Renewable energy generators should assess impact of proposed RPI to CPI switch

On 31 October 2025, the UK Government launched two important consultations proposing changes to the way payments under the Renewables Obligation and Feed-in Tariff schemes are indexed. Renewable energy generators likely to be affected should assess the impact and consider responding to the consultation as the proposed changes could impact future income.

What do the FiT and RO consultations propose?

In each case, the Government is consulting on changing the measure of indexation from the Retail Price Index (RPI) to the Consumer Price Index (CPI).

Why is this change proposed?

Payments under the Renewables Obligation (RO) and Feed-in Tariff (FiT) schemes are ultimately borne by consumers through levies on electricity bills.

It is anticipated that switching which inflation index is used will lead to overall lower increases to the RO and FiT payments over time, and so is likely seen as a way to help reduce energy costs for consumers.

How might the proposed changes affect renewable energy generators?

According to the Government, 850,000 individual generators receive FiT payments and over 30% of the UK’s electricity generation is supported by the RO. By any measure, changes to these schemes will affect a material portion of renewable electricity generation in the UK.

Over the past 10 years RPI has outstripped CPI by about 1 percentage point. If there is a similar deviation in the next 10 years, the potential reduction experienced by RO and FiT-accredited generators could be significant.

Many RO and FiT generators will be subject to leases and other long-term supply arrangements where rents and pricing is subject to RPI. As outgoings could increase by reference to RPI, but subsidy income increases by lesser degrees, affected generators will find their profits squeezed.

Practicalities of the change for UK renewable energy generators

The proposed changes are expected to come into effect in April 2026 and would affect all UK generators on the RO and FiT schemes.

The exact implementation of the proposed change is subject to consultation, but the 2 possibilities discussed in the consultation relate to an immediate switch to CPI or a temporary freeze and gradual re-alignment, which some would argue has a retrospective effect overall.

Next steps

Consider how to respond to the consultation if you use RO, FIT or RHI

Generators that possess RO and FiT accreditations are encouraged to respond to both consultations. Generators accredited under the Renewable Heat incentive (RHI) should also consider responding as they may face similar indexation changes in the future - at least, for those whose payments are indexed by RPI. Holders of Green Gas Support Scheme (GGSS) accreditations can be relatively relaxed on the basis that CPI is the chosen indexation measure for that subsidy.

For those interested in responding to the consultation, you can either respond individually, or look at getting involved through a trade body - for example, ADBA has already launched their campaign.

Assess the financial impact of the switch

Generators may also consider reviewing the potential financial impact by establishing where it is committed to RPI indexation on its existing long-term arrangements. Whilst scope to renegotiate might be limited, affected generators could investigate whether variations can be agreed to change the basis of indexation under these long-term agreements as a ’change in law’.

Generators would also be well-advised to resist RPI indexation in future contracts.