1. The Basic Difference Between kW and kWh
Thinking about solar and worried about calculating your savings accurately? While solar can save you money on kWh (kilowatt-hour) charges, it can’t reduce kW (kilowatt) charges or any fixed charges. If you’ve seen a solar savings quote that includes these charges, you should think twice before moving forward.
Here’s the basic distinction between kW and kWh:
- a kW is a unit of power, or how fast electricity is flowing at any moment
- a kWh is a unit of energy, or how much electricity is flowing over a period of time
Think of it like this. Imagine water flowing through a pipe. Power, or kW, is the size of the pipe—how much water can flow through at once. Energy, or kWh, is the total amount of water that flows through the pipe over a period of time.
If I have a smaller pipe, it will take me longer to fill up a bucket of water than it will if I have a larger pipe. That’s because more water can flow through the large pipe at once. So the pipe is what determines how much water can flow into my bucket in a certain amount of time. The size of the pipe is like electrical power, while the water that flows through the pipe is like energy.
2. What kW vs. kWh means for solar savings
Let’s apply this to solar. Suppose you have two solar systems, one rated at 50 kW of power, the other rated at 100 kW of power. With full sunlight for an hour, and assuming our system is 100% efficient, the 50 kW system would produce 50 kWh of electricity and the 100 kW system would produce 100 kWh of electricity. If we did the same thing for two hours, our 50 kW system would produce 100 kWh of electricity and our 100 kW system would produce 200 kWh of electricity. You probably get the idea: a kWh is the amount of energy that 1 kW of power will produce over the course of 1 hour.
This distinction between kW and kWh is also important for understanding the charges on your electrical bill. It turns out that many utility companies will charge you separately for energy you use and the power it takes to deliver that energy to you. It costs the utility company money not just to get the electricity to you, but to get you the amount you need in a given period of time. So each month the utility company measures not just how much energy you used, but the single point over the course of the month when the power, or rate of energy flow, was highest.
So, for example, your utility bill would look different if you used 1 kWh of energy every hour over the course of a day for a total of 24 kWh and if you used the same amount of energy in a single hour. The difference won’t be in the price you pay for the total amount of energy. The difference will arise from the amount of power it took to deliver that energy to you. Let’s go back to the water and the pipe in the example we discussed a moment ago. In this case, you’re buying the same amount of water whether you get it all in a single hour or over the course of a whole day. But the utility company needs a bigger “pipe” to bring you that water if you want it all in just one hour. In some cases, you’ll have to pay extra for that larger pipe.
Let’s calculate what this might mean for your bill. In the first case, you’re using 1 kWh every hour, which means you’re using a maximum of 1 kW of power that day. But in the second case, you’re using 24 kW of power, because you needed all 24 kWh over the course of a single hour. Let’s images that the utility company charges 10 cents per kWh of energy and $10 per kW of power. In both scenarios, you’ll pay $2.40 for the electricity in kWh. But in the first scenario, you’ll pay only $10 total for power in kW, because you never needed more than 1 kW of power to get the electricity to you. In the second case, however, you would actually pay $240 for power in kW, because you used 24 kW of power to get that 24 kWh of electricity in just one hour. So your total bill for that day if you only used 1 kWh every hour is $12.40. But if you used all 24 kWh in just a single hour, your bill would be $242.40. It would be unlikely to see such a dramatic difference in real life, but I used an extreme example to illustrate the idea.
3. An Example from a Real Electrical Bill
Let’s take a look at an actual residential electrical bill to see how this works in real life. Here’s a sample bill from Eversource for Western Massachusetts. On the left, you can see the total kWh that were used each month. Remember that kWh are electricity, or energy, which is like the water flowing through the pipe and into your bucket. This month, the bill indicates that 1,036 kWh were used. You can see that the charges are actually broken up into two main types: supply and delivery. Supply charges are what it costs to produce the energy that was used. Delivery is what it costs to get that energy to your home or building. Let’s take a look at each of these charges in a little more detail.
The supply charge only includes a single rate per kWh of $0.10470. So we multiply the number of kWh used, which is 1,036, by our rate, and we get $108.47. The delivery charge is a little more complicated. It actually includes multiple rates per kWh and multiple rates per kW. We don’t need to know exactly what all these different rates are for at the moment. We just need to know how the total bill is calculated. If you look at all the kWh rates, which is for electricity, you’ll see that each one is multiplied by 1,036, which is the number we’ve already seen for kWh. But if you look at the rates for kW, or power, you’ll see that they’re multiplied by $9.94 and $10.83. You can see here that, thankfully, the kW amount is pretty low, at 2.5 kW for this month. That means that there was some point over the course of the month when the utility company delivered 2.5 kWh to this address over the course of a single hour. That was the highest rate of energy flow, or power, that occurred over the course of the month.
If we add up all the charges and organize them in a spreadsheet a little more clearly, you’ll be able to see how this works. Note that there’s a customer charge at the top, which is just a flat fee that the utility charges every customer every month, even if they don’t use any electricity. After that, we have a whole list of charges. Most of them are kWh charges for various aspects of what it costs the utility company to bring electricity to you. But two of these charges are kW charges, one for distribution and one for transmission. We’ll get into transmission and distribution in another video. But hopefully this illustration conveys clearly what the difference between kWh and kW means for your electrical bill.
4. Why solar won’t lower your kW charges
What does all of this mean for your actual savings from solar? The basic idea is that while solar can reduce the number of kWh you use, it won’t necessarily reduce your maximum power draw in kW over the course of a month. That’s because your maximum power each month is unlikely to occur at the exactly same time that you are receiving energy from your solar panels. There are a couple of reasons for this. One is that most homes use more electricity in the evening, after the sun has stopped shining, when people return home from work. Another reason is that you may have a cloudy day, a system failure, a system shutdown for maintenance, or some other factor that gets in the way of your solar panels reducing your kW charge for the month. So even if you offset a significant portion of your kWh charges, you shouldn’t count on solar reducing your kW charges. If you find that you’ve received a solar quote which suggests that solar can reduce your charges in kW, you should probably think twice before moving forward. One final thing to note is that a battery can reduce your kW charges, because many batteries can be programmed to deliver energy at moments of high power consumption. This is one reason why solar and a battery together can be such a powerful combination.