From 1 April 2026, the Renewables Obligation (Scotland) buy-out price and the mutualisation cap will be indexed to the Consumer Prices Index rather than the Retail Prices Index. The change is delivered by the Renewables Obligation (Scotland) Amendment Order 2026 and follows scrutiny by the Scottish Parliament’s Net Zero, Energy and Transport Committee, while UK and Northern Ireland schemes move in step. (parliament.scot)
Under the Renewables Obligation (Scotland) Order 2009, licensed suppliers serving customers in Scotland must present Renewables Obligation Certificates (ROCs) to Ofgem each obligation year (1 April to 31 March) or pay a fixed buy‑out amount per ROC shortfall. If payment defaults exceed a threshold, a mutualisation process seeks to recover the shortfall from compliant suppliers, subject to a cap. (ofgem.gov.uk)
The amendment retains the existing annual uprating mechanism but changes the inflation metric. From the 2026–27 obligation period, Ofgem will adjust the buy‑out price and mutualisation cap each year using CPI rather than RPI; the practical effect is that parameters continue to move annually, but typically at a lower rate than under RPI. The governments have confirmed this CPI approach across all RO schemes, subject to each jurisdiction’s legislation. (gov.uk)
For 2025–26, nothing changes: the buy‑out price remains £67.06 per ROC until 31 March 2026. CPI-based indexation applies from the obligation period beginning 1 April 2026, after which Ofgem will publish the CPI‑indexed buy‑out price and mutualisation levels. (ofgem.gov.uk)
Ministers cite consistency and proportionality. Government documents state CPI is the preferred measure across public policy and avoids RPI’s known tendency to overstate inflation. The Office for National Statistics has also set a course to address RPI’s shortcomings by aligning it with CPIH methods from February 2030. (gov.uk)
Cost impacts are expected to be modest but directionally downward for consumers relative to RPI. The government’s response estimates Option 1 (an immediate CPI switch) could reduce policy costs borne by consumers by around £270 million at peak in 2030; it also notes the November 2025 decision to move 75% of the domestic share of RO costs to the Exchequer from April 2026. (gov.uk)
For suppliers and generators, the operational framework is unchanged, but CPI indexation implies slower nominal growth in the buy‑out price and, by extension, in the buy‑out fund and recycle value. Projects with RPI‑linked financing should review cash‑flow assumptions and covenant headroom; government acknowledged such concerns in consultation and noted support could be targeted where hardship is evidenced. (gov.uk)
Recent scheme performance shows mutualisation was not triggered in 2024–25, with shortfalls below the relevant thresholds. The cap will now track CPI from 2026–27, aligning risk-sharing parameters with the updated indexation across Great Britain and Northern Ireland once respective orders complete. (ofgem.gov.uk)
Next steps are administrative. Ofgem has indicated it will publish the CPI‑indexed buy‑out price and mutualisation levels for 2026–27 by 1 April 2026. Suppliers should update accruals, billing parameters and compliance models for the new index, and review contract clauses that reference RPI for RO‑related payments. (ofgem.gov.uk)