How to read a solar proposal: kWp, kWh, savings and payback explained
A plain-language guide to the numbers in a rooftop solar proposal, so you can check the system size, generation estimate, savings and payback before you sign.
A solar proposal packs a lot of numbers onto a page. Most of them come from a small number of inputs. Once you know what each one means and which figures look realistic, you can compare quotes properly and spot one that promises too much.
kWp, kW and kWh: three different things
- kWp (kilowatt-peak) is the size of the system: the combined rated power of all panels under standard test conditions. Twelve 430 W panels make a 5.16 kWp system.
- kW (kilowatt) is power at a moment in time. On a clear midday the same system might be producing 3.5–4.5 kW. Real conditions are hotter and less ideal than the lab test, so it rarely reaches the full kWp.
- kWh (kilowatt-hour) is energy over time. It is what your electricity bill counts and what saves you money.
A proposal should always show both: the size in kWp and the expected yearly generation in kWh.
Is the generation estimate realistic?
Divide the yearly generation by the system size. The result is the specific yield, in kWh per kWp per year. It is the quickest sanity check there is.
| Region | Typical specific yield |
|---|---|
| Most of India | 1,300–1,600 kWh/kWp |
| Southern Spain, Middle East | 1,500–1,800 kWh/kWp |
| Germany, UK | 850–1,100 kWh/kWp |
If a 5 kWp quote in Delhi promises 10,000 kWh a year, that is 2,000 kWh/kWp, well above what the climate allows. Ask how it was calculated.
Losses: where the missing energy goes
No system delivers its full theoretical output. A good proposal lists the losses, which typically add up to 15–25%:
- Temperature. Panels lose roughly 0.3–0.4% of their power for every °C above 25 °C, and a panel in the sun runs much hotter than the air.
- Dust and dirt. Usually 2–5%, more in dusty areas without regular cleaning.
- Inverter. Modern inverters convert 96–98% of the DC power to AC.
- Wiring and mismatch. Typically 1–3%.
- Shading. Anything from 0% to a lot. It should be calculated for your roof, not guessed.
The ratio of real output to theoretical output is the performance ratio. Typical values are 75–85%. A proposal assuming 95% is being optimistic.
How savings are calculated
Savings depend on what happens to each unit of energy:
- Used directly in the home: each kWh replaces one you would have bought, so it is worth your full tariff.
- Exported to the grid: it is worth whatever your net-metering or export arrangement pays, which is often less.
So annual savings ≈ (self-used kWh × your tariff) + (exported kWh × export rate). A proposal that values every kWh at the full retail tariff, when you will export half of it at a lower rate, overstates the savings.
Payback and long-term value
- Simple payback = total cost ÷ annual savings. A ₹3,00,000 system saving ₹45,000 a year pays back in about 6.7 years.
- Panel degradation: good panels lose about 0.4–0.7% of output per year. Check that the 25-year savings figure includes this.
- Tariff changes: many proposals assume electricity prices rise every year. That is reasonable, but look at what rate they assume. A higher assumption makes long-term savings look bigger.
- Subsidies: check whether the price shown is before or after any government subsidy, and who claims it.
CO₂ and environmental figures
The CO₂ saving is the yearly generation multiplied by the grid's emission factor. In India that factor is roughly 0.7 kg of CO₂ per kWh. A 7,000 kWh-a-year system therefore avoids around 5 tonnes of CO₂ a year. Figures far above that deserve a question.
A quick checklist before you sign
- System size in kWp, and the exact panel and inverter models.
- Yearly generation in kWh, and a specific yield that suits your region.
- The losses and shading that were assumed.
- How self-used and exported energy are valued.
- Payback including degradation, and the price before and after subsidy.
- Warranties for panels (product and performance), the inverter and the workmanship.
Make proposals your clients can trust
Solarqivo builds the generation estimate from the actual roof layout and long-term NASA weather data, month by month and with every loss shown. With Pro, you can send it as a clean, branded PDF proposal with energy, savings, payback and CO₂ impact. If you are designing the layout first, start with how many panels fit on your roof.