Are Solar Panels Worth It With the Price Cap Rising?

Last Updated on October 20, 2026

Are solar panels worth it with the price cap rising? On our numbers, yes. A typical 4 kWp system could save £526 to £733 a year at the electricity rates the January forecasts imply, and pay back in 9 to 12 years on a £6,500 installation. The rising cap helps, but it adds less than most people expect: about £59 to £95 a year on top of today’s saving.

We built the calculations from published figures: Ofgem’s 26.32p unit rate, the EU’s PVGIS tool for output, smart meter data for how much power homes use themselves, and export rates from our SEG comparison. Everything is dated 20 October 2026, and Ofgem is due to confirm the January cap by 25 November 2026.

Quick answer: A 4 kWp system costing about £6,500 could save £526 to £733 a year at the unit rates implied by January’s forecasts, with a simple payback of 9 to 12 years. The cap rise adds only £59 to £95 a year, so your export tariff and daytime electricity use matter more than the cap itself.

Key takeaways

• The system: 4 kWp, about 3,600 kWh a year, £6,500 installed, with 40% used at home and 60% exported.
• The rates: Today’s electricity unit rate is 26.32p. We test 30.4p and 32.9p for January.
• The saving: £468 to £638 a year today, rising to £526 to £733 at the modelled January rates.
• The payback: 9 to 12 years at January rates, or nearly 14 years at today’s rate with a 4.1p export tariff.
• January itself: Panels generate just 120 kWh that month in our example, worth about £36 if all of it is used at home.

Are solar panels worth it with the price cap rising?

Yes, because the price cap influences the value of every kWh of electricity you avoid buying from the grid.

Electricity generated and used in your home is worth the unit rate you would otherwise pay. Electricity sent to the grid earns whatever export rate your supplier offers.

The table below compares six scenarios for a 4 kWp solar panel system.

Scenario	Electricity unit rate	Export rate	Self-use value	Export income	Total annual benefit	Payback on £6,500
Today, low export rate	26.32p	4.1p	£379	£89	£468	13.9 years
Today, 12p export rate	26.32p	12p	£379	£259	£638	10.2 years
January, Cornwall forecast	30.4p	4.1p	£438	£89	£526	12.4 years
January, Cornwall forecast	30.4p	12p	£438	£259	£697	9.3 years
January, 25% increase scenario	32.9p	4.1p	£474	£89	£562	11.6 years
January, 25% increase scenario	32.9p	12p	£474	£259	£733	8.9 years

Figures are illustrative, with totals calculated before rounding. Simple payback excludes panel degradation, maintenance, financing costs and future changes in electricity prices or export tariffs.

How we calculated the savings

The calculations use a typical 4 kWp solar panel installation with the following assumptions:

• Annual generation: Approximately 3,600 kWh. The European Commission’s PVGIS tool estimates 3,613 kWh for a 4 kWp system in the Midlands on a south-west-facing roof at 35 degrees, using default system losses of 14%.
• Electricity used at home: 40%, equivalent to 1,440 kWh a year. Good Energy’s smart meter research involving more than 900 solar households found that approximately 60% of generation was exported.
• Electricity exported: 60%, equivalent to 2,160 kWh annually.
• Installation cost: £6,500, based on an average for a 4 kW system reported in an installer price guide using DESNZ and MCS data.
• Export rates: 4.1p from Octopus’s export-only SEG and 12p from tariffs available to eligible customers of suppliers such as British Gas.

The difference between a 4.1p and a 12p export rate is substantial. On 2,160 kWh of annual exports, the higher tariff earns approximately £171 more.

Our comparison of the best SEG export tariffs in the UK covers the available rates and their conditions.

For a broader look at the investment, see are solar panels worth it and our guide to the solar panel payback period.

How does the energy price cap affect solar panel savings?

The energy price cap affects how much you pay for electricity purchased from the grid.

When the electricity unit rate increases, every unit generated by your solar panels and used at home becomes more valuable.

Ofgem’s October to December 2026 cap has an average electricity unit rate of 26.32p per kWh for customers paying by Direct Debit.

Ofgem has not yet announced January 2027 unit rates, so we have modelled two scenarios.

