Feed-in Tariffs scheme: modifications to supplier licence conditions

The UK government is proposing changing the inflation indexation calculation for the Renewable Obligation ( RO ) and Feed-in Tariffs ( FiT ) schemes, from the Retail Price Index ( RPI ) to the Consumer Price Index ( CPI ): for the Renewable Obligation ( RO ) scheme, the inflation indexation calculation for the buy-out price would be changed by Ofgem from RPI to CPI for the Feed-in Tariffs ( FiT ) scheme, the annual tariff adjustment calculation would be changed from RPI to CPI The indexation change would come into effect in April 2026 and would affect all UK generators on the RO and FiT schemes. Changes to inflation indexation would lower the annual subsidy uplifts for generators and reduce the cost of these schemes for UK consumers. Respond to the FiT scheme consultation via the link on this page. Respond separately to the RO scheme consultation Introduction The Feed-in Tariffs ( FiT ) scheme was launched in 2010 with the aim of supporting small scale electricity generation (up to 5 MW ), particularly by organisations, businesses, communities and individuals that had not traditionally engaged in the electricity market. The technologies supported are limited to solar PV, onshore wind, hydropower, anaerobic digestion, and microcombined heat and power (<2 kW ). It provides fixed payments to households, businesses and communities for the electricity they generate and export to the grid. The scheme operates across Great Britain and excludes Northern Ireland. The UK government has the power to amend the FiT scheme for Great Britain. The scheme was closed to new applicants in April 2019, with existing installations continuing to receive payments under their agreed terms. The scheme continues to play an important role in powering the country - 850,000 individual generators receive FiT payments. Ensuring the scheme provides stable and consistent support to these generators, at a fair cost to consumers, remains a priority for the UK government. In an increasingly unstable world, the only way to permanently protect hardworking people and businesses from increased energy bills caused by volatile global gas markets is to accelerate our pathway towards greater energy independence through the deployment of clean energy. The UK government is committed to lowering consumer energy bills within its parliamentary term. This includes finding efficiencies within the energy system where this offers the potential to improve affordability for consumers. Making changes to the way that the FiT scheme is adjusted for inflation would bring it into line with regulatory best practice, as well as reducing the overall scheme cost in future by decreasing the rate at which costs increase with general inflation. Lowering levy costs will also support wider UK government priorities, including efforts to reduce industrial electricity prices. The Industrial Strategy, launched in June 2025, set out a series of electricity price relief schemes, with a commitment to fund these through reductions in levies and other energy system costs. The proposals in this consultation, if implemented, could contribute to that goal. The UK government recognises the important balance that must be achieved between ensuring that generators continue to receive an appropriate return on their investments andmanaging costs to consumers. General information Why we are consulting The UK government is seeking views on proposals to change how the cost of the FiT scheme is adjusted annually for inflation. Consultation details Issued: 31 October 2025 Respond by: 5pm on 12 December 2025 Enquiries to: Email: RO @energysecurity.gov.uk Consultation reference: Changes to inflation indexation of the Feed-in Tariffs scheme Audiences: We are seeking the views of renewable electricity suppliers, generators in receipt of support via the FiT scheme, and any bodies who represent them. We are also interested to hear from consumers and groups that represent their interests. Territorial extent: The FiT scheme operates across Great Britain. This consultation seeks views from respondents across Great Britain (excluding Northern Ireland). How to respond Your response will be most helpful if it is framed in direct response to the questions we have asked, though further comments and evidence are also welcome. When responding, please state whether you are responding as an individual or representing the views of an organisation. Electronic responses are preferred, but we will also consider hard copy responses sent to the address below. Please send your response to the DESNZ Legacy Schemes Team (details provided below). Respond online or Email to: RO @energysecurity.gov.uk Write to: Legacy Schemes Team Renewable Electricity Directorate Department for Energy Security and Net Zero 6th Floor, 3-8 Whitehall Place London SW1A 2AW Confidentiality and data protection Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018 and the Environmental Information Regulations 2004). If you want the information that you provide to be treated as confidential please tell us, but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request. We will process your personal data in accordance with all applicable data protection laws. See our privacy policy. Quality assurance This consultation has been carried out in accordance with the government’s consultation principles . If you have any complaints about the way this consultation has been conducted, please email: bru@energysecurity.gov.uk . The proposal Policy context The FiT scheme was introduced at a time when renewable electricity was significantly more expensive and wholesale electricity prices and capacity market payments were relatively low. Generators faced higher capital costs than those building new generating assets today. The support provided by this scheme, alongside other schemes such as the Renewables Obligation ( RO ), has played a large role in bringing forward the successful renewable electricity sector that we see today in the UK, as well as contributing to reductions in technology costs. However, the schemes leave a cost legacy and one that is ultimately borne by consumers through levies on electricity bills. This cost has been rising over time; the scheme’s value is forecast to be £1.9bn in 2026 to 2027. Though the FiT scheme is closed to new applicants, support will be provided to generators until 2043. In the context of persistent high energy prices that consumers face, the UK government thinks it is right to explore all avenues to bear down on costs in the energy system to support energy bill affordability. In this context, we considering changes to the way that the FiT scheme costs are adjusted for inflation. We are consulting separately, but in parallel, on similar changes to the RO scheme. Currently, both schemes are – in different ways – adjusted for inflation by Ofgem annually in line with the Retail Prices Index ( RPI ). Under the FiT scheme, both generation and export tariff levels are adjusted. These adjustments were included in the scheme design to ensure that the value of the financial support kept pace with overall UK inflation. This was intended to maintain investor confidence, ensure the long-term viability of projects and avoid any erosion in the nominal value of subsidy over time. At the time of their design, RPI was a commonly used metric across government contracts and financial instruments and was seen as the lead measure for general inflation. Historically, RPI has reflected a higher rate of inflation compared to other indices such as the Consumer Prices Index ( CPI ) (see below Figure 1). This is largely due to the differing methodologies of RPI and CPI , with RPI tending to overestimate annual growth compared to CPI . [footnote 1] The Office for National Statistics ( ONS ) have been vocal on the shortcomings of RPI as a measure of inflation, stating that any use of RPI over superior alternatives should be closely scrutinised. Accordingly, in 2019 the UK Statistics Authority proposed replacing RPI with CPI including owner occupiers’ housing costs ( CPIH ) [footnote 2] , citing its historical shortcomings. Following a joint consultation, the UK Statistics Authority and HM Treasury confirmed in November 2020 that the methodology for calculating RPI will be phased out by February 2030 and replaced with the methodology for calculating CPIH . Figure 1: OBR projections for RPI , CPI and CPIH . The plot also shows the rate of change for RPI if the CPI methodology was used (which will occur from 2030) Description of figure 1: Figure showing the OBR projections for RPI , CPI and CPIH to 2037. RPI rises to 310.6, CPI to 289.7 and CPIH to 239.5. We believe it is important to uphold the original intent behind inflation indexation of the FiT scheme – namely, to provide a stable revenue stream that maintains its