The Rossby Centre regional climate model (RCA2) has been integrated over the Arctic Ocean as part of the international ARCMIP project. Results have been compared to observations derived from the SHEBA data set. The standard RCA2 model overpredicts cloud cover and down-welling longwave radiation, during the Arctic winter. This error was improved by introducing a new cloud parameterization, which significantly improves the annual cycle of cloud cover. Compensating biases between clear sky downwelling longwave radiation and longwave radiation emitted from cloud base were identified. Modifications have been introduced to the model radiation scheme that more accurately treat solar radiation interaction with ice crystals. This leads to a more realistic representation of cloud-solar radiation interaction. The clear sky portion of the model radiation code transmits too much solar radiation through the atmosphere, producing a positive bias at the top of the frequent boundary layer clouds. A realistic treatment of the temporally evolving albedo, of both sea-ice and snow, appears crucial for an accurate simulation of the net surface energy budget. Likewise, inclusion of a prognostic snow-surface temperature seems necessary, to accurately simulate near-surface thermodynamic processes in the Arctic.