Fundamentals
kW and kWh are not the same thing, and the difference is on your bill
The single most expensive confusion in commercial energy. One is a rate, one is a quantity, and your utility charges you for both separately.
A rate and a quantity
A kilowatt, kW, is a rate of power. It is how fast energy is flowing right now, like the speed on a car's dashboard. A kilowatt hour, kWh, is a quantity of energy. It is how much has flowed over a period, like the miles on the odometer.
A 100 kW load running for three hours consumes 300 kWh. The same 300 kWh could come from a 300 kW load running for one hour, or a 25 kW load running for twelve. Identical energy, wildly different power.
On a residential bill this distinction barely matters, because households are billed almost entirely on kWh. On a commercial bill it matters enormously, because you are billed on both, separately, at very different rates.
Why your bill has two halves
Look at a commercial demand-tariff bill and you will find energy charges in dollars per kWh, and demand charges in dollars per kW. The energy charge pays for the electricity you used. The demand charge pays for the capacity the utility had to keep available for your highest moment.
That highest moment is usually the highest 15-minute average demand in the billing period. Not the highest instant, and not the average across the month. One quarter hour of unusually high draw can set a number you then pay against for the entire month.
On the facilities we audit, demand and non-coincident demand charges together commonly account for a substantial share of the total bill. On some cold storage and processing accounts they exceed the energy charges outright.
What this means for solar
Solar reduces kWh. It is very good at this. Every kilowatt hour your array produces and you consume on site is a kilowatt hour you do not buy at the retail energy rate.
Solar is far less reliable at reducing kW. Your monthly peak might happen at 7:30pm on a hot Tuesday when the array has finished for the day. If it does, the demand charge is entirely untouched by an array of any size.
This is why we model the load shape rather than the annual total. An array sized from twelve months of kWh, with no reference to when those kWh were used, is a guess dressed up as engineering.
What this means for batteries
A battery is specified with two independent numbers, and they do different jobs. Continuous power in kW is how hard it can push. Usable energy in kWh is how long it can keep pushing.
A 250 kW / 500 kWh battery can deliver 250 kW for two hours, or 125 kW for four. If your demand peak is a sharp 400 kW spike lasting twenty minutes, you need power, not energy: that battery cannot shave it regardless of its kWh rating. If your peak is a broad 200 kW plateau lasting four hours, you need energy.
Buying the wrong one of those two numbers is the most common and most expensive mistake in commercial storage. It is entirely avoidable, because the interval data tells you the shape of the peak before anyone quotes anything.
- kW is a rate. It sets demand charges and battery power ratings.
- kWh is a quantity. It sets energy charges and battery runtime.
- Arrays are quoted in kW DC. Inverters are rated in kW AC. Production is measured in kWh.
- A 1 MW array does not produce 1 MWh. It produces roughly 1,600 MWh a year in this climate.
The quick test
Next time a proposal lands on your desk, look for three things. Does it quote array size in kW DC and production in kWh, and never confuse the two? Does it reference your demand charges at all? Does it say when your peak occurs?
If the answer to any of those is no, the proposal was built from an annual total and a rule of thumb. Ask for the interval data analysis. If there isn't one, that is the finding.
This is a demonstration website. Figures quoted in this article are illustrative.