value over time. However, the government considers that indexing to the RPI has overcompensated generators and increased the policy costs of the scheme over time. This effect was heightened by unexpected inflation surges from 2022, which increased scheme costs beyond original expectations. Policy proposal The UK government is proposing changing how the cost of the FiT scheme is adjusted for inflation in future. Without pre-emptive action, changes to indexation would otherwise take effect in 2030, in line with the ONS ’ decision to realign the RPI to the CPIH . This would see scheme costs continue to rise in line with RPI in the short-term. The UK government believes that alternative methods should be considered. We consider thata more proportionate and fair approach would be to change the price index used to annually adjust the FiT scheme costs for inflation from the RPI to the CPI . This approach would ensure generators continue to receive a stable and predictable return, whilst making savings in the energy system, and preventing further overcompensation. The UK government believes this change should be implemented at the earliest opportunity to prevent overcompensation and, subject to legislative schedules, intends to implement changes for April 2026 ahead of the next scheduled annual adjustment. The rationale for change is as follows: CPI is generally a more stable and widely used measure of inflation – CPI is the UK government’s preferred inflation measure due to its international recognition and consistency. It is used in uprating various state benefits and pensions. It also underpins the Bank of England’s inflation targets. The RPI is now widely considered to be an outdated and unsuitable measure of general inflation in the UK. Avoiding overcompensation of generators – The RPI overestimates inflation, resulting in higher revenues for generators than they would have received had their payments been indexed to CPI or CPIH . Changing indexation to CPI will continue to give generators a reasonable and predictable rate of return and protection against inflation whilst making savings in the energy system. The RPI and CPIH include housing costs such as mortgage interest payments and private rents, which we do not consider relevant to the FiT scheme. The scheme was designed to encourage renewable energy generation and was not meant to account for housing costs. The CPI excludes these costs, making it a more accurate reflection of the cost pressures faced by scheme participants for their renewable electricity generation. Reducing the burden on consumers – The costs of the FiT scheme are recovered through levies on electricity bills, passed on to consumers via suppliers. Changing inflation indexation to the CPI would reduce future consumer bill costs. For example, if inflation indexation on the FiT scheme was switched to CPI in April 2026, there would be an estimated saving of £20m in scheme compliance year 2026 to 2027. This would rise to an estimated saving of £70m in 2030 to 2031 or approximately £2 per year for an average GB household. We are also consulting on changes to the RO scheme; if the indexation of both schemes was switched to CPI , there would be a total estimate savings of £100m in scheme compliance year 2026 to 2027 and £310m in 2031 to 2032, or approximately £5 per year for an average GB household. The savings are greater if indexed to CPI vs CPIH . Alignment with broader policy and regulatory direction – Transitioning to CPI indexation would reflect a more consistent approach across government support mechanisms toward a more accurate and equitable inflation metric. Many of the major support schemes in the energy industry use CPI -based indexation to ensure that these reflect economic conditions without overcompensating. For example, Contracts for Difference (CfDs), Renewable Heat Incentive (RHI) tariffs and aspects of the Capacity Market (CM) are all CPI -indexed in different ways. To address concerns around overcompensation and ensure a fairer inflation adjustment mechanism for the FiT , the UK government is considering 2 options for transitioning from the Retail Price Index ( RPI ) to the Consumer Price Index ( CPI ). Both options aim to deliver a more proportionate approach to inflation indexation, reduce costs to consumers, and align with broader government and regulatory policy. Option 1: Immediate Switch to CPI Indexation This option would involve a simple switch in the price index used to adjust the FiT scheme costs from the RPI to the CPI . Subject to legislative schedules, the UK government would look to implement ahead of the next annual adjustment scheduled in March 2026 which would see the FiT scheme costs increased in line with CPI . This approach would ensure generators continue to receive a stable and predictable return that maintains its value, whilst making savings in the energy system. Option 2: Temporary Freeze and Gradual Realignment with CPI This alternative would involve freezing the tariffs at the 2025 to 2026 level, taking effect from April 2026 (subject to legislative schedules). The government would calculate a ‘shadow’ price schedule for the tariffs from 2002, annually adjusted using CPI instead of RPI . No further inflation-linked increases would be applied until the cumulative effect of CPI -based inflation on that shadow prices matches the current RPI -adjusted buy-out price. At this point of realignment(estimated to occur in the mid-2030s), annual indexation would resume using CPI . This option goes further than Option 1 and would not only prevent further overcompensation in future but gradually realign scheme costs after presumed historical overcompensation caused by RPI ’s tendency to overstate inflation. It could stabilise scheme costs in the short term and transition to a more sustainable inflation measure over time. This would bring with it greater long-term savings for consumers, as scheme costs would be held steady until CPI and RPI inflation realign. We estimate that in scheme compliance year 2026 to 2027 this could save consumers around £60m, rising to an estimated saving of around £230m in 2031 to 2032. The UK government is seeking views on which of these proposals presents the best alternative to the current methodology of RPI -indexation of the FiT scheme. We are mindful that the FiT scheme encompasses hundreds of individual tariffs, each tailored to different technologies, commissioning dates, and installation sizes. Attempting to freeze all these tariffs simultaneously to enact the changes proposed in Option 2 would require an extensive and highly technical intervention. We are also aware that any change needs to be balanced against the broader impacts on renewables investment in the UK, which is essential to protect consumers against volatile fossil fuel prices. This is particularly pertinent in a period where the sector is focused on delivering the UK government’s Clean Power 2030 mission. Consultation questions Do you agree that CPI is a fairer and more accurate measure of inflation for adjusting the FiT tariffs than RPI ? If not, why not? Of the 2 options, which do you think is the best alternative to the current methodology, and why? Do you have any comments on the likely impacts of the proposed change for generators, consumers or investors? Do you think there are alternative approaches that should be considered, and if so, what are these and why? Next steps All responses to this consultation will be reviewed and analysed by the Department of Energy Security and Net Zero ( DESNZ ). We will publish a response to the consultation, which will provide a summary of the views expressed by the respondents. It will also detail whether the UK government intends to proceed with the proposed changes, in what form, and when. Subject to the consultation outcome and ensuing legislative process, the UK government intend to make changes to inflation indexation before the start of the next scheme compliance year on 1 April 2026. The UK government will lay a license condition modification to change the inflation indexation of the FiT scheme. The proposal would, if implemented, affect all accredited generators across Great Britain (England, Wales and Scotland). ONS (2018) Shortcomings of the Retail Price Index ↩ ONS (2019) UK Statistics Authority Statement on the future of the RPI ↩ Background on indexation An inflation measure quantifies the rate at which the general price level of goods and services rises in an economy. It serves to track the cost of living, gauge economic stability, and inform monetary and fiscal policy decisions by central banks and governments. It helps individuals, businesses, and governments understand how their purchasing power is changing and allows for appropriate adjustments to wages, contracts, and interest rates to maintain price stability and economic well-being. There is