The price cap explained, and what it does to solar payback
The energy price cap does not cap your bill. It caps unit rates and standing charges, and the typical bill figure attached to it is arithmetic on an assumed household. Both details change what solar is worth.
Updated 28 October 2026 · written by the Clearline guidance team · 8 min read
What the cap actually caps
The price cap sets a maximum on the unit rate and the standing charge a supplier can charge a domestic customer on a standard variable tariff. It does not cap your bill, so a household that uses more electricity will pay more than the number in the headlines. The widely quoted typical bill figure is Ofgem multiplying the capped rates by an assumed household's consumption, nothing more.
Budget update: gas standing charges
The government announced in the 28 October 2026 Budget that it has asked Ofgem to abolish gas standing charges and move the cost into gas unit rates, aiming for the end of 2027 or as soon as possible after. There is no start date, so the figures on this page are unchanged. Source: HM Treasury, Budget 2026 document (Red Book), paragraph 3.9. What it would mean for your bills.
| Capped element | 1 October to 31 December 2026 | Per year on the typical household |
|---|---|---|
Electricity unit rate | 26.32p per kWh | £658.00 on 2,500 kWh |
Electricity standing charge | 54.83p per day | £200.13 |
Gas unit rate | 7.97p per kWh | £757.15 on 9,500 kWh |
Gas standing charge | 29.68p per day | £108.33 |
Total | £1,723.61, published as £1,723 |
Average capped rates for the quarter, direct debit. Rates vary by region and payment method. Typical consumption values (TDCV) are 2,500 kWh electricity and 9,500 kWh gas, the same basis Ofgem cited for this announcement; the per-year column is Clearline's own arithmetic on the published rates, shown to the penny so the method is checkable, and lands a few pence from Ofgem's own rounded total.
That reconciliation is worth sitting with, because it shows exactly which parts of your bill solar can reach. The £308.46 of standing charges is fixed. You pay it whether you generate nothing or everything. Only the £658.00 of electricity units is in play.
Solar competes with 26.32p, not with £1,723
Every kWh you generate and use yourself displaces one you would have bought at the capped average of 26.32p. Every kWh you export earns whatever your export tariff pays, typically 2p to 13p. Standing charges are untouched. Any payback model that starts from the headline bill figure is starting in the wrong place.
This quarter: a straightforward 4% rise
Ofgem announced the 1 October to 31 December 2026 cap on 26 August 2026: a 4% rise, worth £60 a year, taking the typical dual-fuel bill from £1,663 to £1,723. Unlike the restatement described further down this page, this move is a genuine rate change, not an accounting reclassification: the electricity unit rate went from 26.11p to 26.32p, and gas from 7.33p to 7.97p. For solar, the number that matters is the smaller one: 26.32p is what a self-consumed unit is now worth.
A VAT tailwind sits inside this quarter's figures
Electricity has carried 0% VAT since 1 October 2026, worth roughly £45 a year on a typical bill, and the 28 October 2026 Budget extended the zero rate from 31 March 2027 to the end of June 2027, with legislation due in early 2027. Ofgem's own rates page flags that this quarter's figures are not directly VAT-comparable to the previous one for that reason. It does not change the 26.32p unit rate quoted above, which is already the price you pay, but it is part of why this rise reads smaller than a like-for-like gas and electricity cost comparison alone would suggest.
The other kind of bill move: when the number changes but the cap does not
Not every change in the headline figure is a rate change, and the clearest recent example is worth keeping as a teaching case even though it is now two cap periods old. Ofgem announced a 13 per cent rise to the cap on 27 May 2026, quoting a typical bill of £1,862 a year. Within weeks, suppliers were quoting £1,663 for the same cap period. Nothing about the cap itself had changed between those two numbers: Ofgem cut the Typical Domestic Consumption Values to 2,500 kWh of electricity and 9,500 kWh of gas, because households were using 7 per cent less electricity and 17 per cent less gas than the October 2023 benchmark the old assumption was built on.
Same cap, smaller assumed household, smaller arithmetic. That £199 gap was a change in the yardstick, not in the price. The lesson carries forward: a headline bill figure is always Ofgem's rate multiplied by an assumed consumption, and the assumption can move independently of the rate. Always check which one has actually changed before reacting to a new number.
The May rise was mostly gas
Within that 13 per cent rise, electricity rose around 5 per cent and gas rose around 24 per cent, driven by wholesale gas prices. For anyone weighing up solar, that mattered: the thing solar displaces went up far less than the headline. It is also the reason heat pump and electrification cases are more sensitive to gas prices than to the cap headline.
