SSE PLC (LSE:SSE) is likely to be one of the largest potential winners from the UK government’s upcoming offshore wind auction, according to UBS, with the allocation in the news after the Reform party's absurd threat to cancel subsidies.
Following new policy changes to the contracts for difference (CfD) scheme, analysts at the Swiss bank expect up to 22 gigawatts (GW) of offshore wind capacity to be eligible in the upcoming auction, known as Allocation Round 7 (AR7).
Of this, 4.1GW of the capacity is controlled by SSE.
The auction is expected to take place as early as December 2025, with the government confirming that CfD contracts will be extended to 20 years, lowering upfront prices but still supporting project returns.
UBS estimates auction clearing prices could fall to £53–58 per megawatt hour (MWh) in 2012 real terms, while project-level nominal internal rates of return could remain around 8.5%.
UBS believes SSE’s Berwick Bank project could generate approximately £1.5 billion in equity value if half is sold down, echoing the Dogger Bank development model and helping to manage capital outflows.
The bank reiterated a 'buy' rating on SSE, with a price target of 2,150p.