often debate about which methodology is most appropriate with the 3 most common measures used in the UK being the Retail Prices Index ( RPI ), Consumer Prices Index ( CPI ), and Consumer Prices Index with Housing ( CPIH ). The Office for Budget Responsibility ( OBR ) produce regular Economic and Fiscal Outlooks that provide projections for RPI , CPI , and CPIH (Figure 1) up to Q1 2030. In general, RPI has consistently tracked higher than both CPI and CPIH and is expected to remain higher in the future. Beyond Q1 2030, it is assumed that CPI increases at 2.0% with CPIH and RPI increasing at 2.4% based on OBR long-term forecasts from the publication ‘The long-run difference between RPI and CPI inflation’. [footnote 1] Figure 1. OBR projections for RPI , CPI and CPIH . The plot also shows the rate of change for RPI if the CPI methodology was used (which is expected to occur in the future) Description of figure 1: Figure showing the OBR projections for RPI , CPI and CPIH to 2037. RPI rises to 310.6, CPI to 289.7 and CPIH to 239.5. Operation of the Renewables Obligation Scheme The Renewables Obligation ( RO ) operates as a market-based system of tradable green certificates. The scheme places an obligation on UK electricity suppliers to present a certain number of Renewable Obligation Certificates ( ROCs ) to the scheme administrator (Ofgem), for each unit of electricity they supplied to non-exempt customers during an obligation year. Suppliers can purchase these ROCs from generators or traders (with the precise value of a ROC a matter for negotiation) or can meet their annual obligation, in part or in full, by paying into a ‘buy-out’ fund. The prices of ROCs sold through the buy-out fund is set by the Department for Energy Security and Net Zero ( DESNZ ), the price of which is adjusted by Ofgem each year in line with inflation - currently RPI . Although the majority of suppliers meet their obligation by purchasing ROCs rather than paying the buyout price, the predefined buyout price is assumed to directly impact on the traded price of a ROC. Any adjustment to the rate of indexation will therefore directly impact on the total spend required by suppliers and the total revenue received by generators. Operation of the Feed-in Tariff Scheme The Feed-in Tariff ( FiT ) scheme was introduced in 2010 to incentivise small-scale renewable electricity generation. Although closed to new applicants, accredited generators continue to receive payments under the scheme for the duration of their contracts – typically 20 to 25 years. Under the FiT scheme, accredited generators are registered with FiT licensees (electricity suppliers) who are responsible for administering payments. These payments consist of 2 components: a generation tariff – a payment for each kilowatt-hour ( kWh ) of electricity generated, regardless of whether it is consumed on-site or exported an export tariff – a payment for electricity exported to the grid, either metered or deemed Tariff rates were set by DESNZ and its predecessors and are adjusted annually by Ofgem, also in line with RPI . As tariffs are defined explicitly and indexed, any change in the indexation methodology would directly affect both the total value of payments made to generators, and the overall cost of the scheme, which is ultimately passed on to consumers. Impact of the change of indexation Each year the Department updates its projections for the number of ROCs that are expected to be produced under the scheme (figure 2), with these then being used to define the headroom required within the scheme and the obligation for suppliers. Figure 2. Forecast of the number of ROCs produced each year until the end of the RO scheme (in 2037) Description of figure 2: Figure showing the forecast of the number of ROCs produced each year until 2036 to 2037. The number decreases from 111.5 in financial year 2025 to 2026 to 22.9 in financial year 2036 to 2037. See Table 2 for full details. The RPI , CPI and CPIH forecasts from OBR are used to project buy-out prices (table 1). The impact of the change in indexation (table 2) has been calculated by multiplying the projected ROC volumes by the buy-out prices and uplifted by 10% to account for headroom. The scheme costs are paid by suppliers through the RO obligation which are assumed to be passed onto consumers. The savings in table 2 are assumed to be for the consumer. Changing RO indexation from RPI to CPI is forecast to produce savings for the consumer of £80m (2024 to 2025 prices) in 2026 to 2027 increasing to £250m (2024 to 2025 prices) in 2030 to 2031. The savings beyond this point reduce as the total generation falls as the scheme closes in 2036 to 2037. Generators income would fall by similar amounts. Freezing the RO indexation is forecast to produce savings for consumers of £300m (2024 to 2025 prices) in 2026 to 2027 increasing to £820m (2024 to 2025 prices) in 2030 to 2031. Generators income would fall by similar amounts. Table 1. The forecast ROC buy-out price Actual RPI Increase (%) CPIH Increase (%) CPI Increase (%) 2024/25 £64.73 - - - - - - 2025/26 £67.06 - - - - - - 2026/27 - £69.66 3.9% £69.50 3.6% £69.00 2.9% 2027/28 - £72.06 3.4% £71.34 2.6% £70.58 2.3% 2028/29 - £74.30 3.1% £72.93 2.2% £72.07 2.1% 2029/30 - £76.40 2.8% £74.49 2.1% £73.53 2.0% 2030/31 - £78.54 2.8% £76.07 2.1% £75.01 2.0% 2031/32 - £80.44 2.4% £77.85 2.3% £76.51 2.0% 2032/33 - £82.37 2.4% £79.72 2.4% £78.04 2.0% 2033/34 - £84.35 2.4% £81.63 2.4% £79.60 2.0% 2034/35 - £86.38 2.4% £83.59 2.4% £81.19 2.0% 2035/36 - £88.45 2.4% £85.59 2.4% £82.81 2.0% 2036/37 - £90.57 2.4% £87.65 2.4% £84.47 2.0% Table 2. Impact of changing the indexation of the RO scheme Buy-out price: 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 ROCs (m) 111.5 111.5 86.5 86.0 82.9 78.5 69.0 60.8 48.7 37.8 29.0 22.9 RPI £67.06 £69.66 £72.06 £74.30 £76.40 £78.54 £80.44 £82.37 £84.35 £86.38 £88.45 £90.57 CPIH £67.06 £69.50 £71.34 £72.93 £74.49 £76.07 £77.85 £79.72 £81.63 £83.59 £85.59 £87.65 CPI £67.06 £69.00 £70.58 £72.07 £73.53 £75.01 £76.51 £78.04 £79.60 £81.19 £82.81 £84.47 No indexation £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 £67.06 Cost (£bn, nominal prices): 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 ROCs (m) 111.5 111.5 86.5 86.0 82.9 78.5 69.0 60.8 48.7 37.8 29.0 22.9 RPI £8.2 £8.5 £6.9 £7.0 £7.0 £6.8 £6.1 £5.5 £4.5 £3.6 £2.8 £2.2 CPIH £8.2 £8.5 £6.8 £6.9 £6.8 £6.6 £5.9 £5.3 £4.3 £3.4 £2.7 £2.2 CPI £8.2 £8.5 £6.7 £6.8 £6.7 £6.5 £5.8 £5.2 £4.3 £3.4 £2.6 £2.1 No indexation £8.2 £8.2 £6.4 £6.3 £6.1 £5.8 £5.1 £4.5 £3.6 £2.8 £2.1 £1.7 Cost (£bn, 2024 to 2025 prices): 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 ROCs (m) 111.5 111.5 86.5 86.0 82.9 78.5 69.0 60.8 48.7 37.8 29.0 22.9 RPI £7.9 £7.9 £6.2 £6.1 £5.9 £5.6 £4.9 £4.3 £3.5 £2.7 £2.1 £1.6 CPIH £7.9 £7.9 £6.1 £6.0 £5.8 £5.4 £4.8 £4.2 £3.4 £2.6 £2.0 £1.6 CPI £7.9 £7.9 £6.0 £5.9 £5.7 £5.3 £4.7 £4.1 £3.3 £2.6 £2.0 £1.5 No indexation £7.9 £7.6 £5.7 £5.5 £5.2 £4.8 £4.1 £3.5 £2.8 £2.1 £1.6 £1.2 Savings (£m, 2024 to 2025 prices): 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 ROCs (m) 111.5 111.5 86.5 86.0 82.9 78.5 69.0 60.8 48.7 37.8 29.0 22.9 RPI £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 CPIH £0 £20 £60 £110 £150 £180 £160 £140 £110 £90 £70 £50 CPI £0 £80 £130 £180 £220 £250 £240 £230 £200 £160 £130 £110 No indexation £0 £300 £430 £600 £720 £820 £820 £810 £710 £600 £500 £420 The FiTs cost forecast is derived from the latest outturn data published by Ofgem for the 2023 to 2024 financial year. Given that the FiTs scheme is closed to new entrants, the modelling assumes that aggregate costs remain constant in real terms until 2029. From 2030 onwards, costs are projected to decline annually, reaching zero by early 2040s, in line with the expected expiry of generator contracts. Changing FiTs indexation from RPI to CPI is forecast to produce savings for the consumer of £20m (2024 to 2025 prices) in 2026 to 2027 increasing to £70m (2024 to 2025 prices) in 2030 to 2031. Generators income would fall by similar amounts. Freezing the FiTs indexation is forecast to produce savings for consumers of £60m (2024 to 2025 prices) in 2026 to 2027 increasing to £230m (2024 to 2025 prices) in 2030 to 2031. Generators income would fall by similar amounts. Table 3. Impact of changing the indexation of the FiTs scheme Cost (£bn, nominal): 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 RPI £1.9 £1.9 £2.0 £2.1 £2.1 £2.0 £1.9 £1.7 £1.6 £1.5 £1.3 £1.2 CPIH £1.9 £1.9 £2.0 £2.0 £2.0 £1.9 £1.8 £1.7 £1.6 £1.4 £1.3 £1.1 CPI £1.9 £1.9 £2.0 £2.0 £2.0 £1.9 £1.8 £1.7 £1.5 £1.4 £1.2 £1.1 No indexation £1.9 £1.9 £1.9 £1.9 £1.9 £1.7 £1.6 £1.4 £1.3 £1.2 £1.0 £0.9 Cost (£m, 2024 to 2025 prices): 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 RPI £1.9 £1.9 £1.9 £1.9 £1.9 £1.7 £1.6 £1.4 £1.3 £1.2 £1.0 £0.9 CPIH £1.9 £1.9 £1.8 £1.8 £1.8 £1.7 £1.5 £1.4 £1.3 £1.1 £1.0 £0.8 CPI £1.9 £1.9 £1.8 £1.8 £1.8 £1.7 £1.5 £1.4 £1.2 £1.1 £0.9 £0.8 No indexation £1.9 £1.8 £1.8 £1.7 £1.7 £1.5 £1.3 £1.2 £1.0 £0.9 £0.8 £0.6 Savings (£m, 2024 to 2025 prices): [footnote 2] 25/26 26/27 27/28 28/29 29/30 30/31 31/32 32/33 33/34 34/35 35/36 36/37 RPI £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 £0 CPIH £0 £10 £30 £40 £50 £50 £50 £40 £40 £30 £30 £30 CPI £0 £20 £40 £50 £70 £70 £70 £70 £70 £60 £60 £50 No indexation £0 £60 £120 £170 £210 £230 £240 £250 £250 £240 £230 £210 This projection is based on high-level aggregate modelling and is subject to several uncertainties. Key among these is the variability in generation output from FiTs -accredited installations and the pace at which existing generators will exit the scheme. No granular modelling has been undertaken at the individual generator level to estimate specific exit dates, which introduces further uncertainty into the long-term cost trajectory. Office for Budget Responsibility (2024) ‘The long-run difference between RPI and CPI inflation’ ↩ Figures are rounded to the nearest £10m. ↩ Introduction Context The Feed-in Tariffs ( FIT ) scheme was launched in 2010 with the aim of supporting small-scale electricity generation (up to 5MW), particularly by organisations, businesses, communities and individuals that had not traditionally engaged in the electricity market. The technologies supported are limited to solar PV , onshore wind, hydropower, anaerobic digestion, and micro combined heat and power (<2kW). It provides fixed payments to households, businesses and communities for the electricity they generate and export to the grid. The scheme operates across Great Britain. The scheme was closed to new applicants in April 2019, with existing installations continuing to receive payments under their agreed terms (10-25 years). The scheme continues to play an important role in powering the country, supporting around 870,000 generators in Great Britain. The majority of FIT installations (829,000) are domestic solar installations who either directly receive or benefit from, FIT payments. Ensuring the scheme provides stable and consistent support to these generators, at a fair cost to consumers, remains a priority for the Government. Tackling the affordability crisis is our number one priority, and we are acting to bring bills down now and for the long term. The Government is committed to lowering consumer energy bills within its parliamentary term. This includes finding efficiencies within the energy system where this offers the potential to improve affordability for consumers. On 31 October 2025, the Government launched two consultations on changes to the Renewables Obligation ( RO ) and FIT schemes. The consultations proposed changing the way that both schemes are indexed to inflation in order to bring them into line with regulatory best practice, as well as reducing overall scheme costs in the future. This document provides the response to that consultation. The joint UK and Devolved Government response to the RO consultation was published in parallel on 28 January 2026. Overview of consultation proposals The consultation invited views on two proposed options which would adjust the method of inflation indexation of FIT rates for the foreseeable future. These were: Option 1 – Change inflation indexation of FIT rates from the Retail Price Index ( RPI ) to the Consumer Price Index ( CPI ). This would come into effect in April 2026. Option 2 – A temporary freeze of FIT rates at current (2025/26) levels, taking effect from April 2026 and a gradual realignment with the CPI . The consultation posed the following questions: 1. Do you agree that the CPI is a fairer and more accurate measure of inflation for adjusting the FIT scheme costs than the RPI ? If not, why not? 2. Of the two options, which do you think is the best alternative to the current methodology, and why? 3. Do you have any comments on the likely impacts of the proposed change for generators, consumers or investors? 4. Do you think there are alternative approaches that should be considered, and if so, what are these and why? Engagement with consultation proposals The consultation was published online on the GOV.UK website and ran from 31 October 2025 to 12 December 2025. Responses were submitted through an online response tool (Citizen Space) and by email. The consultation attracted around 2800 individual responses, of which 10 were from large generators and developers that own or operate FIT assets, 114 were from small-scale or community owned generators, 28 from institutional investors, 6 from suppliers and utilities, 9 from industry bodies, 9 from councils, 7 from solar providers, 2 from consumer bodies and 15 responses were listed as ‘other’. The majority (2600) of responses were from members of the public with domestic solar PV installations on their property. The consultation also saw a small number of responses from local governments and authorities and academics. A number of responses (82) to the RO consultation referred only to the FIT scheme and have therefore been analysed as and counted in total FIT responses. A large proportion of responses (617) voiced opposition to any changes to the FIT scheme but did not answer the remaining consultation questions. These responses have been categorised as not in favour of either option. The Government engaged extensively with generators and investors who shared views on changes to both the RO and FIT schemes throughout the consultation period to hear their views and understand the potential impacts of a switch to CPI indexation first-hand. The Government is grateful to stakeholders for taking the time to engage with the consultation. A significant number of respondents expressed disappointment that they had not been informed directly about the publication of the consultation. The Government does not hold the contact information for individual FIT generators. This is held by the FIT licensees (suppliers). At the Government’s request, Ofgem contacted FIT licensees on the 24 November 2025 to enable licensees to notify individual FIT generators of the live consultation. Analysis of responses In reporting the overall response to each question, the ‘majority’ indicates the clear view of more than 50% of respondents in response to that question, and ‘minority’ indicates fewer than 50%. The following terms have been used in summarising additional points raised in the responses: ‘most respondents’ indicates more than 70% of those answering the particular question; ‘a few respondents’ means fewer than 30%; and ‘many’ refers to the range in between 30% and 70%. Summary of responses Question 1: Accuracy of CPI compared to RPI Question 1 sought views on whether CPI would be a fairer and more accurate measure of inflation for the purpose of indexing FIT . The majority of respondents disagreed that the use of CPI would be either fairer or more accurate, while a minority agreed. In addition, around 200 respondents answered neutrally, or not at all. Many of those who disagreed were individual FIT generators who receive FIT payments, or benefit from the scheme via other means (e.g. through a ‘rent-a-roof’ type arrangement). A large proportion of individual generators used a campaign-style response which disagreed with the use of CPI in indexing tariff rates for a number of reasons. Firstly, they believed they had entered into a 25‑year fixed FIT contract, indexed to RPI , under which the terms and conditions could not be changed. They therefore viewed any proposed modification as a breach of those expectations. Secondly, that the proposals would reduce their trust in government schemes and therefore negatively affect future investment in low carbon technologies. Lastly, some respondents stated their belief that RPI better reflects real household cost pressures including mortgage interest payments, council tax and rent. However, individual generators did not provide evidence to suggest that these costs were directly related to the ongoing operational costs of FIT installations. Larger FIT generators (including community generators) and institutional investors with FIT assets in their portfolios argued that a move away from RPI -based indexation would have significant commercial impacts. Among respondents who disagreed, most argued that RPI better reflects material generator cost bases faced by these assets, including (but not limited to) debt repayments, transmission charges, contractor costs, land lease payments and long-term operations and maintenance contracts, though with limited evidence to support. Many noted that indexing costs to CPI in future would therefore create an immediate and permanent revenue/cost mismatch which in turn would compress margins and undermine the financial resilience of these assets, though respondents did not provide evidence to suggest that changes would