Blog Updated: December 2025
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. If you’re asking “what is a kWH?” or “How do I understand solar energy cost per kWh?”, we’ll break down these basic measurements to help you better assess any proposals for home solar energy systems.
We know that measures of power and solar energy cost per kWh can be tricky to grasp, so we’ll take it as easy as possible.
Solar Energy Cost per kWh Key Takeaways
- What is a watt? A watt is the standard unit used to measure electrical power in the International System of Units, and a kilowatt (kW) is 1,000 watts.
- What is a kwh? A kilowatt-hour (kWh) is a measure of the amount of energy used over time. If you used a 1,000-watt appliance for one hour, you would have used 1 kWh.
- The cost of solar per watt is calculated by taking the total cost of the system and dividing it by the number of watts of capacity in the system. This number represents the cost of the proposed system’s power capacity. If two proposals each show you a cost per watt or kW, you’re comparing apples to apples.
- If two proposals both list the “solar energy cost per kWh,” the comparison likely isn’t as straightforward. There are often different assumptions (e.g. design elements, climate data, lifetime estimate) being used to calculate this number. Beware of comparing solar energy cost per kWh across different proposals – you might be comparing apples to oranges.
What Is a kW and a kWh?
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 over time. One 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 one 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.We hope we explained what a kWh is well enough, but 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 installations so you are able to accurately compare the proposals.
How Can I Compare Solar Energy Cost per kWh or kW Across Multiple Solar Energy Proposals?
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). This measurement of cost per kW is a measure of the maximum power output of your system. A 400 kW panel can create 400 kWs of power maximum, but how much it produces over time various based on a number of factors like placement, shading, weather, etc.
The great thing about the cost of solar energy per kW is that it’s straightforward and easy to understand. If two proposals each show you a cost per kW, you are comparing apples to apples.
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!).
Remember that a kWh is a measurement of power over time. So the solar energy cost per kWh refers to how much your solar panel system would cost based on how much power it produces over time. But the cost per kWh does not have a universal equation, and the final number can be influenced by using different calculations.
Different solar companies will use different calculations to give you a cost per kWh. Do they each 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. They should be able to talk you through the assumptions behind their calculations.
Be an Informed Solar Customer
You now have a basic understanding of kWs, what a kWh is, and the solar energy cost per kWh. 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, so congrats on your new knowledge.
We hope we gave you enough information to better understand any proposals you receive for home solar. And if you still feel confused, you can always give us a call to talk through specifics – even if those specifics are helping you compare proposals. 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. Give us a call at 303-536-8920 or click the button below to get in touch with our team.
