One of the most common questions Maryland and DC homeowners and businesses ask us is “How much does solar cost?” Solar PV system cost can depend on a number of factors, including the type of solar panel installed, the type of installation (rooftop or ground mount), and — most importantly — system size in kilowatts (kW).
While solar PV systems are sized in kW, their energy output is measured in kilowatt-hours (kWh). These two units of measurement are related yet describe two slightly different aspects of a PV system. Here is what you need to know about the difference between kW and kWh — and how these measurements affect the cost of solar installation.
What Is a kW and a kWh?
A kilowatt (which equals 1,000 watts) is a unit of power, while a kilowatt-hour is a unit of energy. Kilowatts describe how much power something uses, while kilowatt-hours describe the use of power over time. If you run a 60-watt light bulb for one hour, for example, you’ve used 60 watt-hours (or 0.06 kilowatt-hours). Kilowatt-hours are used on your energy bill to describe how much power your home has consumed over a given period of time.
The relationship between kilowatts and kilowatt-hours is much like the relationship between distance and speed. Kilowatt-hours are a measurement of kilowatts used over time, while speed is a measurement of distance traveled over time.
The Cost of Solar Energy Per kW and kWh
Let’s say you’ve contacted your local solar installation company, received a free site evaluation, and now have a detailed proposal for your new solar PV system. This proposal outlines how large your new system will be, how much of your energy bill it will offset, how much it will cost, and other key pieces of information. Your new system might be 4.5 kW in size, for example, and cost about $16,000 to install (before applying any federal and local incentives.) To determine the cost of your system per kW, you would simply divide the total cost by the size in kW: $16,000 / 4.5 kW = $3,556 per kW (or $3.55 per watt).
Still, it’s important to remember that system size in kW doesn’t exactly tell you how much energy your system will produce. That metric would be represented by kWh. To determine how much energy your system will produce in kWh, your solar contractor will need to complete a detailed calculation which includes estimates on how roof tilt, orientation, shading, and other factors will affect energy output. Many solar contractors complete such a calculation and list an estimated cost of solar energy per kWh on their solar proposals. The number lets you compare the estimated cost of solar energy to the cost of energy from your local utility.
A Solar Investment Is Well Worth the Cost
If you’re considering installing solar panels on your home or commercial building, think about the larger financial picture. By investing in solar, you are essentially purchasing 25+ years’ worth energy at a low, fixed rate — and protecting yourself against rising utility costs.
What’s more is that local and federal incentives can significantly reduce the upfront cost of solar installation. If you were to install a system with a gross cost of $16,000 this year, for example, that system would qualify for the 30% Federal Solar Tax Credit, making the net cost of your system just $11,200.
When you consider the lower cost of solar energy along with the many incentives that are currently available for solar, installing solar panels becomes well worth the upfront cost.