The terms Energy and Power are often used interchangeably when describing electricity. But despite their close relationship, they actually represent different aspects of how electricity is generated and used. Understanding this difference can be very helpful for reading bills and sizing a solar/generator or backup power system.
Power (watt) is the capacity (of work) at any moment (i.e. the sum of electrical loads right now)
Energy (watt-hours) denotes the amount of work done over time, is based on hours (average power per hour), and is also expressed in days (kWh/day), months (kWh/month), etc.).
Other noteworthy terms include electrical load (or just "load"), which refers to the device or appliance that uses power, in contrast to the generator ("line" or "source") that creates the potential energy.
The watt (W) is the standard unit of measure for electrical power, both as it is generated or consumed. Individual home devices and appliances use tens, hundreds, or sometimes thousands of watts to operate.
The kilowatt (watt x 1,000) is the typical measure of power for a household, by adding all of the variable loads together at any specific time. This can be tracked in real-time with monitoring systems or electrical meters.
The megawatt (watt x 1,000,000) would measure the power requirement of a neighborhood or large facility.
For example, solar panels produce power whenever they are exposed to sunlight, and the intensity of the sunlight causes their power capacity to vary at any one time. If the solar power generator (an array of solar panels and power inverter) is rated at 6 kW, then that is the maximum power it could provide.
Likewise, a water heater uses 4.5 kW of power, and a toaster uses 1.2 kW of power; therefore, running both at the same time equals 5.7 kW of power being used.
Specifically in the context of solar power, if your home is using 3 kW and your solar power is generating 2 kW, then you will be using only 1 kW from the grid; furthermore, if you are using 2 kW and your solar power is generating 3 kW, you will have 1 kW excess solar power (that can be stored in a battery, back-fed to the grid, or even curtailed).
Since power fluctuates at any one time, it can be summed up as the average amount over time, and this is quantified as energy.
Power use (or generation) over a period of time is energy consumption. Time is what distinguishes the kW and the kWh.
Energy is measured in watt-hours (Wh) for individual devices, but a kilowatt-hour (kWh) is typically used for time spans of days or months. Megawatt-hours (MWh) may also be used to measure longer time frames.
For example, powering a 1-kilowatt load (i.e. a water pump) continuously for one hour equals 1 kilowatt-hour of energy consumed. If it runs for 45 minutes, it would instead be 0.75 kWh consumed. But in reality, as various loads turn on and off over time, the kWh will ultimately represent average power use over the hour.
Kilowatt-hours are most often summed up for a day, month, or year. For example, electricity bills are monthly, so energy charges are denoted in kWh/Month. Utility bills might also note your average kWh/day. And since usage varies over the seasons, usage can also be summed up as kWh/Year (just like solar power production).
A typical home uses around 33 kWh per day, 1,000 kWh per month, and 12,000 kWh per year. Some homes may be 1/3 the average, others may be 3x average or even greater.
For an average South Dakota home...
Average day: 33 kWh
Average month: 1,000 kWh
Annual: 12,000 kWh (12 MWh)
Peak power consumption:
Efficiency: 3 to 5 kW
Average: 5 to 10 kW
Above Average: 10 to 15 kW
High: 15 to 20 kW
Very high: over 20 kW is possible with larger homes, especially those with electric heat.
Your power bills also distinguish between energy and power. Most residential accounts are billed only for energy (kWh), which is the "volumetric charge" that everyone is familiar with.
Some accounts are also assigned demand charges (typically larger homes and commercial) which bill for both energy (kWh) and power (kW). The demand charge is based on the highest power usage (during the specified, "peak" times of the day, averaged over a 15- or 30-minute interval depending on the utility) over the billing period.
Solar energy reduces the energy charge, but even though it reduces demand from the grid during the daytime, it is not actually effective at reducing the demand charge since peak usage may happen at night. Battery power systems, however, can be effective at reducing demand from the grid, since they are powering the home at all times (as long as they maintain their charge). Learn more from our more in-depth post on our local utilities.
When sizing a system for energy bill reduction, then we need to consider kWh. But when designing backup/battery power systems, sizing for peak power (kW) is essential as well.
When sizing a battery for a backup system, both energy and power needs must be accounted for. The battery capacity must be sufficient to handle the peak load (when multiple appliances operate simultaneously), and the battery capacity must also be sufficient for the energy (kWh) needs for at least 24 hours.