Price Cap Rises to £1,723 in October: What It Means If You're Weighing Up Solar

Ofgem confirmed the new price cap today: £1,723 a year for a typical dual-fuel household on Direct Debit, up 4% from £1,663. It takes effect on 1 October and runs until the end of December. That’s the highest the cap has been in three years, and Cornwall Insight is already forecasting another rise in January, potentially taking it past £1,870.

Why it’s going up despite the VAT cut

The government cut VAT on electricity from 5% to 0% for six months from 1 October, worth roughly £45 a year to a typical household. On paper that should have cushioned the rise. In practice the cap still went up by £60, so the VAT cut barely dents it. Ofgem is pointing at high international gas prices, driven in large part by continued disruption in the Middle East, as the main cause. None of that is UK-specific, and none of it is something a VAT change on your bill can fix.

What this changes for solar

The price cap sets what you pay for electricity you buy from the grid. It has no effect on what you earn exporting solar through the Smart Export Guarantee, but it does change the maths on the other side: every unit of grid electricity a solar system lets you avoid buying is now worth more than it was in September. A system sized to cover most of your daytime use pays itself back a little faster every time the cap rises, not because solar got cheaper, but because the alternative got more expensive.

If you already have solar and are deciding whether a battery is worth adding, this is the same logic that applies to negative electricity prices and export tariffs: the cap going up makes storing your own daytime generation and using it in the evening more valuable, because the evening electricity you’d otherwise buy now costs more.

What this changes for heating

If you’re comparing a heat pump against a gas boiler, the price cap covers both fuels, but a rise driven by wholesale gas doesn’t move electricity and gas prices by the same amount. See our gas boiler vs heat pump cost comparison for how the running-cost gap actually shakes out at current prices, and why running a heat pump on a dedicated tariff matters more as the standard cap climbs.

Is this a reason to rush?

No single quarterly announcement is a reason to sign anything the same week. But the direction of travel is clear: this is the fourth cap change of 2026, and three of the four moves have been upward. If you were already planning to get solar or battery quotes, a rising cap is one more reason not to keep waiting for prices to come back down, because on the electricity side, they haven’t been.

Get matched with vetted installers to see what solar or a battery would actually cost and save on your own roof, based on current prices rather than a national average.

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