developers investment certainty in the UK for projects with long construction timelines and high upfront costs.6

Under AR7, a further 8.4 GW of offshore wind capacity was secured, including offshore wind (6.9 GW), offshore wind in Scotland (1.4 GW) and floating offshore wind (0.19 GW).7 AR7 awarded six offshore wind projects and two floating wind projects, which together will generate enough clean electricity to power the equivalent of 12 million homes.8 This is a new European record for offshore wind procurement,9 and supports the UK’s clean power mission by 2030 while also representing progress in emerging technologies, in particular, the use of floating offshore wind.10 While the capacity awarded to floating wind projects under AR7 remains comparatively small, the 192 MW secured represents a clear commitment to floating-specific auctions11 and reinforces the UK’s position as the global leader in this technology.12

Notably, under AR7 the government has gone well beyond the initial budget of £1.1 billion – now at £1.79 billion.13 This is particularly striking when compared with developments in the United States, where the Trump administration has taken a more cautious approach to offshore wind development.14

The UK adjusted its AR7 auction parameters to reflect current market conditions; the lease periods were extended from 15 to 20 years and the “strike prices” were increased from 2012 prices (which have been presented in all previous allocation rounds) to 2024 prices.15 These changes are expected to reduce revenue volatility and overall project risk. There will be greater certainty to developers who will be able to know in advance the price at which they will be able to sell their electricity for up to 20 years, and these changes will help to lower financing costs.16

The next auction round, AR8, will begin later in 2026 and will be critical for projects aiming for delivery in the early 2030s.17 It will be important to maintain momentum and ambition in the offshore wind sector, particularly as AR7 faced significant delays which created cost challenges and difficulties for the wider supply chain.18 We also note that on 10 February 2026, the results of the seventh allocation round for non-offshore wind projects were announced, procuring 6.2GW of onshore wind, solar and tidal energy projects.19

Changes to China’s Arbitration Law

As offshore wind projects expand globally, the legal frameworks governing dispute resolution are becoming increasingly important. The Arbitration Law of the People’s Republic of China (the “Arbitration Law”) came into force in 1995 and has remained largely unchanged, with only limited amendments in 2009 and 2017. In light of China’s substantial share of global operational offshore wind capacity and growth in popularity as a choice of arbitration seat,20 the revised Arbitration Law (the “New Arbitration Law”) which took effect on 1 March 2026 is particularly significant. By modernising China’s arbitration framework and aligning it more closely with international standards, the reforms may increase the attractiveness of China as a seat of arbitration.

Three provisions of the New Arbitration Law are particularly noteworthy: Article 78 on arbitrable disputes; Article 86 on foreign arbitral institutions; and Article 81 on the seat of arbitration.

Article 78 – Arbitrable disputes

Previously, the 2017 Arbitration Law amendments limited foreign-related arbitrations to disputes arising in four sectors: economic, trade, transportation and maritime. Article 78 in the New Arbitration Law expands this scope to include “other foreign related disputes”. This broader formulation may allow disputes arising from offshore wind projects to be arbitrated in China.

Article 81 – Seat of arbitration

In line with modern practice, the New Arbitration Law introduces the concept of a seat of arbitration. The seat may be agreed by the parties in writing or by the arbitral tribunal. Article 81 provides that the parties may choose the applicable procedural law governing the arbitration.

Article 86 – Foreign arbitration institutions

Perhaps the most significant development in the New Arbitration Law is introduced by Article 86 which allows foreign arbitration institutions to establish case management offices in free-trade pilot zones on mainland China to conduct foreign-related arbitration activities for the first time. This signals a clear intention to modernise China’s arbitration framework and align it more closely with international arbitration practice.

Case law

On 4 March 2026, the UK Supreme Court delivered judgment in Kingdom of Spain v Infrastructure Services Luxembourg S.A.R.L and Republic of Zimbabwe v Border Timbers Ltd [2026] UKSC 9 (“Kingdom of Spain”). The appeals considered whether two foreign sovereign states subject to adverse arbitration awards rendered pursuant to the ICSID Convention21 could rely on sovereign immunity to set aside the registration of those awards under the Arbitration (International Investment Disputes) Act 1966 (the “1966 Act”).22

The dispute arose after Spain implemented energy subsidies guaranteeing investors a reasonable return on investments in renewable energy facilities.23 The respondents invested approximately €139.5 million in reliance on these incentives, which were later rolled back. They commenced arbitration under the Energy Charter Treaty and succeeded, with the tribunal awarding around €101 million in damages.24

The respondents subsequently obtained an order from the High Court of England and Wales registering the award as a judgment under the 1966 Act. Spain sought to set aside the order, arguing it was immune from the jurisdiction of the English courts under the State Immunity Act 1978 (the “SIA 1978”). While Spain’s challenge failed at first instance, the issue ultimately reached the Supreme Court.

The Supreme Court held that Spain could not rely on sovereign immunity to prevent the registration of the ICSID award in the UK, and that the ICSID constituted a clear and unequivocal submission to the English court’s adjudicative jurisdiction.

For offshore wind and other renewable energy projects, the decision highlights a key risk: governments may change regulatory regimes or incentive schemes after projects are built, prompting investors to pursue investment treaty arbitration. The ruling also reinforces that, by signing the ICSID Convention, states effectively waive immunity in respect of the recognition of awards, providing greater certainty for investors in large-scale renewable energy projects.

Conclusion

As offshore wind projects continue to expand globally, developers and investors must navigate an evolving landscape of regulatory frameworks, subsidy regimes and dispute resolution mechanisms. The developments highlighted in this article illustrate how legal and regulatory changes will continue to shape the offshore wind sector in the years ahead.