Save time, save money and demystify home solar.


Your guide to a smart investment.

Solar Energy Cost Per kWh (And What Is a kWh, Anyway?)

Publish Date: January 4th, 2018

When looking at installing solar panels on your home, you’ll receive quotes that detail your system size in terms of kilowatts (kW) as well as cost per kilowatt hour (kWh). These numbers in the quotes can be confusing since we don’t use these measurements in our daily lives. In this post, our goal is to break down these basic measurements to help you understand what a kWh means and to help you better assess any proposals for home solar energy systems. (If you're looking for details on the average cost of home solar, visit out cost page to learn more.)

Get ready for a quick refresher on the basics of how we measure power and the energy produced by solar panel systems. We promise we won’t lecture, but we also know these are tricky concepts to grasp. If you aren’t in the mood for nerdy watt talk right now, take a kitten break instead! If you are ready, then we’re going to cover the basic measurements of solar energy to help you understand solar energy cost per kilowatt hour (kWh) and kilowatt (kW).

What Is a kW and a kWh?

Dieters are concerned with counting calories while gear heads are interested in horsepower. If you’re in the dark and relying on your battery-powered flashlight, you’re relying on amp hours stored in those batteries. There are many different measurements of energy and power, each unique to the specific applications. For solar energy, we’re talking about kilowatts and kilowatt hours.

The watt is the standard unit used to measure electrical power in the International System of Units, and 1,000 watts equal a kilowatt (kW). This is what you’ll find on appliances to express how much power it uses. For example, the standard incandescent light bulb uses 60 watts while a more efficient LED bulb might use only 9 watts to produce the same amount of light. Hair dryers can use anywhere from 600 watts on the low end to a whopping 3600 watts for professional blow dryers. Refrigerators run on between 150-400 watts, and washing machines use around 500 watts.

The wattage is used to express how much power something uses. If measured over time, then we’re talking about energy. That’s where the kilowatt hour (kWh) comes in. A kWh is a measure of how much energy you’re using, but it doesn’t simply refer to how much energy you’re using each hour. Instead, a kWh is the amount of energy you would use if a 1,000-watt hair dryer ran for an hour. A 500-watt washing machine would have to run for two hours to use 1 kWh. (That’s as deep as we’ll go here, but feel free to dig in if you want more info on power vs energy.)

Even though we use electricity every day, the kWh is not an intuitive measurement because it doesn’t compare to more familiar terms like miles per hour. It’s ok if the concept isn’t crystal clear. The important part is that you know how to look at proposals for home solar panel systems so you are able to accurately compare offers.

Solar Energy Cost Per kWh and kW

You’ve always thought about home solar so you reached out to a local solar company to get a free quote, and now you have a proposal in hand. You’re probably staring at this proposal with a bunch of numbers trying to make sense of which number will tell you whether solar is the right choice for you or not. If you got multiple quotes, you may be comparing apples to oranges if they gave you cost per kW or cost per kWh.

The first way to look at the cost of solar is by watt or kilowatt. The cost per watt is a simple measurement calculated by taking the total cost of the system and dividing it by the number of watts of capacity in the system. (The system’s wattage is the number of panels multiplied by each panel’s production rating.) You may also see a cost per kW, in which case it’s the total cost divided by kW (remember 1 kW = 1000 watts).

The great thing about this number is that it’s straightforward and easy to understand. If two proposals each show you a cost per watt or kW, you are comparing apples to apples. This number represents the cost of the proposed system’s power capacity, but does not tell you about the system’s potential to produce energy.

Proposals will often also list the solar energy cost per kWh, but this number is not as straightforward. There are often different assumptions being used to calculate this number. That means that even though “cost per kWh” is listed on both, you might be comparing apples to oranges (or you might have a mango!).

This is because the cost per kWh does not have a universal equation, and the final number can be influenced by using different calculations. How does each calculation take into account design elements like roof tilt, orientation, or shading? Does each proposal’s calculation use the same climate data to forecast for how much energy your panels will produce? Does the proposal estimate the lifetime of your system to be 20, 25, or 30 years? Each of these factors will change the final cost per kWh shown.

So why even look at kWh? For one, the cost per kWh can be informative because it allows you to compare the cost of solar to your utility costs. The solar energy cost per kWh can also help you compare two system proposals because two systems of the same kW size could produce different total kWh because of design choices. Just remember that it’s a subjective number, and feel free to ask your solar company how they calculate solar energy cost per kWh.

Be Informed

Congratulations if you made it this far! The kilowatt hour is a unique unit of measurement that trips up many people trying to understand the cost of their solar panel system or how much energy their solar panels produce. We hope we gave you enough information to better understand any proposals you receive for home solar. Remember, you can always give us a call to talk through the specifics. Our team doesn’t work on commission, so you can be sure that our #1 goal is to help you compare apples to apples to get you the most solar savings.

If you're on the Front Range in Colorado, get a free quote today!


Recommended Reading:

Namaste Solar Joins 500+ B Corporations Committed to Net Zero by 2030

How Much Does It Cost to Go Solar, Anyway?

Are Solar Panels Worth It for Your Home?