Renewables Obligation scheme: Changes to Inflation Indexation
This consultation is open for responses
Respond to this consultationSummary
Government proposes switching inflation indexation for Renewables Obligation buy-out prices and Feed-in Tariff rates from RPI to CPI. Both schemes use inflation adjustments to maintain real value of payments over time. The change would reduce annual increases since CPI typically runs 0.5-1 percentage point below RPI.
Why it matters
This transfers value from existing renewable generators to electricity consumers by reducing the rate at which support payments grow. The change affects closed schemes with legacy obligations — RO certificates must still be purchased until 2037, and existing FiT contracts run until the 2040s.
Key facts
- •RPI typically exceeds CPI by 0.5-1 percentage points annually
- •RO scheme closed to new entrants in 2017
- •FiT scheme closed to new entrants in 2019
- •RO obligations continue until 2037
Areas affected
Memo
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 Read the [RO consultation document](https://www.gov.uk/government/consultations/renewables-obligation-ro-scheme-indexation-changes) on GOV.UK. Respond separately to the [FiT consultation](https://www.gov.uk/government/consultations/feed-in-tariffs-fit-scheme-indexation-changes) on GOV.UK.