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Power vs Energy

Updated: Feb 7

Energy and Power are closely related terms that refer to electricity, but they represent different aspects of how electricity is generated and used. Power, measured in watts (W) or kilowatts (kW), refers to the capacity of work at any given moment, while energy, measured in watt-hours (Wh) or kilowatt-hours (kWh), refers to the amount of work done over a period of time. This distinction is important for understanding electricity bills (energy charges and demand charges) and determining the appropriate size of a solar or backup power system.

  • Power (watt) is the capacity (of work) at any moment (i.e. the sum of electrical loads at any one time).

  • 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 to understand include:

  • Electrical load, or simply "load," which refers to the device or appliance that uses power, in contrast to the generator (any power "source") that creates power.

  • Demand, which refers to the amount of power required at a specific point in time, and is typically measured in kilowatts (kW).

Power Defined

Power, measured in watts (W), is the amount of electrical energy that is being used or produced at any given moment by an electrical load or generator.

For example, in a household, the power usage can be measured in kilowatts (kW) by adding together all the loads, such as appliances and devices, at a specific time. This can be tracked in real-time using monitoring systems or electrical meters.

Solar panels are another example, they generate power when exposed to sunlight, and the intensity of the sunlight affects the level of power they can generate. A solar power generator will be rated for the maximum amount of power it can produce.

In terms of specific appliances, a water heater uses 4.5 kW of power and a toaster uses 1.2 kW, so running them together at the same time equals 5.7 kW of power being used. The total power usage of a household can be calculated by adding up the usage of all the appliances and devices in use.

In the context of grid-tied solar power in a home, if a home is using 3 kW and the solar power system is generating 2 kW, the home will only be using 1 kW from the grid. If the home is using 2 kW and the solar power system is generating 3 kW, there will be 1 kW excess solar power that can be stored in a battery or fed back to the grid.

Since power fluctuates at any one time, it can be summed up as the average amount over time, and this is quantified as energy.

Energy Defined

Energy is the amount of power used or generated over a period of time. It's measured in watt-hours (Wh) for individual devices, but for whole homes and longer time periods, such as days or months, it's typically measured in kilowatt-hours (kWh), which is Wh x 1,000. For even longer time frames, such as a year, it's measured in megawatt-hours (MWh), which is Wh x 1,000,000.

For example, if a 1-kilowatt load (like a coffee maker) runs continuously for one hour, it would consume 1 kilowatt-hour of energy. If it runs for 45 minutes, it would consume 0.75 kilowatt-hours of energy. But as various loads in a home actually turn on and off at various power levels, kilowatt-hours generally represents the average power use over any given one-hour period.

Kilowatt-hours are also summed up per day, month, or year. For example, electricity bills are usually presented on a monthly basis and the energy charges are denoted in kilowatt-hours per month.

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, while others may be 3x average and sometimes greater.

While all power bills include an energy charge, only some include a power (demand) charge.


For an average South Dakota home...

solar energy

Energy consumption:

  • Average day: 33 kWh

  • Average month: 1,000 kWh

  • Annual: 12,000 kWh (12 MWh)

Peak power consumption:

  • Minimal: 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.

Utility billing

Power bills typically distinguish between two types of charges: energy and power. The majority of residential accounts are only billed for energy, which is measured in kilowatt-hours (kWh) and is the charge that most people are familiar with. This is known as the "volumetric charge."

However, some accounts, such as all-electric homes, large homes, and commercial properties, may also be assigned demand charges. These charges bill for both energy (kWh) and power (kW), and are based on the highest amount of power used during specific peak times of the day. The peak demand reading for the billing period is based on the highest power use averaged over a 15- or 30-minute interval, depending on the utility.

Using solar energy reduces the energy charge, but solar is not as effective at reducing the demand charge. This is because peak demand periods also occur at night. However, battery power systems are effective at reducing demand from the grid because they always attempt to zero grid usage, so they can reduce demand charges as long as they have a sufficient charge. Learn more from our post that describes rates and more about our local utilities.

System design

How a solar power and battery power system is recommended and designed depends on the application and interest that the customer is looking for, as well as the type of utility charges targeted for reduction.

It's good to know that while solar power reduces demand from the grid during the daytime, it does not reduce the demand charge due to the way a demand charge is registered as the single highest peak for the entire billing period. However, the energy (kWh) consumed from the grid is invariably reduced as all energy consumed from solar would have otherwise come from the grid.

Battery systems also reduce demand from the grid, but are responsive to loads as they happen, and not only when sunshine is most intense. As long as the battery has the power capacity and charge to be able to handle a load, and is real-time responsive (like Tesla Powerwall), demand peaks from the grid will be limited. However, batteries only store energy and do not produce it, so batteries do not reduce the energy charge (kWh), only, potentially, they can reduce the power/demand charge (kW).


Thank you for taking the time to read our guide about the differences between energy and power. We understand that this can be complex information, and we want to make sure you have all the information you need to make the best decisions for your power system design.

We know that energy is a big part of our daily lives, and our power systems play a big role in it. Understanding the difference between energy and power can help you make informed decisions about your power system design.

Don't worry if this information is new to you or if it's hard to fully grasp. That's what we're here for! Black Hills Solar has a lot of experience with system design, utility rates, and performance expectations and we're more than happy to help you navigate through all this information. So, you don't have to be an expert yourself and you can rely on our guidance.



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