Renewables Obligation (Scotland) Order 2009 - inflation indexation changes: child rights and wellbeing impact assessment

Disclaimer

This document is a point in time assessment of the likely effects of the above-named proposal on the rights and wellbeing of children and young people. This impact assessment should be read in conjunction with other impact assessments prepared for this proposal.

Scottish Government acknowledge the importance of monitoring and evaluating the impact of strategic decisions and legislation on children’s rights and wellbeing. Any information gathered during implementation of the legislation or strategic decision to which the impact assessment relates, will be used to inform future determinations of impact. Any new strategic decision or new legislation (including amending legislation) would be subject to a new CRWIA in line with the legislative requirements.

1. Brief Summary

Type of proposal (Please delete as necessary):

• Scottish Statutory Instrument

Name the proposal, and describe its overall aims and intended purpose.

Changes to Inflation Indexation of the Renewables Obligation (Scotland) Order 2009

The Renewables Obligation (Scotland) Order^[1] is the legislation which governs the Renewables Obligation (Scotland) (ROS) scheme. It was first introduced in 2002 and has supported a significant amount of the renewable generation capacity installed in the proceeding 15 years, having closed to new capacity in 2017.

This scheme exists to promote and support renewable electricity generation in Scotland. It does so by placing an annual obligation on electricity suppliers to present to Ofgem a specified number of Renewables Obligation Certificates (ROCs) per megawatt hour (MWh) of electricity supplied to their customers during each obligation period (1 April – 31 March). Suppliers can meet their annual obligation by presenting ROCs, making a payment into a buy-out fund or a combination of the two.

It is essentially a subsidy scheme which gives accredited renewable generators^[2] additional income on top of the money they receive for selling their electricity on the wholesale market. ROCs are issued to operators of accredited renewable generating stations for the eligible renewable electricity they generate. Operators can trade ROCs with other parties or sell them directly to a supplier, thus receiving additional income over and above what they receive for selling their electricity on the wholesale market.

The ROS is legally distinct from the Renewables Obligation (for England and Wales) yet their operation is, for the most part, aligned.

The Scottish Government published a joint consultation^[3] with the UK Government and the Northern Ireland Executive on 31 October 2025 which proposes to change how the cost of the Renewables Obligation (RO) schemes across the UK are adjusted for inflation^[4] from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI). This is in order to reduce the costs that are passed onto consumers in their energy bills.

The consultation proposed two 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 to be implemented ahead of the next annual adjustment scheduled in March 2026 which would see the RO buy-out price increased in line with CPI.
• Option 2: Temporary Freeze and Gradual Realignment with CPI – This alternative would involve freezing the RO buy-out price at the 2025/26 level (£67.06 per ROC), taking effect from April 2026 (subject to legislative schedules). A ‘shadow’ price schedule would be constructed 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.

Following a review of consultation responses, the Scottish Government, the UK Government and the Northern Ireland Executive have agreed to proceed with Option 1. We therefore propose to amend the Renewables Obligation (Scotland) Order 2009 using an SSI in order for the changes to come into effect from 1 April 2026.

Start date of proposal’s development: 10 September 2025

Start date of CRWIA process: 17 September 2025

2. With reference given to the requirements of the UNCRC (Incorporation) (Scotland) Act 2024 which aspects of the proposal are relevant to/impact upon children’s rights?

After reviewing against UNCRC requirements, it has been determined that all requirements are neutral, there are no aspect of the proposal which are deemed relevant to the UNCRC requirements.

3. Please provide a summary of the evidence gathered which will be used to inform your decision-making and the content of the proposal

Not applicable

4. Further to the evidence described at ‘3’ have you identified any 'gaps' in evidence which may prevent determination of impact?

Not applicable

5. Analysis of Evidence

Not applicable

6. What changes (if any) have been made to the proposal as a result of this assessment?

Not applicable