cause projects to shut down or cease generation prematurely. Several investors – in consultation responses and in direct discussions with the Department - raised concerns about the wide-reaching, longer-term impacts that these changes could have on investor confidence and regulatory stability. It was clear that investors and generators almost unanimously view any change to existing indexation as retrospective in nature, citing risks to policy predictability and trust. Many argued that this would raise risk premia, depress valuations, and would likely increase the cost of capital on new investments which they claimed would deter future investment and ultimately impact consumers and the Government’s ability to achieve the Clean Energy Superpower Mission, including Clean Power 2030. Most also suggested that in their view, both options would represent a breach of legitimate expectations based on prior commitments from the Government, and some believed that proposals would likely attract legal challenge. Stakeholders representing a range of renewable technologies noted that assets had been developed and built, and secondary transactions undertaken, on the presumption of a stable policy framework, and that retrospective changes to the terms on which investments were made would introduce additional policy risk for investors. However, many cited the challenges in quantifying the precise impact of reduced investor confidence. Many highlighted their view that the estimated consumer bill savings from switching to the CPI would be modest or otherwise offset elsewhere by increases to the cost of capital of future projects. Several respondents drew parallels between these changes and proposals related to zonal pricing, arguing that increases in the cost of capital could spill over to future Contracts for Difference ( CfD ) auctions. There was no consensus provided in responses over the scale of potential increases to cost of capital in future. Few noted that whilst CPI is more statistically robust and accurate, it is not fairer because it would ultimately impact pension investors by reducing their asset values. They emphasised a preference for retaining RPI to avoid potential revenue-cost mismatches. Few agreed that a switch to the CPI is necessary at all, noting that the RPI will naturally align to the Consumer Prices Index including owner occupiers’ housing costs ( CPIH ) by 2030 as confirmed by the UK Statistics Authority. Local council respondents (4 responses) and consumer bodies (2 responses) provided a mix of responses, with equal numbers agreeing and disagreeing with the proposals. A small number of consumer-related bodies favoured a switch to CPI on the basis that it could reduce the value of policy costs that are ultimately borne by electricity consumers, both domestic and non-domestic. Among respondents who agreed with proposals to move away from RPI to CPI , many highlighted the CPI ’s methodological robustness or supported the use of the CPI for improving consumer affordability and reducing levy costs. Many also emphasised how a switch to the CPI would align with other regimes that are already indexed to the CPI such as Contracts for Difference, Capacity Market, and the RIIO (Revenue = Incentives + Innovation + Outputs) price control framework. Many also supported a switch to the CPI on the basis of the UK Statistic Authority’s inevitable alignment with the CPIH by 2030 which effectively phases out the RPI methodology. Few noted that a switch to CPI would address the current inconsistency in indexation rules across support schemes which currently create regulatory confusion. Question 2: Preferred approach Question 2 asked respondents to indicate which of the proposed options they preferred. Many responses (55%) did not select either Option 1 or Option 2 as their preferred approach, simply leaving this question unanswered. Individual FIT generators almost universally offered a nil response (c. 90%), stating elsewhere in responses to the consultation that their preference was to maintain the ‘status quo’ of RPI -based indexation, and that they didn’t feel that this option had been presented to them in the consultation itself. Question 4 asked consultees for any alternative approaches to the Government’s proposals – these are summarised below. Of those who did answer directly, Option 1 ( RPI to CPI ) was marginally preferable (32%), with the sentiment being that this option was the least damaging of the two options presented. Many responses expressed a preference, however, for retaining RPI indexation until the already signalled CPIH alignment by 2030, which they claimed would meet existing expectations. Only a small minority of respondents (11%) supported Option 2 (temporary freeze and gradual realignment with CPI ), typically on the grounds that this would provide greater bill relief for electricity consumers – though, this later point was disputed by those who disagreed with proposals altogether. Many argued that whilst they do not prefer either option, Option 1 was perceived as less harmful to investors and generators, providing greater clarity on returns, and avoiding prolonged uncertainty. Several framed Option 1 as simply the “least damaging” compared with Option 2’s freeze. Many respondents argued that Option 2 would be far more damaging and impose far greater financial stress on assets because it could see tariffs frozen for a prolonged and uncertain period of time, and leave assets exposed without inflation protection whilst project costs could continue to rise. Some owners and operators of assets reflected that ultimately, this could jeopardise their financial viability though in most cases respondents were not able to provide evidence to support this. Many also claimed that Option 1 would be simpler to administer in comparison to Option 2, ultimately applying less burden on generators – a view shared by the Delivery Body, Ofgem. Many claimed that Option 2 offers a more robust, structured pathway, but recognised that it would be more complex to administer. While many raised concerns over Option 2 due to potential impacts on investor confidence and perceptions that it would be more exposed to legal challenge, a small number of respondents (largely those representing domestic or non-domestic energy consumers) expressed a preference for Option 2. This was largely down to greater potential in reducing consumer bills and effectiveness in tackling a perceived historic overcompensation under the RPI -based indexation. There were a number of representations from private individuals and/or consumers who supported Option 2 as it offers a way of correcting perceived windfall gains that generators have benefitted from during periods of high inflation. Many acknowledged the challenge of this switch for aligning prior RPI -linked obligations but argued Option 2’s correction was still warranted or could be carefully managed with sufficient lead-in time. Question 3: Stakeholder impact Question 3 sought views on impacts of the switch from the RPI to the CPI on generators, consumers and investors. The majority of responses expressed the view that the proposals constituted a breach of contract or that the changes would undermine trust in the Government. These views were raised by 58% of respondents. Concerns around trust were prevalent among private individuals and investors. Private and community generators repeatedly emphasised that policy stability is essential for participation in the sector and that the changes (which they perceived to be retrospective) would erode the Government’s legitimacy in future schemes. Many individuals expressed the view that early adopters had acted in good faith and that weakening indexation could slow future uptake by eroding confidence in similar schemes. Many participants highlighted that a switch from RPI to CPI would reduce projected lifetime returns, lengthen payback periods, and undermine the basis on which investments were originally financed. Some private individuals shared that they rely on FIT income for supplementing household budgeting, retirement planning or meeting loan obligations. These views were echoed by industry and investors, highlighting that assets financed on RPI ‑linked cost structures could experience reduced margins, debt‑service pressure, or difficulty refinancing. Investors also expressed concern that reduced inflation-linked increases would materially impact Net Asset Value, cash‑flow projections, and long‑term investment performance. Investors also expressed concern over the proposed timeline, emphasising that an abrupt change to indexation would increase perceived regulatory risk and prompt investors to apply higher risk premia to future UK energy projects. Wider impacts mentioned included increased cost of capital, reduce appetite for participation in future CfD rounds, and decreased interest in