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Kilowatts & Kilowatt-Hours: Understanding a Solar Price Estimate
Before signing a sales agreement, you should understand the electrical power units integral to buying and operating a solar array. We recommend getting several bids on a solar photovoltaic (PV) system, unless you are familiar with or trust a recommendation about a specific contractor.
Kilowatts (kW), the industry standard for sizing and valuing a PV system, form the basis of a straightforward estimate (components and labor) – commonly called the “installed price per kilowatt.” For example, a 5-kilowatt system priced at $17,500 would cost $3,500 per installed kilowatt. Kilowatt hours (kWh), on the other hand, represent the electrical production of the solar PV system. As you’ll learn later in this article, kilowatt-hour production is not static and varies based on conditions, including available sunlight and panel shading.
Quality contractors always provide the installed kW price at the front of their estimate, ensuring customers have accurate information to make an educated purchase. The estimate also includes the projected kWh production of the PV system, but that number is approximate and not the metric used to determine the installed price.
Be cautious of solar sales predicated primarily on kilowatt-hour production rather than an upfront and well-defined installed price per kilowatt. This subjective sales tactic can be associated with a guarantee to “eliminate” or “zero out” your utility bill. To help you understand, let’s look at kilowatts (kW) and kilowatt-hours (kWh) and their role and meaning in solar pricing and production.
A kilowatt (kW) is 1,000 watts of electrical power — a standard measurement used across the utility and solar industries. The kilowatt size of the solar array represents the system’s power output (capacity) when operating at full production. It is calculated by totaling the output of the individual solar panels within the array. For example, if your system estimate includes 10 400-watt panels, the kilowatt size is 4,000 watts or 4 kW (10 x 400).
A kilowatt-hour (kWh) is 1,000 watts of electrical power generated or used over one hour. Specific to solar PV electrical production, the kilowatt-hours a system yields are a combination of the solar array size (in kW) and as important, variables, including available sunlight, solar panel orientation, ambient temperature, and shading or blockage on the solar panel surface.
The kWh production of a solar PV system can only be estimated, and because it relies on the variables listed above, the array output fluctuates daily and seasonally. For most of Montana, the standard formula used by reputable contractors is that 1 kW of solar produces about 1,300 kWh of electricity annually. This calculation accounts for production variables. You can also access an online tool called PVWatts to estimate solar production at your specific location within the state.
The National Renewable Energy Lab (NREL) developed and maintains PVWatts to assist homeowners interested in solar. It is user-friendly and allows you to input specifics for your home, such as your location, roof orientation, and angle (pitch).
If the contractor providing the bid presents the estimate primarily based on projected kilowatt-hour production, use caution and ask for the system size ( in kilowatts) and price per installed kilowatt. You need to know these numbers to understand the materials and labor you are paying for and as a sound reference to compare with other bids.
PV Watts link: https://pvwatts.nrel.gov
John Jones and Mitch Hegman have developed renewable energy curriculum and trained Montana solar installers, electricians, regulators and others since 2005. In line with the solar industry’s growth and technology changes, their portfolio includes more than 20 solar and energy storage courses and seven industry publications. Together with the Montana Electrical Joint Apprenticeship Training Center (MEJATC), they provide renewable energy education for Montana contractors, electricians and apprentices.