The British government has opted to press ahead with a change in the way old subsidy payments account for inflation, a move that has been widely criticized by the solar industry.
Trade body Solar Energy UK said it was “frustrated by the inadequate consultation period provided for such a significant policy change”, noting that the request for an extension “was ignored”.
In December 2025, the government opened a consultation on moving the indexation of payments under the Renewables Obligation (RO) and Feed in Tariff (FiT) schemes from the Consumer Price Index (RPI) in favor of the Consumer Price Index (CPI). It would roll back the change until the launch of the RO in 2002. It announced its intention to make this change on January 26.
The organization shared its responses to the consultation: “We would respectfully emphasize that long-term affordability is best achieved through a stable and predictable regulatory framework that allows new generation to be delivered at the lowest possible cost. Investor confidence in policy stability is fundamental to keeping financing costs low, ultimately delivering greater value to consumers.”
The government noted in its announcement to go ahead with the change that the six largest UK listed renewable energy funds fell in value by around £400 million when the consultation was first announced.
Chris Hewett, CEO of Solar Energy UK, said the trade body is “concerned that changing indexation will weaken investor confidence and increase the cost of capital just as the sector plans for unprecedented expansion”, echoing the sentiment of NextEnergy Capital, which published its response to the consultation early this year.
After Solar energy portal article on the subjectOther companies got in touch to echo NextEnergy’s (and now Solar Energy UK’s) position and shared their similar responses to the consultation.
Change of indexation for the benefit of the consumer
The government said the change in the way inflation is reflected in subsidy payments could reduce the cost of subsidies for consumers, saving between £320 million and £1.5 billion by 2031/2032. The government gave a second option: to freeze payments in nominal terms for most of the remaining duration of the support scheme.
In its response to the consultation, it also said it had considered the approaches suggested during the consultation, delaying any changes until 2030 or adopting a more transitional change where RPI would be phased out more gradually, but that these “would not deliver the same level of consumer benefit or be consistent with wider policy objectives”.
The change in the inflation measure would save consumers around £5 per year. However, NextEnergy Capital’s response said the proposed changes could lead to a net increase in total costs to consumers in the region of £584 million to £2.5 billion between 2026 and 2050, as companies would have to bear higher capital costs.
The government said it understands the change “poses some risk to investor confidence,” and that revenues could decline in the short term, but this is expected to be “modest” compared to the benefits.
The government will complete the necessary legal instruments to implement the change by April 1, after which Ofgem will publish the final RO buyout price and mutualisation levels.