Scenario 1: Electricity rises to 30.4p per kWh

Cornwall Insight’s January forecast of £1,999 includes approximately £959 for electricity, according to EnergySwitch.

Holding the standing charge at today’s 54.83p per day implies an electricity unit rate of approximately 30.4p.

For a household using 1,440 kWh of solar electricity directly, the annual value of that electricity rises from £379 to approximately £438.

That is an additional £59 a year.

Scenario 2: Electricity rises to 32.9p per kWh

A second scenario applies a 25% increase to today’s electricity unit rate, reflecting the approximate average of several supplier forecasts reported by MoneySavingExpert.

This produces an illustrative rate of 32.9p per kWh.

At that rate, 1,440 kWh of self-consumed solar electricity would be worth approximately £474 a year.

That is an additional £95 compared with today.

These are modelling assumptions, not confirmed January tariff rates. The actual electricity rate will depend on Ofgem’s final calculation, your region and your payment method.

Why the export tariff matters too

Every 1p increase in the electricity unit rate adds approximately £14.40 a year to the value of 1,440 kWh of self-consumed solar electricity.

However, export payments do not automatically increase when the energy price cap rises.

Under the Smart Export Guarantee, suppliers set their own export rates.

That means selecting a competitive export tariff can make a bigger difference to annual savings than the January price cap increase itself.

How much of the January energy price rise can solar panels offset?

Forecasts suggest that the January 2027 cap could add between £276 and £462 to a typical household’s annual energy bill.

Our guide to how much energy bills will go up in January explains the estimates.

In our model, a 4 kWp solar panel system delivers a total annual benefit of £526 to £733 at the forecast electricity rates.

That is larger than the forecast increase in the typical household’s annual energy bill.

For example, using a projected annual bill of £2,154, subtracting £562 to £733 of solar savings gives an illustrative net annual energy cost of approximately £1,421 to £1,592.

This is lower than today’s £1,723 typical annual bill.

However, it does not mean solar panels completely protect a household from the energy price cap.

Solar panels reduce electricity purchased from the grid. They do not directly reduce gas consumption.

Cornwall Insight’s forecast attributes approximately £175 of its £276 annual increase to gas.

The additional value created by higher electricity prices is therefore only part of the overall increase.

For a closer look at household electricity costs, read our guide to the average monthly electricity bill with solar panels.

How much electricity do solar panels generate in January?

Solar panels generate electricity throughout the year, but their output varies significantly by season.

Using the same 4 kWp Midlands installation, PVGIS estimates the following seasonal generation.

Season	Estimated generation	Share of annual output
December to February	406 kWh	11.2%
March to May	1,175 kWh	32.5%
June to August	1,337 kWh	37.0%
September to November	695 kWh	19.2%

January alone generates approximately 120 kWh, or 3.3% of the system’s annual output.

At a forecast electricity rate of 30.4p per kWh, that electricity would be worth approximately £36 if every unit were used at home.

In reality, some electricity may be exported, depending on household demand.

This highlights an important point: solar panel savings are earned across the whole year, not just during the winter months when energy bills are often highest.

Most generation takes place during spring and summer.

Our guide to whether solar panels work in winter explains what to expect in colder months.

Are solar panels worth it with a battery when prices rise?

Adding battery storage allows households to use more of the electricity generated by their solar panels.

Instead of exporting surplus electricity during the day, a battery stores it for use later.

The 4 kW solar system price guide reports that self-consumption can reach approximately 74% to 76% with a 9 to 10 kWh battery.

At 75% self-consumption, a system generating 3,600 kWh annually would use around 2,700 kWh at home.

Every 1p increase in the electricity unit rate would then add approximately £27 a year to the value of that electricity.

That is almost double the £14.40 benefit for a system without battery storage using 40% of its generation directly.

However, the battery itself has an additional installation cost.

A higher self-consumption rate does not automatically mean that a battery is financially worthwhile.

You need to compare the additional electricity savings against the battery’s purchase price, lifespan and potential export income.

Our guides to whether solar batteries are worth it and home battery off-peak tariff savings explore these calculations.

Should I install solar panels before the January 2027 price cap?

The January cap increase may improve solar panel savings, but it is not necessarily the most important deadline for someone already planning an installation.

