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Government consultation - Changes to inflation inderxation in the Renewable Obligation and Feed-in Tariff schemes

On 31 October 2025, the UK’s Department for Energy Security and Net Zero (“DESNZ”) published a consultation regarding potential changes to the indexation of Renewable Obligation Certificates (“ROC”) and Feed-in Tariffs (“FiT”).

The ROC and FiT schemes were designed and introduced by the UK Government to encourage investment in renewable electricity generation by providing long-term certainty of stable inflation-linked revenues. Currently, both ROC and FiT schemes adjust payments for inflation using the Retail Price Index (“RPI”). Both are calculated using the previous year’s RPI and applied from 1 April each year. DESNZ proposes to change the current approach to indexation of the ROC and FiT schemes, by using the Consumer Price Index (CPI) instead of RPI as the basis for calculating inflation.

Proposal details

The consultation documents are available at the following links:

Company update

NextEnergy Solar Fund published an RNS announcement on Tuesday 11 November 2025. The Company’s Investment Adviser NextEnergy Capital opposes the potential changes, because of the negative impact they would have on investment in the UK, costs to consumers, the UK’s ability to deploy a clean, secure domestic energy supply, and the Company’s Net Asset Value.

Company and Investment Adviser engagement

Since the publication of the consultation, NextEnergy Solar Fund and its Investment Adviser have undertaken extensive engagement on the proposed changes. NextEnergy Capital is a specialist solar investment manager with over £3.6 billion of funds under management.

A summary of activity as of 02 December 2025 is below:

RO consultation response and impact modelling

  • NextEnergy Capital published a comprehensive response to the RO consultation. Drawing on expert insight from across its Fund, Portfolio and Investment Management teams, the response describes and explains the impacts of the proposed changes, and recommends that the Government does not proceed with them.
  • NEC, on behalf of NESF, worked with market-leading energy consultancy LCP Delta to assess the cumulative effect of the proposed change on the cost of capital to the renewable energy sector. Find the full assessment here.

FiT consultation response

  • NextEnergy Capital published a comprehensive response to the FiT consultation. Drawing on expert insight from across its Fund, Portfolio and Investment Management teams, the response describes and explains the impacts of the proposed changes, and recommends that the Government does not proceed with them.

Public commentary

  • NextEnergy Capital Chief Investment Officer Ross Grier provided initial public commentary on the proposed changes, highlighting concerns around their design and potential implementation.
  • The Financial Times’ Sustainable Views policy and regulation supplement published a subsequent op-ed, also from Ross Grier, exploring the proposals in more detail.
  • NextEnergy Solar Fund highlighted its concerns to its relevant trade associations and worked with its advisers to support its consultation response. Paul Le Page, Chair as at 25 November 2025, was quoted by the Association of Investment Companies as follows:

“The UK government has made significant steps in advancing their commitment to Clean Power 2030 by extending the future tenor of their Contracts for Difference scheme to improve revenue certainty. The proposed modification of the terms of legacy Renewables Obligation Certificates and Feed-in Tariffs risks undoing much of this good work by adding an uncertainty premium to any future contracts in which the UK government is a counterparty. It could have wider adverse cost implications beyond the renewables sector if the UK government is perceived to be an untrustworthy counterparty by financial market participants.”

  • The Company and its Investment Adviser have sought specific engagement with an extensive range of elected and other officials across the Westminster and devolved Governments. This is ongoing.

Next steps

  • NextEnergy Solar Fund welcomes constructive debate on renewable energy investment policy, and is available and willing to work closely with the Government to assess how the sector can best support consumers and industry with their bills.
  • The Company will respond to the FiT consultation in line with the Government’s deadline.
  • The Company will provide further updates in due course.