Renewables Obligation (Scotland) Order 2009 - inflation indexation changes: island communities impact assessment

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

The Renewables Obligation (RO) has incentivised UK renewable electricity generation since 2002 through a system of tradable green certificates called “Renewables Obligation Certificates” (ROCs).

Three separate but complementary Renewables Obligation schemes cover the UK. The RO and the Renewables Obligation Scotland (ROS) were introduced in 2002, and the Northern Ireland Renewables Obligation (NIRO) was introduced in 2005. The UK Government is responsible for the legislation for the RO scheme for England and Wales. The Scottish Government and the Northern Ireland Executive are responsible for the legislation for their respective schemes. All schemes are administered by Ofgem.

Subject to respective parliamentary procedures, the UK Government, Scottish Government and Northern Ireland Executive are changing how the costs of the RO schemes are adjusted for inflation from 1 April 2026. This is in order to bring the schemes in line with regulatory best practice as well as reducing the overall cost of the schemes in future by decreasing the rate at which costs increase with general inflation. The cost of the RO schemes is currently paid for by a levy in consumers energy bills. Any savings from making changes to how the RO schemes are adjusted for inflation could potentially lead to savings in consumer energy bills, however these are expected to be very small.