There is a brief moment of good news on the horizon. From 1st April 2026, Ofgem’s energy price cap drops to £1,641 per year for a typical household, a saving of around £117 compared to the current period. Most of that reduction comes from the government removing certain environmental levies from bills, not from any meaningful fall in wholesale energy costs.
The relief is likely to be short-lived. Forecasters are already warning of a significant rise in July, with estimates from major energy consultancies ranging from £1,900 to nearly £2,000 per year. To understand why, and why this keeps happening, it helps to look at how UK electricity is priced and what is going on in the world right now.
Why global events move your electricity bill
The UK imports around 70% of its gas. That makes our energy prices unusually sensitive to anything that disrupts the global supply of oil and gas. When the Russia-Ukraine conflict escalated in 2022, wholesale gas prices spiked to nearly six times their normal level. Bills followed. Even now, in 2026, typical energy costs remain around 35% above where they were before that crisis began.
The latest disruption is the conflict in the Middle East. Following US and Israeli strikes on Iran in late February 2026, Iran closed the Strait of Hormuz, a narrow shipping channel through which roughly 20% of the world’s oil passes. Oil prices jumped from around $70 per barrel to over $100. Wholesale gas prices reacted almost immediately, and that feeds directly into what households pay.
The structural reason electricity is so expensive in the UK comes down to how the market is priced. Even though renewable sources like wind and solar are now the largest contributors to our electricity mix, the grid still relies on gas-fired power stations to fill gaps when demand exceeds what renewables can provide. Under the current pricing mechanism, it is the cost of gas, the last and most expensive source called upon, that effectively sets the price for all electricity at any given moment. That is why electricity currently costs around 27.7p per kWh, compared to just 5.9p for gas. It is a disparity that no amount of political will seems to resolve quickly.
The long-term answer, as energy industry bodies keep pointing out, is to reduce the UK’s dependence on imported gas altogether. And that is exactly where solar comes in for homeowners.
How solar panels reduce your exposure
A solar PV system on your roof does not just generate electricity. It insulates you, partially, from the volatility described above. Here is how that works in practice.
- You generate your own electricity at zero fuel cost. Once a system is installed, the electricity it produces costs you nothing in terms of fuel. The sun does not have a wholesale price. When the price cap rises in July, the units you generate yourself are unaffected.
- You reduce the number of units you buy from the grid. A typical domestic solar installation in Cambridgeshire will generate between 3,000 and 4,500 kWh per year, depending on system size and orientation. With electricity currently priced at 27.7p per kWh, that equates to between £830 and £1,250 worth of electricity you are no longer buying. As the price rises, that saving increases proportionally.
- Battery storage extends the benefit. The challenge with solar is that it generates during the day, while many households use the most electricity in the morning and evening. A battery storage system, such as those available from GivEnergy or similar, captures the surplus generated during the day and makes it available when you need it. This significantly increases the proportion of your own electricity you actually use, rather than exporting it.
- The Smart Export Guarantee pays you for surplus. Any electricity your system generates that you do not use yourself can be exported to the grid under the Smart Export Guarantee (SEG). Rates vary by supplier, but it means your panels are working for you even when you are not home.
- The payback case improves as prices rise. When we first started fitting solar systems, electricity was significantly cheaper than it is today. The payback period on a well-designed system has shortened considerably as prices have risen. A system that might have taken 10 to 12 years to pay for itself a few years ago may now do so in 7 to 9 years, depending on usage and system size.
A note on realistic expectations
Solar will not eliminate your electricity bill entirely, and it is worth being honest about that. You will still draw from the grid at night, in winter, and on cloudy days. The extent to which you can offset grid usage depends on your roof’s orientation and pitch, your household’s consumption patterns, and whether you pair the panels with battery storage.
What a well-designed system does do is meaningfully reduce how many units you are buying at whatever the going rate happens to be. In an environment where that rate keeps being pushed upward by events entirely outside your control, a war in Ukraine, a conflict in the Middle East, a cold snap driving up gas demand, that matters.
Thinking about solar?
If you would like to understand what a system could do for your property specifically, we are happy to work through the numbers with you. We design and install MCS-certified solar and battery systems across Cambridgeshire, Bedfordshire, and Northamptonshire, and every quote is bespoke to your home and usage.
Give us a call on 01480 400607, or use the booking link on the website to request a survey.
Jason Pope
Owner, Selec Group