as Department for Energy says move to de-link electricity and gas prices won’t affect RO incentives

  • 21 April 2026
  • QuotedData
  • Gavin Lumsden

Shares in renewable energy providers and infrastructure funds rose today after the government clarified that its plan to break the link between electricity and volatile gas prices would not affect generators accredited under the long-standing renewables obligation (RO) incentive scheme.

Energy secretary Ed Miliband and the chancellor Rachel Reeves announced an immediate hike in the electricity generator levy from 45% to 55%. They said this would ensure more of the “extraordinary revenues” power companies received from gas prices soaring in response to the Middle East war were available to support households and businesses.

Officials hope the tax rise will also encourage older renewable energy generators, which provide around a third of the UK’s power supply, to voluntarily move to long-term fixed-price contracts where they hadn’t already done so.

The move to new wholesale contract for difference (WCfD) would offer generators a stable, fixed price for their electricity and would mean that they and consumers would no longer be exposed to variable gas-linked electricity prices, the Department for Energy Security and Net Zero said.

Crucially, for London-listed renewables funds, the Department for Energy Security and Net Zero said the new WCfD regime, on which it will consult, would not replace their existing RO revenues.

“Under this proposal it is envisaged that generators accredited under the renewables obligation (RO) would continue to receive support via the RO in the way they do currently – with only their wholesale revenues being exchanged for a fixed price CfD,” the Department said.

“Government will only offer contracts to electricity generators where it represents clear value for money for consumers,” it added.

Having fallen last week when the government announced it would scrap the carbon price support tax on fossil fuel burners used to subsidise renewable energy providers, and reports emerged of the plan to uncouple gas and electricity prices, shares in renewable funds rallied. The Renewables Infrastructure Group (TRIG) rose 5% to 67.5p, Greencoat UK Wind (UKW) added 3% to 99p. Power companies Centrica, SSE and Drax gained 2%-4%.

Miliband said the government was “doubling down on clean power” as the UK faced its second fossil fuel shock in less than five years since Russia’s invasion of Ukraine also sent gas prices soaring.

Speaking at the Good Growth Foundation conference in London, Miliband announced further measures such as increased grants to upgrade oil and gas boilers, instal solar panels in social housing and schools and streamline planning rules to unlock more public land for renewable projects and speed up their connections to the electricity grid.

Energy groups and trade associations welcomed the moves but regretted the confusion caused last week.

RenewableUK CEO Tara Singh said: “We will work constructively through the details of all the measures being announced by the government, but we have to ensure that we take investors with us. At a time when ministers are hoping to attract record levels of investment into renewables, uncertainty over changes to taxation needs to be clarified immediately so it does not drive up the cost of investment.”

Dhara Vyas, chief executive of Energy UK, said it was frustrating that a positive announcement had been overshadowed by poor communications.

“The UK wins when there is the stability and certainty for companies to invest and we’ve seen the results in the roll-out of clean power, through CfDs for example, which continues to increase our energy security and reduce our reliance on gas. Sudden and ambiguous briefing of potential tax and policy changes outside a fiscal event, like the Budget, damage the UK’s investability and result in uncertainty for businesses and customers.”