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What this means for solar payback
Payback is the installed cost divided by the annual benefit. The cap sets the biggest term in that benefit, and it resets every three months, which is the part most payback claims quietly ignore.
- Self-consumed generation is worth 26.32p per kWh this quarter, at the average capped rate.
- Exported generation is worth whatever your tariff pays. Open-market rates we could confirm on suppliers' own pages on 28 October 2026 run from 1.05p to 13p, with supplier-installed exclusive rates up to 25p. The full picture is in the export rates comparison.
- Standing charges are untouched by anything you generate. At 54.83p a day for electricity, that is £200.13 a year you keep paying.
- The ratio between the two matters more than either. A system that self-consumes 60 per cent of its output at 26.32p and exports 40 per cent at 12p averages 20.59p per generated kWh. The same system exporting on a 3p tariff averages 16.99p. Nothing changed on the roof.
That last bullet is the whole argument for treating tariff selection as part of the design. It is worked through properly in why tariff choice moves payback more than kit choice.
The cap moves, so payback models should say when they were built
The cap is reset quarterly. Ofgem confirms the level for 1 January to 31 March 2027 in late November 2026. Any payback figure quoted to you should carry the quarter it was calculated against, because a model built on 26.32p and presented as permanent is a forecast dressed up as a fact. We keep the current and previous cap, and the dated forecasts for the next one, on one page, updated the day Ofgem confirms it.
What the suppliers are already forecasting for January
EDF, British Gas and E.ON Next have each published a January-to-March 2027 forecast, dated 21 to 23 September 2026: rises of 21.8% to 23.9% on the whole dual-fuel bill. Cornwall Insight's last published forecast, dated 26 August 2026, sits lower at 9%. These are supplier and analyst snapshots, not the cap itself, and Ofgem's actual figure is confirmed in late November. Whichever way it lands, it resets the benchmark every payback figure in this guide is measured against, so treat any number quoted for January as dated until Ofgem publishes.
It is also worth remembering how much room there is in both directions. Current levels sit well below the 2022 crisis peak of £2,500, and around 22 million accounts, roughly 40 per cent of the market, sit on fixed tariffs that the cap does not touch at all. If you are on a fixed deal, the cap is a reference point rather than your actual price, and your solar arithmetic should use your real unit rate.
Find your own unit rate
Take it off a recent bill rather than the cap headline. Regional variation and payment method both move it, and a fixed tariff may put you somewhere else entirely.
Separate units from standing charges
Only the unit portion is addressable. Write the standing charge down separately so it never contaminates the savings figure.
Split generation into self-consumed and exported
Value each at its own rate. This is where a battery changes the answer, by moving units from the export column to the self-consumption column.
Re-run it when the cap changes
Quarterly. A model from two quarters ago is describing a market that no longer exists.
A free design call runs this arithmetic on your bill, your roof and your export options, with the date on every figure.
Get my free quote →Where a battery changes the sum
The gap between 26.32p and a 12p export rate is 14.32p per kWh. That is the value of moving a unit from the export column to the self-consumption column, which is exactly what a home battery does. Across 1,000 kWh redirected, that is £143.20 a year.
A battery also opens the second route, buying electricity in an off peak window at 6.99p to 9p and using it during capped-rate hours. That is a different gain again, running to 19.33p per kWh against the capped average, and it works in winter when generation is thin. We have set out the mechanism and its limits in off peak tariffs and battery charging.
Because unit rates vary by region, the version of this arithmetic that matters is the local one. Every county page across our coverage area carries a calculator built on the same model, and the solar guide covers the generation side.
Cap figures from Ofgem, checked 25 September 2026. The 1 January to 31 March 2027 cap had not been published at the time of writing; the supplier and analyst forecasts above are dated snapshots, not the confirmed figure. The Budget notes were checked against GOV.UK on 28 October 2026.
Price cap questions, answered
How much is the energy price cap right now?
For 1 October to 31 December 2026 the average capped rates are 26.32p per kWh for electricity and 7.97p per kWh for gas, with standing charges of 54.83p and 29.68p a day. Ofgem's typical dual-fuel Direct Debit bill on those rates is £1,723 a year, a 4% rise from £1,663. Your own rate varies by region and payment method.
Why did the typical bill rise to £1,723?
This time, it is a genuine rate rise rather than an accounting change: Ofgem's own announcement, dated 26 August 2026, puts it at 4%, or £60 a year, taking the typical bill from £1,663 to £1,723. The electricity unit rate moved from 26.11p to 26.32p per kWh. Electricity also carries 0% VAT this quarter, extended in the 28 October 2026 Budget to the end of June 2027, which is a separate, favourable factor sitting underneath the same figures.
