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Calculating Energy Production of a Solar Panel System

Calculating the annual electricity production of a solar panel system in kilowatt-hours (kWh) involves several factors, including the system’s size, the efficiency of the solar panels, the amount of sunlight the installation site receives, and potential shading or orientation issues.

Here’s a basic guide to estimate the annual energy output:

1. Determine System Size

The system size is usually given in kilowatts (kW). This is the peak capacity of your solar panel system under ideal conditions.

2. Calculate the Average Daily Peak Sunlight Hours

This varies based on your geographic location. Peak sunlight hours refer to the average number of hours per day when the sunlight is strong enough to be considered equivalent to the peak output of your solar panels.

You can find this information from local weather services or solar irradiance maps specific to your area.

3. Factor in System Efficiency

Solar panels and the overall system (including the inverter) have efficiency losses. These can be due to the conversion of DC electricity to AC, losses due to heat, and inefficiencies in the panels themselves. A conservative estimate is that system efficiency might be around 75% to 85%.

4. Annual Energy Output Calculation

Use the following formula to estimate the annual energy output:

Annual Energy Output (kWh) = System Size (kW) × Average Daily Peak Sunlight Hours × 365 × System Efficiency

Example Calculation:

  • System Size: 5 kW
  • Average Daily Peak Sunlight Hours: 5 hours
  • System Efficiency: 80% (or 0.8)

Annual Energy Output = 5 kW × 5 hours × 365 × 0.8 = 7,300 kWh

This means a 5 kW solar panel system in an area with an average of 5 peak sunlight hours per day and an efficiency factor of 80% is expected to produce approximately 7,300 kWh of electricity annually.


  • Geographic Location: The amount of sunlight your location receives can significantly impact the calculation. Areas closer to the equator typically receive more peak sunlight hours.
  • Panel Orientation and Tilt: The direction your panels face and their tilt angle can affect production. Panels facing south with an optimal tilt based on latitude typically yield the best results in the Northern Hemisphere.
  • Shading: Any shading from trees, buildings, or other obstructions can reduce the amount of sunlight your panels receive, decreasing their output.
  • Weather: Local weather conditions, such as frequent cloudy days, can also impact the system’s performance.

For a more precise estimate, consider using solar energy calculators provided by the National Renewable Energy Laboratory (NREL) or consulting with a solar provider who can account for all these variables and provide a detailed analysis tailored to your specific situation.

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