the UK market. Respondents also argued that uncertainty generated by changes that they perceive to be retrospective could slow the deployment of small‑scale renewables and community energy projects. Across renewable technologies – particularly those with RPI ‑linked cost bases such as AD and biomass generators – respondents warned that the mismatch between RPI ‑linked operating costs and CPI ‑linked revenues could threaten project viability, shorten asset life, or discourage reinvestment in maintenance. A common theme throughout responses was that the benefits to ordinary consumers would be negligible and any savings produced would be offset by higher long‑term investment costs. A very small minority of responses (9), stated that Option 2 could provide meaningful consumer savings due to addressing perceived historical over‑compensation. Question 4: Alternative approaches Question 4 sought views on alternative approaches to indexation. A majority (78%) of responses proposed maintaining the status quo, preferring that FIT continue to be adjusted in line with RPI on an annual basis. Several responses (28%) proposed that CPI -based indexation only apply to future schemes or projects, avoiding application to any FIT assets. Several responses suggested that if the scheme indexation change to CPI is pursued, that generators could be offered a one-off ‘buy-out’ or voluntary switch on to CfDs – akin to the ‘Pot Zero’ proposals put forward by academics in relation to RO assets. A small number suggested that RPI should be phased out gradually (4%), though responses did not offer suggestions as to how this could be applied. Several responses (11%) suggested the use of CPIH or a blended index instead of CPI . Other suggestions included targeting savings elsewhere in the energy system, limiting changes to large or commercial generators or moving costs of the FIT scheme on to general taxation. Government response The Government would like to thank all respondents for taking the time to engage with the consultation. The detail and breadth of responses have been invaluable in shaping our assessment. The Government wishes to acknowledge the important contribution made by early adopters of renewables in the development of the UK renewables sector. The collective participation of homeowners in domestic solar PV has supported driving down technology costs and normalising the deployment of rooftop solar across the UK. More widely, we recognise that legacy renewables form an integral part of the UK’s generating fleet, and that a stable and predictable policy framework is critical to maintaining investment appetite across the energy sector The Government has carefully considered the full range of stakeholder views and recognises that both options received limited support from most respondents. However, respondents were clear that Option 2 was the least preferred due to its higher financial impact. On balance, we consider Option 1 to be the least disruptive approach, avoiding the prolonged uncertainty and more severe impacts associated with a temporary freeze, while still delivering savings for electricity consumers. The Government therefore intends to proceed with an immediate switch to CPI -based indexation of FIT rates ahead of the next annual adjustment (1 April 2026). Following publication of this Government Response, a licence condition modification will be laid in Parliament to enact this change. We consider that this approach strikes the most appropriate balance between reducing the cost burden for all consumers whilst still ensuring generators continue to receive a stable and predictable return on their investments. This approach will also align with the parallel decision to change inflation indexation on the RO scheme to the CPI . In reaching this decision, the Government has been guided by the following overarching principles: Reducing the burden on consumers and ensuring the energy system remains fit for future demands Projects that were successfully accredited under the FIT scheme were eligible to receive support for up to 25 years from their date of accreditation, and we remain committed to supporting generators for the remainder of their support period. However, the Government considers it reasonable to periodically review and revise the scheme to offer better value for money for households and businesses that bear the costs of the support, as well as appropriate rates of return for generators and investors. This is particularly relevant in light of the affordability pressures on electricity billpayers. Over the next 10 years, the total scheme cost savings under Option 1 are approximately £600m (2024/25 prices), equivalent to an average annual saving of approximately £60m. Whilst the Government acknowledges that this may appear a modest saving, taken together with RO changes, these form part of a wider package of measures aimed at bearing down on the costs of electricity. In addition, at the last Budget the Government announced it will take an average of £150 of costs off energy bills from this coming April. This includes the announcement to move 75% of the domestic share of the cost of the RO to the Exchequer from April 2026, which represents a major further contribution to easing pressure on consumers. Energy costs and price increases are felt disproportionately, as lower income households spend a higher proportion of their income on utility bills and are more likely to be in fuel poverty [footnote 1] . The Institute of Fiscal Studies estimate that due to the RPI inflation spikes, in 2022, the bottom 10% of the population in terms of income faced an inflation rate of 10.9%, 3 percentage points higher than the inflation rate of the richest 10%. This difference was largely due to energy costs, which made up 11% of the total household budget for the poorest households, compared to 4% for the richest households [footnote 2] . The Government considers that taking action to constrain the rising costs of the FIT scheme, while maintaining appropriate and sustainable support for generators, through the immediate implementation of a switch from RPI to CPI (Option 1), represents a balanced and justified approach in pursuit of these objectives. Ensuring long-term stability and confidence for investment We fully recognise the importance of regulatory stability for maintaining the UK’s attractiveness to global capital. The Government has carefully weighed the strength of stakeholder sentiment in arriving at a final decision, mindful of the key role that private individuals and investors play in delivery of the clean energy mission. The Government notes that many respondents highlighted that Option 2, involving a temporary freeze of inflation indexation, presented materially higher impact to investor confidence and valuation risks. Stakeholders were also clear that prolonged ambiguity could elevate risk premia, raise the cost of capital and potentially depress investment appetite in future energy infrastructure. In proceeding with Option 1, the Government is seeking to minimise further uncertainty for legacy assets and send a clear signal that the UK remains committed to ensuring a stable and transparent regulatory environment, in addition to an attractive investment environment for renewables. Alongside these changes, the Government is committed to supporting consumers to invest in low carbon technology through the Warm Homes Plan. The Government is investing £13.2bn to help households take up measures like solar panels, heat pumps, batteries and insulation. Through the policies in the Warm Homes Plan, we could increase the number of households with rooftop solar to 3 million by 2030. Alignment with broader energy schemes Stakeholders emphasised that some projects – particularly those with cost bases linked more strongly to RPI (including O&M and debt costs) – could experience tighter financial headroom as a result of these proposals. We recognise these concerns and have taken them into account during our assessment, though we were provided with limited evidence to suggest that this is a significant or widespread concern, particularly for the many domestic solar PV installations supported by FITs. In addition, we note that for assets where a portion of the debt is longer-term, fixed-rate debt, the real value of this debt will have been reduced by the recent period of high inflation. This would have enhanced the return on equity for some assets compared to returns had inflation remained low. At the same time, CPI is now the standard inflation measure across government and aligning RO scheme indexation with CPI brings consistency with other energy schemes such as the CfD and the Capacity Market. It also aligns with an economy-wide shift away from the use of RPI , supported by the UK Statistics Authority’s previous de-designation of RPI as a “National Statistic”. Based on the evidence presented, the Government considers that on average, CPI indexation will continue to offer sufficient inflation protection for FIT installations – the original intent of the methodology. This ensures a sustainable long-term balance between the interest of consumers, and of generators, asset owners, operators and investors. We do not consider that there is sufficient rationale or evidence to suggest that, on average, ongoing project costs will rise above the level of inflation as measured by CPI . The Government appreciates that this will not be the case for all projects, and some technologies may experience greater inflation. We judge that, while some projects may face financial adjustments, the aggregate sector-wide impact is likely to be modest and manageable. Consideration of alternative options The Government considered suggestions from respondents that the Consumer Price Index including Housing costs ( CPIH ) might be a more suitable alternative to CPI , due to the majority of FIT generators (approx. 