Colorado Residential Solar Install by Namasté Solar

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

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


If it’s been many years since your last physics lesson, get ready for a quick refresher on the basics of how we measure the power and energy of 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).

When looking at installing solar panels on your home, you’ll receive quotes that detail your system size in terms of kW and will sometimes provide you a cost based on kWh. Since we don’t use these units of measurement on a daily basis, they can cause confusion. Our goal is to break down these basic measurements to help you understand what each unit means and to help you better assess any proposals for home solar energy systems.

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, 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. A kWh is equivalent to using 1,000 watts of electricity for an hour. Said another way, 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 information 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’re energized about solar, you made the call to a local professional, and now you have a proposal in hand. You’re probably staring at this proposal and trying to make sense of which number will tell you whether solar is the right choice for you or not. If you received multiple quotes, you may be comparing apples to oranges if one company gave you cost per kW while the other gave 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 watt capacity of the system. (System wattage = number of panels × each panel’s production rating) This might be shown in cost per watt or cost per kW (remember 1 kW = 1000 watts). As an example, if a 4 kW system costs $13200, the cost per watt is $3.3 while the cost per kilowatt is $3,300.

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.

Home solar proposals will often also list the solar energy cost per kWh, but unfortunately, this number is not as straightforward. So 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 to walk you through 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 how much solar energy costs 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, but you can also use the expertise of your chosen solar company. Our home solar advisors are here to answer any of your solar questions. 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 the most solar savings.


Want to learn about your home’s solar potential? Contact us or call 303.447.0300 to get a free quote!

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