Renewables Obligation (Scotland) Order 2009 - inflation indexation changes: business and regulatory impact assessment

Section 2: Engagement and information gathering

Engagement approach

The Scottish Government has undertaken a structured engagement process to inform the development of this policy. A public consultation was jointly undertaken in collaboration with the Northern Ireland Executive and UK Government to gather views on the proposed changes to both ensure transparency and provide an opportunity for broad participation in the policy process. In parallel, officials reviewed analysis and data provided by the UK Government underpinning the changes set out in the consultation. This process provided additional assurance on the methods used to calculate the anticipated impacts of both policy options proposed.

To complement written responses, the Scottish Government held individual meetings with key stakeholders, including renewable generators and business representatives. These discussions allowed officials to clarify technical aspects, explore sector-specific concerns, and gather detailed feedback on potential impacts. Insights from both the consultation and direct engagement informed the final policy decision, helping to ensure changes to the policy are proportionate, practical, and aligned with Scotland’s strategic objectives.

Ongoing and planned engagement will focus on implementation, including updates to stakeholders on timelines, compliance expectations, and any technical guidance required. Planned engagement includes follow-up sessions with industry representatives to monitor readiness and address emerging issues, as well as continued liaison with UK Government counterparts to ensure policy alignment and share best practice.

Internal SG engagement / engagement with wider Public Sector

Internal SG engagement

Internal engagement with policy leads for Inward Investment, Consumer Issues, Fuel Poverty, and the Renewables industry took place during and after the consultation period to further develop our understanding on the impacts of this proposal.

UK/ Devolved Administrations

We have continued to engage with UK Government and the Northern Ireland Executive throughout the policy development process to ensure alignment on changes to the respective RO schemes.

Wider Public Sector

Officials engaged with Consumer Scotland, Citizen’s Advice Scotland and Ofgem throughout the BRIA process.

International

No international engagement was required.

Business / Third Sector engagement

In addition to the consultation process jointly run by Scottish Government, the UK Government and the Northern Ireland Executive which received over 247 responses, Scottish Government has engaged with renewable energy generators and business representatives in Scotland.

In the weeks following the end of the consultation, Scottish Renewables, SSE, Scottish Power and Nadara met with Scottish Government to expand on their responses, providing additional depth and insight into the anticipated impact this policy will have on businesses.

Noting the impacts described by the renewables industry in responses to the consultation, the Scottish Government will continue to engage with stakeholders throughout the new RO reporting year from 1 April 2026. We will also conduct a review of this policy change in 2027.

Public consultation

The Scottish Government, UK Government and the Northern Ireland Executive jointly published a public consultation seeking views on proposals to change how the cost of the RO scheme is adjusted annually for inflation. The consultation was issued on 31 October 2025 with responses required by 2 December 2025. The consultation sought views on the following two policy options:

Option 1: Immediate Switch to CPI Indexation

This option would involve a simple switch in the price index used to adjust the RO buy-out price from the RPI to the CPI. Subject to legislative schedules, the UK government, the Scottish Government, and the Northern Ireland Executive would look to implement ahead of the next annual adjustment scheduled in March 2026 which would see the RO buy-out price increased in line with CPI. This approach would ensure generators continue to receive a stable and predictable return that maintains its value, whilst making savings in the energy system.

Option 2: Temporary Freeze and Gradual Realignment with CPI

This alternative would involve freezing the RO buy-out price at the 2025 to 2026 level (£67.06 per ROC), taking effect from April 2026 (subject to legislative schedules). The government would construct a ‘shadow’ price schedule for the RO buy-out price from 2002, annually adjusted using CPI instead of RPI. No further inflation-linked increases would be applied until the cumulative effect of CPI-based inflation on that shadow price matches the current RPI-adjusted buy-out price. At this point of realignment, annual indexation would resume using CPI.

Four consultation questions were then asked of participants:

1. Do you agree that CPI is a fairer and more accurate measure of inflation for adjusting the RO scheme costs than RPI? If not, why not?
2. Of the 2 options, which do you think is the best alternative to the current methodology, and why?
3. Do you have any comments on the likely impacts of the proposed change for generators, consumers or investors?
4. Do you think there are alternative approaches that should be considered, and if so, what are these and why?

In total the consultation received 247 responses, of which 84 were from generators that own or operate RO assets, 51 were from institutional investors that own or have invested in assets and 49 were from members of the public. The consultation also saw a small number of responses from local governments and authorities, academics, non-profits and think tanks.

UK Government’s response to the consultation, including a high-level summary of consultation responses was published on 28 January 2026.

Impacts identified in the consultation responses, and in the following business engagement, have informed the preferred policy option being taken forward, helping to ensure changes are proportionate, practical, and aligned with Scotland’s strategic objectives.

Other stakeholders

No other stakeholders were engaged in the policy process.