Renewables Obligation Buy-Out Price 2026/27: Key Changes Explained

July 13, 2026

Ofgem has confirmed the Renewables Obligation buy-out price for 2026/27, alongside updated mutualisation thresholds, obligation levels and a change to how future annual increases will be calculated.

For the obligation year running from 1 April 2026 to 31 March 2027, the buy-out price will rise to £69.34 per Renewables Obligation Certificate, up from £67.06 in 2025/26.

The updates will affect electricity suppliers and may also influence the policy costs reflected in business electricity prices.

What is the Renewables Obligation?

The Renewables Obligation, commonly known as the RO, is a government support scheme designed to encourage renewable electricity generation in the UK.

Licensed electricity suppliers must obtain and present a specified number of Renewables Obligation Certificates, or ROCs, based on the amount of electricity they supply.

ROCs are issued to accredited renewable electricity generators. These generators can sell the certificates to electricity suppliers, creating an additional source of revenue alongside the electricity they produce.

Suppliers can meet their annual obligation by:

  • presenting the required number of ROCs;
  • paying into the scheme’s buy-out fund for any certificate shortfall; or
  • using a combination of the two.

Although the scheme is now closed to most new generating capacity, it continues to support accredited renewable energy projects and remains an important component of the UK electricity market.

What is the Renewables Obligation buy-out price for 2026/27?

Under the Renewables Obligation, electricity suppliers must present a specified number of Renewables Obligation Certificates, or ROCs, based on the amount of electricity they supply.

Where a supplier does not obtain enough certificates, it must pay a buy-out price for each missing ROC.

For 2026/27, the buy-out price has increased to £69.34 per ROC.

This means suppliers with certificate shortfalls will face higher compliance costs, strengthening the incentive to secure sufficient ROCs throughout the obligation year.

 

Why has RO indexation changed from RPI to CPI?

One of the most significant changes this year is the switch from the Retail Prices Index (RPI) to the Consumer Prices Index (CPI) when calculating annual increases to the buy-out price and mutualisation limits.  

The change follows a decision by the Department for Energy Security and Net Zero (DESNZ) and takes effect from 1 April 2026. 

As CPI has generally increased more slowly than RPI, future rises in RO-related costs are expected to be more moderate than under the previous system. 

The buy-out price may still rise each year, but the rate of increase is likely to be lower than it would have been under the previous indexation method.

 

What is the 2026/27 Renewables Obligation level?

Alongside the increase in the buy-out price, the obligation level has fallen slightly for 2026/27.

For 2026/27, suppliers will be required to present:

  • 0.472 ROCs per MWh in Great Britain
  • 0.184 ROCs per MWh in Northern Ireland

This is down from 0.493 ROCs per MWh in Great Britain and 0.193 in Northern Ireland for 2025/26. 

This means suppliers will need fewer certificates for each megawatt-hour of electricity supplied, helping to offset some of the increase in compliance costs. 

 

Updated RO mutualisation limits 

The Renewables Obligation includes a mutualisation mechanism that protects the scheme where electricity suppliers fail to meet their payment obligations.

For 2026/27, mutualisation will be triggered if the relevant shortfall exceeds:

  • £83.3 million in England and Wales
  • £8.3 million in Scotland

The maximum amount recoverable through mutualisation has also increased to:

  • £417.7 million in England and Wales
  • £41.8 million in Scotland

Northern Ireland does not operate a mutualisation mechanism. This is because the Northern Ireland Renewables Obligation (NIRO) is governed by separate legislation. While it operates alongside the RO schemes in Great Britain and uses the same ROC market, the NIRO regulations do not include provisions requiring compliant suppliers to cover the defaults of other suppliers through mutualisation.

 

What do the changes mean for electricity suppliers? 

The higher buy-out price increases the financial impact of non-compliance and strengthens the incentive for suppliers to secure sufficient ROCs. 

As a result, suppliers are likely to place greater emphasis on compliance planning, certificate procurement and risk management. 

For larger suppliers, even relatively small certificate shortfalls can result in significant costs. Smaller suppliers may also face pressure where they have less capacity to absorb unexpected compliance liabilities.

However, the lower obligation level should partly offset the increase in the buy-out price. 

 

How could the changes affect business electricity costs?

 Businesses are not directly responsible for meeting the Renewables Obligation. However, suppliers commonly reflect environmental and policy costs within electricity pricing.

The higher buy-out price may therefore contribute to electricity costs for some business customers.

The overall impact will depend on several factors, including the reduced obligation level, ROC market prices, supplier procurement strategies and the structure of individual electricity contracts.

The move to CPI indexation should also help limit the pace of future increases.

The overall impact on businesses is therefore a balance between the short-term costs of funding renewable energy support schemes and the longer-term benefits of a cleaner, more secure and potentially more stable energy system. 

For businesses, the update highlights the importance of understanding the policy costs included in electricity bills and whether available energy relief schemes could reduce exposure to those costs

 

Conclusion  

The 2026/27 Renewables Obligation update introduces a higher buy-out price of £69.34 per ROC, revised mutualisation limits and a move from RPI to CPI indexation.

While the changes reinforce the importance of effective certificate procurement and compliance planning and increase compliance costs for suppliers, the shift to CPI should help moderate future increases. At the same time, the scheme continues to provide valuable support for existing renewable energy projects and remains an important part of the UK’s energy market. 

 

Source:

​​Ofgem, “Renewables Obligation: buy-out price and mutualisation threshold and ceilings 2026 to 2027,” 31 March 2026. [Online]. Available: https://www.ofgem.gov.uk/data/renewables-obligation-buy-out-price-and-mutualisation-threshold-and-ceilings-2026-2027

 

Njomza Aliu

Energy Consultant

Share This: