Energy Use in the Home

To properly size a solar PV system for your home, it is important to understand how much energy you consume and how it affects your utility bill – and budget. Once you understand your energy consumption you can determine how much you want to reduce your bill, how much you want to spend on solar, and in turn, the appropriate size for your system.

What’s a watt?

A watt (W) is a unit of instantaneous power. In the solar industry, this refers to the capacity or size of the system.

What’s a kilowatt-hour?

A kilowatt-hour (kWh) is a unit of energy, which is the use of power over time. You are billed by your utility company per kWh.

How can I find my past electricity consumption?

Sign up for your utility’s online service, if available. You will be able to retrieve your past 12 months of kWh consumption. If your utility does not offer an online service, you can add up your total kWh consumed from your past 12 electricity bills. Always look at kWh use on an annual basis, since your consumption fluctuates over each season.

How am I charged on my utility bill?

Depending on your utility company, different rate structures may be available. For residential customers the rate structures offered are  flat, tiered and time-of-use (TOU). Although uncommon for residential customers, demand charges may be included on your bill.

Flat rate – You are charged the same amount per kWh no matter how much, or when, you consume.


Tiered rate – You are charged the rate of various tiers. Each tier has a designated amount of kWh that can be consumed before being charged at the next higher tier. The rates increase with each tier, with typically two to four tiers in total.


Time-of-use (TOU) rate – The rate you pay per kWh is based on the time of consumption, with designated peak and off-peak times. Once you install solar, your utility may require you to change to a different rate structure required for solar customers. For example, you may be required to move from a tiered rate schedule to a TOU rate.

Demand charges - Measuring demand means monitoring and recording the maximum average instantaneous energy need for every 15 minute interval within each billing period (kW).

The electric utilities must maintain sufficient generating capacity and transmission capacity to supply a customer’s peak demand at any given time. The utility does not know for sure when the peak demand might come, but it has to be ready. Most of the time, the utility’s generating and transmission capacity sits by idly waiting to spring into action whenever customers demand it. It is expensive to maintain that excess generation and transmission capacity. Utilities charge customers for the costs of having power ready on demand at any time through the demand charge.

Tiered rate – You are charged the rate of various tiers. Each tier has a designated amount of kWh that can be charged for before shifting up to the next higher tier. The rates increase with each tier, with typically two to four tiers.

Once you install solar, your utility may require you to change to a different rate structure required for solar customers. For example, you may be required to move from a flat rate schedule to a TOU rate.

Reduce before you produce

There are several easy and cost-effective ways to make your business more energy efficient, such as replacing incandescent light bulbs with LEDs (light-emitting diodes) and installing smart power strips to more extensive retrofits like air sealing and adding insulation to your building. As your business becomes more efficient, you will consume fewer kWh, which will allow for a smaller solar PV system to be installed and save you money. Energy-efficient improvements also can make your business cleaner, heathier and safer.

To learn more about energy efficiency measures you can do for your business, visit your local utility website for more information on energy efficient programs and rebates (if available).

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