Energy Costs: kW, kWh, Tariffs and Payback

Power and energy are different units

Kilowatts measure power at a point in time; kilowatt-hours measure energy consumed over time. A 1 kW appliance running for two hours uses 2 kWh. Multiply energy by the applicable unit tariff to estimate the usage charge.

Standing charges and efficiency matter

A household bill can include both per-kWh cost and a daily standing charge. Heating comparisons should convert purchased energy into useful heat using an explicit efficiency or coefficient-of-performance assumption rather than comparing tariffs alone.

Payback is not an investment guarantee

Simple solar payback divides installation cost by modelled annual net energy value. Generation, self-consumption, import/export tariffs, maintenance and equipment performance can all change, so use a range and label the result as simple payback.

Convert every energy input to one basis

Before comparing appliances, heating systems or charging, convert the relevant consumption to kWh over the same time period. Keep standing charges, efficiency assumptions and export income separate from the unit rate so a tariff comparison does not accidentally mix fixed and variable costs.

Treat payback as a sensitivity model

For solar or efficiency upgrades, show how the simple payback changes when generation, self-consumption, import price, export price or maintenance differs from the baseline. The calculation should not imply that future tariff values or equipment performance are guaranteed; its purpose is to reveal which assumptions drive the payback most.