95%) being homeowners with solar installations. The CPIH metric includes owner occupiers’ housing costs, which are costs associated with owning, maintaining and living in one’s own home, including mortgage interest payments, council tax and maintenance and repair costs [footnote 3] . The FIT scheme was designed to encourage renewable energy generation and was not meant to account for housing costs. The CPI excludes these costs, which makes it a more accurate inflation metric for the cost pressures faced by FIT scheme participants for their renewable electricity generation. We acknowledge several responses suggested that a switch in indexation should only apply to new contracts. As the FIT scheme closed to new applicants in 2019, any changes can only be applied to the administration of the scheme which will apply to all FIT generators for the remainder of their support period. The Government reviewed a number of alternative proposals, including a voluntary switch to the Contracts for Difference scheme and the introduction of dynamic pricing. Although these options were considered, they were not judged to provide the same level of consumer benefit or coherence with broader policy objectives. To conclude, the UK Government intends to pursue Option 1, which it considers a proportionate change. While we acknowledge the concerns raised by many FIT individual and small-scale generators, we consider this approach a reasonable means of safeguarding all consumers from rising energy costs whilst maintaining a stable environment for investment within renewables. Making an immediate switch to CPI best supports long-term regulatory stability by aligning the FIT scheme with other energy schemes and with the UK’s wider shift away from the RPI . This decision ensures that the Government can continue supporting FIT -accredited generators for the remainder of the scheme whilst delivering better value for money for consumers. A number of responses from private individuals suggested that any change to their FIT tariff would constitute a breach of contract. As set out above, the FIT scheme does not involve any contracts between the Government and FIT generators. When they join the scheme, FIT generators enter into a “ FIT Agreement” or “Statement of FIT Terms” with their electricity supplier. Suppliers make payments to FIT generators based on tariff rates. The means by which these rates are indexed to inflation is set out in legislation. The Government is entitled to amend this legislation, subject to established parliamentary and legal processes. Next steps In order to enact this change ahead of the 2026-2027 scheme year, a draft negative statutory instrument was laid in Parliament on 7 January 2026, which delayed the publication deadline for FIT rates from 1 February 2026 to 1 April 2026. For subsequent years, the original publication deadline of 1 February 2027 will apply. To change the inflation indexation metric for the FIT scheme for the 2026/27 financial year, the Secretary of State intends to make a modification to license conditions before the 1 April 2026 (the temporary tariff publication date for 2026). Once the licence condition modification has been made, Ofgem will publish updated CPI -indexed tariff rates for the 2026-2027 period, along with any supporting materials. Office for National Statistics: Energy prices and their effect on households . ↩ Institute for Fiscal Studies: Inflation hits 9% with poorest households facing even higher rates . ↩ Office for National Statistics: Measures of owner occupiers’ housing costs, UK . ↩ The outputs in this annex will differ from the Analytical Annex in the consultation on changes to inflation indexation in the Feed-In Tariffs ( FIT ) [footnote 1] , due to updated forecasts published by the Office for Budget Responsibility on 26th November 2025 and updated FIT for financial year 2024/25 [footnote 2] . Background on Indexation An inflation measure quantifies the rate at which the general price level of goods and services rises in an economy. It serves to track the cost of living, gauge economic stability, and inform monetary and fiscal policy decisions by central banks and governments. It helps individuals, businesses, and governments understand how their purchasing power is changing and allows for appropriate adjustments to wages, contracts, and interest rates to maintain price stability and economic well-being. There is often debate about which methodology is most appropriate with the three most common measures used in the UK being the Retail Prices Index ( RPI ), Consumer Prices Index ( CPI ), and Consumer Prices Index with Housing ( CPIH ). [footnote 3] significant concerns about RPI . The methods used to produce it are not consistent with internationally-recognised best practice, a shortcoming that led to it losing National Statistics status in 2013. The Office for Budget Responsibility ( OBR ) produce regular Economic and Fiscal Outlooks that provide projections for RPI , CPI , and CPIH (Figure 1) up to Q1 2030. In general, RPI has consistently tracked higher than both CPI and CPIH and is expected to remain higher in the future. Beyond Q1 2030, it is assumed that CPI increases at 2.0% with CPIH and RPI increasing at 2.4% based on OBR long-term forecasts from the publication “The long-run difference between RPI and CPI inflation” [footnote 4] . Figure 1. OBR projections for RPI , CPI and CPIH . The plot also shows the rate of change for RPI if the CPI methodology was used (which is expected to occur in the future). Operation of the Feed-in Tariffs Scheme The FIT scheme was introduced in 2010 to incentivise small-scale renewable electricity generation. Although closed to new applicants, accredited generators continue to receive payments under the scheme for the duration of their contracts – typically 20 to 25 years. Under the FIT scheme, accredited generators are registered with FIT licensees (electricity suppliers) who are responsible for administering payments. These payments consist of two components: A generation tariff : A payment for each kilowatt-hour ( kWh ) of electricity generated, regardless of whether it is consumed on-site or exported. An export tariff : A payment for electricity exported to the grid, either metered or deemed. Tariff rates were set by the Department for Energy Security and Net Zero ( DESNZ ) and its predecessors and are adjusted annually by Ofgem, in line with RPI . As tariffs are defined explicitly and indexed, any change in the indexation methodology would directly affect both the total value of payments made to generators, and the overall cost of the scheme, which is ultimately passed on to consumers. Impact of the Change of Indexation The FIT scheme cost forecast is based on the most recent outturn data published by Ofgem for the 2024/25 financial year. As the FIT scheme is closed to new entrants, the modelling assumes that total scheme costs remain flat in real terms up to 2029. From 2030 onwards, costs are assumed to decline gradually each year, falling to zero in the early 2040s, consistent with the expected expiry profile of existing generator contracts. This projection is derived from high-level, aggregate modelling and is therefore subject to a number of material uncertainties. In particular, it does not explicitly model heterogeneity in generation output across FIT accredited installations, which can vary significantly over time due to technology type, ageing effects, weather variability, and operational performance. In addition, there is uncertainty around the timing and profile of scheme exits, as the analysis applies stylised assumptions on generator retention rather than forecasting individual exit behaviour. No generator level modelling has been undertaken to estimate scheme exit dates or changes in participation status, and as a result the long-term

