Electricity can sometimes seem like magic. Wires come into your house carrying power. You flip a switch or press a button, and the lights come on, the TV wakes up, or the coffee maker comes to life. How does it all work?

The article below is an explanation of how electricity works, from the watts needed to power your lightbulbs to the kilowatt-hours of electrical energy used that your utility records on your monthly electric bill.

What is a watt?

A watt (W) is a unit of power. Think of power as “the ability to do work.” Technically, a watt is a measurement of energy transfer that equals one joule per second, but since nobody outside a laboratory has uttered the word “joule” since high school physics class, we’ll stick with “watt.”

With electricity, power is voltage times amperage. Or one watt (W) equals one volt (V) times one ampere (A). 

A good way to think about electricity is that it’s a lot like water. Voltage is the pushing, or the pressure, and amperage is the flow. When discussing electricity, amperage is also called current.

How electricity is like water

Imagine a hose with a spray nozzle on the end. Say the nozzle has three settings: off, low, and high. The water pressure behind the nozzle is constant; that pressure is like voltage. In the off position, there’s no flow, so no power. 

Turn the nozzle on “low”, and you’ve got power! You’ve increased the amperage and water is flowing. The flow is measured in gallons per minute, and to return to our metaphor, that flow would be the “wattage”. 

Turn the nozzle on high to increase the amperage again, and you’ve got more power; more “wattage”.

Measuring the flow of power 

Sticking with the water metaphor: the flow that is coming out is a measure of the power. Point the hose into a bucket for 10 minutes and you’ll fill it up. The water that flowed into the bucket is like a measure of the energy that flowed through the hose.

A common way people interact with watts is through the lightbulb. Say a 100-watt light bulb needs that much power to glow. If you leave a 100-watt bulb on for an hour, you’ve used 100 watt-hours. 

A kilowatt of power (kW) is 1,000 watts, so if you leave 10 100-watt bulbs (1 kW of bulbs) on for an hour, you’ll have used one kilowatt-hour (kWh).

This is one reason why switching to low-wattage light bulbs can have such a great impact. An LED bulb that can make as much light as a 100-watt incandescent bulb only needs 14 watts. That means you can run 10 14-watt LEDs for 7.25 hours and use the same amount of total energy as the incandescent bulbs do in an hour.

Again, a watt is a measure of power, or the ability to do work, and a watt-hour is a measure of energy, which means the amount of work done over a certain period of time. 

A kilowatt is simply a thousand watts, and a kilowatt-hour is a record of an average output of a thousand watts over an hour. 

Another way to think about power and energy is a marathon runner. Power is like the ability to run at a certain pace, and the distance the runner covers is the amount of energy they used. 

In 2019, the fastest marathoner in the world completed a race in almost exactly 2 hours. That means he put out enough power to consistently run at about 13.1 miles per hour, and the 26.2 miles of the marathon are the measure of the energy he used.

If we measured the runner’s consistent power output at about 300 watts, he would have expended 600 watt-hours over the 26.2 miles of the race. If he could run at the same power output for 5 hours, his total energy output would be 1,500 watt-hours or 1.5 kilowatt-hours.

kW and kWh on your electricity bill

As your home uses electricity during the day, a meter spins (or digitally counts up) to record the amount of power you use at all times. This measurement adds up to a certain number of kWh of energy consumption at the end of the month.

At the end of each billing cycle, the company “reads” your meter and records a total for energy usage. They then apply their fancy (and sometimes extremely complicated) calculations and bill you at a certain rate of cents per kWh. 

Say you use 1,000 kWh per month, and your electric rate is $.15/kWh - your bill would be $150.00, plus any additional connection and service fees.

How solar panels reduce your energy costs

Solar panels produce power to run your air conditioner, dishwasher, and other appliances and devices. Solar power reduces your energy bill by replacing electricity you would have otherwise bought from the utility company.

Electricity is created by solar panels when photons of light excite electrons in one layer of a panel’s surface. Those excited electrons are attracted by the other layer of the panel and will travel through a conductive wire to get to the other side. By diverting that travel through your home’s wires, solar electricity can be used to power your home. 

Each solar panel is rated to convert a certain number of photons to electrons under full sun — i.e. put out a certain number of watts. The average peak power output of a solar panel these days is about 340 watts. A typical solar system for a home needs about 18 of those panels, for a total rated output of about 6 kW of power. 

We know that a 6-kW solar panel system can produce that much power under full sun, but while the sun shines all day long, it’s technically only “full” at midday. During other parts of the day, the sun shines at a lower angle. 

To return to the voltage/amperage discussion above, as soon as enough sun touches the surface of a solar panel, its full voltage is ready, but the number of photons exciting electrons is low, so its amperage (current) is low. 

As the sun rises and shines more directly on the panel, the number of excited electrons increases up to the maximum, or full sun. If you look at solar energy production during the day, it looks like a bell curve with the lowest numbers at sunrise and sunset and a rounded peak in the middle. 

To make it easier to understand how much energy a solar panel can make during the average day, people who study solar came up with the concept of peak sun hours. 

They look at all the solar energy available in a given place on the earth over a whole year and divide it by 365 to get an average number of hours the sun would have to shine from its highest point in the sky to make that much energy.

Say you live in an area with an average of 5 peak sun hours per day. Your 6-kW solar system could be expected to generate about 30 kWh of electricity on an average day. Of course, most days aren’t average, so it’s more likely that your system’s production will make more or less energy on any given day, but would end up at around 10,950 kWh per year (365 times 30 kWh/day).

Using our example above, a home that needs 12,000 kWh per year can reduce the amount of electricity they get from the grid down to just 1,050 kWh with our example 6-kW system and 5 peak sun hours per day. That represents a savings of $1,642.50 over that time period, thanks to solar.

How your state affects the value of solar energy

Every solar kWh is created equal, but unless you have net metering, they’re not all credited equally to your energy bill. 

Net metering is a rule that ensures each kWh of solar energy gets full retail-rate credit on your bill. If your solar panels produce more than your monthly electricity usage, you earn a credit that is applied to the next month’s bill. 

Learn more: What is net metering and how does it work?

Most states have net metering rules in place, but some don’t. Without full retail credit for the energy your solar panels make, going solar is not as financially advantageous. 

Read our state solar guides to get information about net metering, and use the most accurate online solar panel calculator to see estimated cost and savings for solar panels on your specific roof.