Why did the typical bill figure once change from £1,862 to £1,663 without a price falling?
That was an earlier, different event, from May and August 2026. Ofgem cut the Typical Domestic Consumption Values used to calculate the headline bill, to 2,500 kWh of electricity and 9,500 kWh of gas, because households were using 7 per cent less electricity and 17 per cent less gas than the October 2023 benchmark. The cap's unit rates did not change between those two figures; only the assumed household did. It is a useful reminder to check which one has moved before reacting to any new cap headline, including this quarter's.
Does the price cap cap my bill?
No. It caps the unit rate and the standing charge, so a household that uses more than the typical figures will pay more than the typical bill. This is why the cap headline is a poor starting point for a solar payback calculation and your own unit rate is a good one.
When will the January price cap be announced?
Ofgem confirms the level for 1 January to 31 March 2027 in late November 2026. Supplier forecasts published 21 to 23 September 2026 put the rise at 21.8% to 23.9%; Cornwall Insight's last published forecast, dated 26 August 2026, was lower at 9%. Until Ofgem publishes, treat every one of those numbers as a labelled forecast, not the cap.
Does the price cap apply to me if I am on a fixed tariff?
No. Around 22 million accounts, roughly 40 per cent of the market, sit on fixed tariffs outside the cap. If that is you, use your contracted unit rate for any solar or battery calculation, because the cap headline may be well above or below what you actually pay.
Did the October rise make solar more worthwhile?
A little. The electricity unit rate solar displaces rose from 26.11p to 26.32p per kWh, which increases the value of every self-consumed unit, and 0% VAT on electricity this quarter is a separate favourable factor. Neither is dramatic on its own; both move the same direction, in solar's favour.
Should I wait for the January cap before deciding?
The cap resets every quarter, so there is always a next number coming, and supplier forecasts already point to a larger rise in January than this quarter's. What matters more for a solar decision is the ratio between your import rate and your export rate, and the export side is set commercially rather than by Ofgem. Waiting for one cap announcement rarely changes the shape of the answer, and a larger forecast rise argues for using today's rate as a floor, not a ceiling.
See the numbers next: Tesla Powerwall 3, installed, or export rates compared.
Figures and specifications in this guide are sourced below and were checked on the date shown. Rates and product specifications change; we confirm the current picture on your free design call.
Sources
- Ofgem, energy price cap will rise 4% from October 2026, including the electricity and gas splits, the £1,723 typical figure and the 4% rise from £1,663, accessed 25 September 2026 https://www.ofgem.gov.uk/press-release/energy-price-cap-will-rise-4-october-2026
- Ofgem, changes to the energy price cap between 1 October and 31 December 2026, average unit rates and standing charges, VAT comparability note, accessed 25 September 2026 https://www.ofgem.gov.uk/information-consumers/energy-advice-households/energy-price-cap-unit-rates-and-standing-charges
- HMRC, Revenue and Customs Brief 10 (2026): temporary zero rate of VAT for domestic electricity in Great Britain from 1 October 2026, announced to 31 March 2027 and since extended in the Budget, accessed 25 September 2026 https://www.gov.uk/government/publications/revenue-and-customs-brief-10-2026-temporary-zero-rate-of-vat-for-domestic-electricity-in-great-britain
- EDF, British Gas and E.ON Next price cap prediction pages, January to March 2027 forecasts dated 21 to 23 September 2026 https://www.edfenergy.com/gas-and-electricity/price-cap-predictions
- Cornwall Insight, predictions and insights into the default tariff cap, forecast dated 26 August 2026 https://www.cornwall-insight.com/predictions-and-insights-into-the-default-tariff-cap/
- Octopus Energy, Outgoing Octopus export rate used for the self-consumption comparison, accessed 3 August 2026 octopus.energy
- EDF, GoElectric Overnight off peak rate used for the battery comparison, accessed 3 August 2026 edfenergy.com
- HM Treasury, Budget 2026 document (Red Book), paragraphs 3.3 to 3.5, 3.9 and 6.210, accessed 28 October 2026 https://www.gov.uk/government/publications/budget-2026-document/budget-2026-html
- HMRC and HM Treasury, Budget 2026: Overview of tax legislation and rates, paragraph 2.20 (domestic electricity zero rate to 30 June 2027), accessed 28 October 2026 https://www.gov.uk/government/publications/budget-2026-overview-of-tax-legislation-and-rates-ootlar/budget-2026-overview-of-tax-legislation-and-rates-ootlar
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