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These modifications provide for Feed-in Tariffs to increase (or decrease, as the case may be) in line with the consumer price index instead of the retail price index from 1 April 2026.

Modifications under section 42(3) of the Energy Act 2008 of the standard conditions of electricity supply licences granted or treated as granted under section 6(1)(d) of the Electricity Act 1989

Presented to Parliament pursuant to Section 42(3) of the Energy Act 2008

The Secretary of State makes these modifications to licences, in exercise of the powers conferred by section 41(1)(b), 41(2)(a), 41(3)(b) and 41(7)(c) of the Energy Act 2008 (“the Act”).

In accordance with section 42(1) of the Act, the Secretary of State has before making these modifications consulted holders of the licences being modified, the Gas and Electricity Markets Authority and such other persons as the Secretary of State considered appropriate.

A draft of these modifications has been laid before Parliament in accordance with section 42(3) of the Act. Neither House of Parliament resolved, within the 40-day period referred to in section 42(4) and (5) of the Act, not to approve the draft.

The modifications: alterations to the indexation of tariffs to inflation

1. Schedule A to standard condition 33 of the standard conditions of electricity supply licences is modified in accordance with paragraphs 2 and 3.

2. In Annex 4—

a. in Part 1—

i. in paragraph 1, at the appropriate place, insert—

"” CPI ” means the percentage increase or decrease in the Consumer Price Index over the 12 month period ending on 31st December immediately before the start of the relevant FIT Year;”;

ii. in sub-paragraph 3(a), omit “and”;

iii. in sub-paragraph 3(b), for “ FIT Year 5 and subsequent FIT Years” substitute “ FIT Years from FIT Year 5 up to and including FIT Year 16”;

iv. after sub-paragraph 3, insert—

”; and

(c) for FIT Year 17 and subsequent FIT Years, are to be determined in accordance with Part 4 of this Annex.”;

b. in the heading of Part 3, for “ FIT Year 5 (2014-15) and subsequent FIT Years” substitute “ FIT Years from FIT Year 5 (2014-2015) up to and including FIT Year 16 (2025-26)”;

c. after Part 3, insert—

“ PART 4

FIT Payment Rates for FIT Year 17 (2026-27) and subsequent FIT Years

Chapter 1

Generation Tariffs

30. The Generation Tariff for electricity generated by an existing installation in the relevant FIT Year shall be the rate applying in the preceding FIT Year, adjusted by CPI .

Chapter 2

Export Tariffs

31. The Export Tariff for electricity exported in the relevant FIT Year from an existing installation shall be the rate applying in the preceding FIT Year adjusted by CPI .”.

3. In Annex 4A—

a. in paragraph 2, at the appropriate place, insert—

"” CPI ” has the definition set out in Annex 4;”;

b. in Part 2—

i. in paragraph 19, after “subsequent years”, insert “up to and including FIT Year 16”;

ii. after paragraph 19A, insert—

“19B. The Generation Tariffs for electricity generated by an existing installation in FIT Year 17 and subsequent years shall be the rate applying in the preceding FIT Year, adjusted by CPI .”;

c. in Part 3—

i. in paragraph 21, for “in FIT Year 8 and in subsequent years”, substitute “in the FIT Years from FIT year 8 up to and including FIT Year 16”;

ii. after paragraph 21, insert—

“22. The Export Tariff for electricity exported by an existing installation in FIT Year 17 and subsequent years shall be the rate applying in the preceding FIT Year, adjusted by CPI .”.

Explanation of the effect of the modifications

These modifications amend Annexes 4 and 4A to Schedule A to standard condition 33 of the standard conditions of electricity supply licences, which relate to the Feed-in Tariff ( FIT ) scheme.

Under the FIT scheme, eligible installations receive tariffs (presented as deductions to their electricity bills) when they generate or export renewable electricity. Annexes 4 and 4A to standard condition 33 of the standard conditions of electricity supply set out the generation and export tariffs available under the FIT scheme for FIT year 4 (2013-2014) and subsequent years. These tariffs are indexed to inflation and have changed in line with the retail price index each year since the FIT scheme came into force.

These modifications provide for generation and export tariffs to increase (or decrease, as the case may be) in line with the consumer price index instead of the retail price index for all FIT years from FIT year 17 (2026-27) onwards.

Date the modifications have effect from

The modifications have effect from 31 March 2026.

Michael Shanks MP , Minister of State, Department for Energy Security and Net Zero

26 March 2026