The VAT rules could have a larger immediate impact on installation costs.

According to HMRC’s guidance on energy-saving materials, qualifying solar panel installations are zero-rated for VAT until 31 March 2027.

Under the published rules, the reduced VAT rate of 5% applies from 1 April 2027.

On a £6,500 installation, a 5% charge would add approximately £325, assuming the £6,500 price is the pre-VAT amount.

That is more than three years of the additional £95 annual solar benefit modelled under the higher January electricity rate scenario.

The comparison illustrates why installation timing and tax treatment may matter more than a single quarterly energy price cap increase.

Our guide to VAT on solar panels explains the eligibility rules.

If you are already considering solar panels, it may be worth getting quotes early enough to allow for survey, installation and certification before the VAT deadline.

FAQs

Are solar panels worth it with the price cap rising?

For many suitable homes, yes.

A 4 kWp system costing approximately £6,500 could save £526 to £733 a year at the modelled January electricity rates, giving a simple payback period of 9 to 12 years.

The price cap increase adds approximately £59 to £95 a year to those savings. Your export tariff, installation cost and how much solar electricity you use at home have a greater overall impact.

How much will solar panels save me at the January price cap?

Our 4 kWp example saves approximately £526 to £733 annually if the electricity unit rate reaches 30.4p to 32.9p per kWh.

At today’s 26.32p rate, the same system saves approximately £468 to £638.

The difference depends on the electricity rate and whether you receive 4.1p or 12p per kWh for exported electricity.

How long do solar panels take to pay back at higher energy prices?

For a £6,500 installation, our calculations suggest a simple payback of approximately 9 to 12 years at the modelled January electricity rates.

At today’s rates, the same system takes approximately 10 years with a 12p export tariff or nearly 14 years with a 4.1p tariff.

Actual payback depends on the installation, household consumption and future energy prices.

Do solar panels protect me from the energy price cap?

Partly.

Solar panels reduce the electricity you need to purchase, making your household less exposed to changes in electricity unit rates.

However, they do not directly reduce gas bills.

Cornwall Insight’s January forecast attributes approximately £175 of the projected £276 increase to gas, so households using gas for heating will still be affected.

How much electricity do solar panels produce in January?

A 4 kWp system in the Midlands with a south-west-facing roof could generate approximately 120 kWh in January, based on PVGIS estimates.

That is around 3.3% of its annual generation.

At an illustrative electricity rate of 30.4p per kWh, the January output would be worth approximately £36 if all the electricity were used at home.

Should I install solar panels before 31 March 2027?

If you are already planning an installation, the date is worth considering.

HMRC’s published guidance provides for zero-rated VAT on qualifying solar panel installations until 31 March 2027, with a 5% reduced rate from 1 April 2027.

On a £6,500 installation, the difference could be approximately £325.

Confirm the applicable VAT treatment and installation timetable with your installer before making a decision.

Our Verdict

Solar panels can still be a worthwhile investment when the energy price cap rises, but the increase should be treated as an additional benefit rather than the main reason to install them.

Our model suggests that a typical 4 kWp system could save £526 to £733 a year at the forecast January electricity rates, with a simple payback period of approximately 9 to 12 years.

However, only £59 to £95 of that annual benefit comes from the modelled increase in electricity prices.

Choosing a competitive export tariff, making good use of solar electricity during the day and paying a reasonable installation price all have a significant influence on long-term returns.

For households already planning solar panels, the 31 March 2027 VAT deadline may be a more important consideration than the January price cap announcement.

Eco Happy can help you explore suitable solar panel systems and compare installation options for your property.

Sources

• Ofgem – Energy Price Cap Unit Rates and Standing Charges
• Ofgem – Smart Export Guarantee
• EnergySwitch – January 2027 Energy Price Cap Forecast
• MoneySavingExpert – Energy Price Cap Predictions
• European Commission – PVGIS Solar Energy Calculator
• Good Energy – Research into Solar Electricity Exports
• Expertsure – 4 kW Solar Panel Systems
• Octopus Energy – Smart Export Guarantee
• British Gas – Smart Export Guarantee
• HMRC – VAT Treatment of Energy-Saving Materials