The October Price Cap and VAT-Free Electricity: What a Plug-In Solar Kit Saves Now

Two things happen to your electricity bill on 1 October 2026. Ofgem's price cap for October to December sets the average unit rate at 26.32p per kWh, up from 26.11p, and the government removes the 5% VAT from electricity bills until 31 March 2027. Both matter to anyone weighing up a plug-in solar kit, because the whole saving from one is the electricity it stops you buying, and that saving is worth exactly the unit rate you would otherwise have paid.

Most guides, including until today our own, still quote 24p per kWh. That was a fair round figure for the first quarter of 2026. It is now nearly 2.5p short, which is a tenth of the answer. This piece sets out the new figures, what the VAT cut does and does not change, and what to type into the savings calculator.

The October Cap: What Changes on 1 October

Ofgem announced the October to December cap on 26 August 2026. For a typical household using both fuels and paying by Direct Debit, energy prices rise by 4%, which Ofgem attributes to higher wholesale gas prices caused by the conflict in the Middle East. The annual cap level for that household is £1,723. The averages behind it:

The gas rate is where the rise sits. The electricity unit rate, the only number a solar kit interacts with, moves by a fifth of a penny. The electricity standing charge falls, which is welcome but irrelevant to solar: no kit reduces a charge you pay for being connected.

VAT-Free Electricity, and Why It Barely Touches the Solar Saving

On 21 July 2026 the Prime Minister announced that VAT on domestic electricity would be removed from 1 October, cutting it from 5% to 0% until the end of the financial year on 31 March 2027. The government put the saving at around £45 a year off the October cap for a typical household and the cost at around £850 million. Gas keeps its 5% VAT. Ofgem's October figures already reflect this: its rates page states that there is no VAT on electricity from 1 October 2026 to 31 March 2027, and that the published prices include VAT on gas only.

That is the point people get backwards. The 26.32p is what you pay, with no tax in it. Had VAT stayed, the same electricity would have cost about 27.64p. So the cut lowers the value of every kilowatt-hour a solar kit saves you by about 1.32p, at the same time as the cap raises it by 0.21p. For a kit generating a few hundred kilowatt-hours a year, the two movements land within a pound or two of each other. Your saving is not smaller than it was in the summer. It is smaller than it would have been in a winter with VAT still on the bill, which is a different thing and not a reason to hold off.

What a Plug-In Kit Saves at 26.32p

Our savings guide works through a 600W south-facing kit in London generating about 491 kWh a year, of which a working household uses half directly. Re-run at the new rate:

That sits at the bottom of the government's own £70 to £110 a year estimate for a plug-in kit, which is where a single balcony install belongs. A two-panel 800W kit in the south of England with the same self-consumption rate lands near the top of that range; the regional table in the savings guide now uses the October rate throughout.

Two cautions carry over. Self-consumption, not the tariff, is the variable you control: running the washing machine and dishwasher while the panels are producing does more for the number than any price cap. And the kit is not a way to escape the standing charge, which is the part of the bill that rose fastest over the last two years and the part the October cap finally trims.

How Much a Balcony Solar Panel Could Save a UK Household

Put the new rate against the kits actually on sale. A single 400W to 460W panel on a balcony, the cheapest verified plug-in solar panels at about £449, generates in the region of 300 to 350 kWh a year facing south in the south of England, and a household that uses half of it directly saves around £40 to £46 at 26.32p. A two-panel 800W kit, the ceiling of the plug-in route, roughly doubles that and lands in the upper half of the government's range. Rooftop solar on the same house would generate ten times as much, but it costs ten times as much, needs an installer, and is not an option for the renters and flat-owners the plug-in route was written for.

None of that needs battery storage or an export tariff to work. The saving comes from the socket: the kit feeds the grid side of your consumer unit through an ordinary plug, your appliances draw from it first, and only what you are not using at the time goes back to the grid unpaid. Run the washing machine at noon and the numbers above are conservative; run everything after dark and they are generous.

Winter Is the Wrong Season to Judge It

The new rate arrives as output falls. A UK balcony kit produces most of its annual energy between April and September, and our winter performance guide explains how far it drops from October. Judged on a December bill a kit looks feeble; judged over twelve months at 26.32p the sums above hold. If you buy in the autumn, buy on the annual number, and expect the first quarter to be the quiet one.

What to Do Now

• Put your actual unit rate into the calculator. Its default is now 26.32p, but a fixed tariff or a regional rate will differ, and the figure on your bill beats any average.
• If you are on a time-of-use tariff, the saving is the rate at the hour you avoid buying, which in daylight is often the cheap end. Our smart tariffs guide covers which tariffs suit a daytime generator.
• Ignore export for now unless you have an installer's paperwork. The SEG guide explains why most plug-in owners cannot claim it yet.
• Buy a verified kit. The certification tracker lists every record on the ENA register and the ones with a price today.

Frequently Asked Questions