Feed-in Tariffs: guidance for suppliers

What this is about

Ofgem has published Version 18 of its FIT supplier guidance, the operational manual that licensed electricity suppliers use to administer the Feed-in Tariffs scheme. The substantive change is the switch from RPI to CPI as the inflation index used to adjust FIT tariff rates. This follows DESNZ's consultation response published on 28 January 2026, which confirmed the government's decision to mandate the change.

The FIT scheme closed to new applicants in March 2019 but continues to pay existing generators — roughly 850,000 domestic and small-scale installations — index-linked tariffs for the remainder of their 20- or 25-year contracts. The inflation index used to uplift those tariffs each year determines how much generators receive and how much suppliers must collect through the FIT levelisation fund. Switching from RPI to CPI is a permanent reduction in the annual uplift, compounding over the remaining life of every FIT contract.

Key points

RPI to CPI: a systematic value transfer. CPI typically runs 0.5–1.0 percentage points below RPI. Over a 10-year remaining contract life, that gap compounds to a 5–10% reduction in cumulative payments compared to the RPI baseline. For a typical 4 kW domestic solar installation on a 2012 generation tariff (currently around 16p/kWh after indexation), the difference is modest per installation but material in aggregate across 850,000 accredited installations. The FIT levy on consumer bills falls correspondingly.

Who gains, who loses. The losers are existing FIT generators who made investment decisions based on RPI-indexed returns. Their nominal income stream has been retrospectively reduced. The gainers are electricity consumers (via a lower FIT levy) and suppliers (whose levelisation obligations shrink). The government gains fiscally: a lower FIT cost trajectory without having to legislate scheme closure or buy out contracts.

The precedent matters more than the amount. RPI-to-CPI switches have been applied across public sector pensions, student loans, and now energy support schemes. The pattern is consistent: government treats the index switch as a technical correction rather than a benefit reduction, avoiding the political cost of an explicit cut. For FIT generators, the contract said RPI. It now says CPI. The economic substance is a unilateral reduction in the value of an existing obligation.

Consultation confirmed, not debated. DESNZ published its consultation response on 28 January 2026 confirming the switch. The consultation itself ran in late 2025. Ofgem's Version 18 guidance is the administrative implementation — it updates the tariff adjustment methodology that suppliers must follow. There is no further decision point. The switch applies from the next annual tariff adjustment date (1 April 2026).

Other changes are minor. Version 18 also updates the contact email for Ofgem's RE Compliance Team. No other substantive changes to supplier obligations, registration processes, or levelisation mechanics.

Context: FIT is a declining but still significant cost. Total FIT levelisation costs were approximately £1.5 billion in 2024/25, funded through supplier obligations passed to consumers. The scheme's cost is falling as older, higher-tariff installations reach the end of their contract terms, but it remains one of the larger environmental levies on electricity bills. The CPI switch accelerates the cost decline.

What happens next

Immediate effect. The CPI indexation applies from 1 April 2026. Suppliers must use the updated methodology in Version 18 for all tariff adjustments from that date. There is no transition period — the switch is a one-time change to the formula.

No further consultation. The policy decision is final. DESNZ's January 2026 response closed the matter. Generators who object have no regulatory route to challenge the change, though judicial review of the consultation process remains theoretically possible (the argument would be legitimate expectation based on the original RPI-linked offer).

Watch the levelisation numbers. Ofgem publishes quarterly FIT levelisation data. The first post-CPI quarter (Q2 2026/27) will show whether the cost reduction matches the projected 0.5–1.0 percentage point gap. If RPI and CPI diverge more sharply — as they did in 2022–23 when the formula effect widened — the transfer from generators to consumers will be larger than the headline estimate.

Broader pattern. The RPI-to-CPI switch is part of a wider government effort to reduce the cost of legacy renewable support schemes on consumer bills. The same logic could be applied to early CfD contracts if those were RPI-indexed (most are CPI already). The FIT change establishes that retrospective index switches are politically deliverable, which matters for any future debate about reforming older subsidy obligations.