UK Policy Update: Potential ROC and Feed-In-Tariff Indexation Changes

The UK Government recently launched a consultation proposing significant changes to the indexation for the Renewables Obligation (RO) and Feed-in Tariff (FiT) schemes. Currently, payments under these legacy support schemes are adjusted annually using the Retail Price Index (RPI). The proposal seeks to accelerate a switch to the Consumer Price Index (CPI) for inflation adjustments, a move intended to reduce the rising cost of these schemes, a cost ultimately borne by consumers through their electricity bills.

DESNZ has proposed two potential avenues for the changes, each with varying impact on generators with legacy contract subsidies.

1. Immediate switch to CPI (from April 2026)
   An estimated reduction of 1.7% to the largest UK fund net asset value (NAV) - Source: UK Wind, Schroders Greencoat
   
   
2. Temporary freeze of ROC and FiT asset indexation until 2034
   An estimated reduction of 7.5% to fund net asset value (NAV) - Source: UK Wind, Schroders Greencoat

While government aims to balance rising consumer bills with fair treatment of prior investment, the change will impact long-term revenue projections and net asset value (NAV) of affected projects. Furthermore, the change will undoubtedly erode investor confidence in UK renewables. At such a crucial time in the energy transition, this relatively low-return, short-termist change could detriment our 2030 Net-Zero ambitions.

This change would impact many small and large scale generators in the UK, with RO and FiT accredited sites representing around one third and one quarter of the assets connected to the UK grid, respectively. The changing regulatory environment underscores the importance of actively managing every element of a project's income, mitigating impacts from decisions made outside the generator's direct control.

In this evolving landscape, generators can refocus their efforts on the elements of revenue generation they can influence. Crucially, this means maximising returns from the Power Purchase Agreement (PPA) for the export of power to the grid. By moving beyond unquestioned renewal with the incumbent supplier, generators can proactively tender their assets to secure optimal value for exported power. Strategically timing contract execution to capture peak market prices, thereby taking control of revenue and diluting the impact of policy changes.

Our PPA pricing engine is designed to help our generators act on these market peaks to secure a PPA with: 

• Daily, site-specific PPA forecasts for your renewable assets.
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• An account manager that keeps you informed during periods of high pricing in the lead up to your PPA renewal.
• Lightning PPA and send-to-sign features, which allows PPAs to be signed in just a few clicks.

For renewable asset portfolios large and small, we make sure you never miss the best PPA prices.

To get started, just register here or email us at contact@renewable.exchange, and we will contact you for an initial consultation.

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