What is a kWh? - Kilowatt hours & Costs Explained

Trying to wrap your head around kWh? HOOD has you covered. Discover what kWh can mean for your home with our handy guide today. Read on to find out!

Can you say with confidence that you understand your power bills? While most will look towards the end price that needs to be paid, understanding your invoice and the type of kWh or kW you're being charged can help answer questions about your home's billing and help you confidently shop around to find the right rate for you. 

From identifying which appliances use more power than others to finding effective ways to lower your carbon footprint, understanding your kWh usage will help you understand the usage of your home on a deeper level. 

What Does 'kwh' Stand For?

A kWh stands for kilowatt hour. Broken down further, it means kilo, meaning a 1000; watt, a measurement of power; and h, standing for an hour. kWh is, therefore, a unit of energy that measures your home's electricity usage. 

You might be familiar with the wattage that your appliances use (i.e. 1000 watts), but kWh will measure the wattage usage from said appliance by the hour. So, for example, if you run your 1000-watt microwave for one hour your usage will be 1 kWh. This is all measured by your home's electricity meter, recorded by your energy provider and presented on your electricity bills. 

What's The Difference Between A Kw And Kwh?

While people might think that kW and kWh can be used interchangeably, they will differ greatly regarding your power usage and billing. kWh is a unit that measures how much energy was used, while kW measures the rate at which the energy is used. While it may not sound like a huge difference, it can drastically change the outcome of your energy bills. 

Average Electricity Prices Per Kwh

When it comes down to your home's energy usage and power retailer, kWh will be used to calculate the usage of your home- this is also referred to as a usage charge. This usage charge will vary from state to state due to the regulations and retail competition. 

The average usage rate in VIC is 21.14c/kWh*, NSW's is 28.54c/kWh* and QLD's is 25.45c/kWh*, while SA's usage charge is an average of 36.13c/kWh*. These prices were calculated from some of the country's leading electricity providers like AGL, Origin Energy Australia, Red Energy and Alinta Energy. 

*Prices based on single-rate electricity tariffs for selected postcodes in each state, October 2022. Usage rates are subject to change.

The usage price provided by your energy retailer will depend on market conditions and price caps. If you were to look at how much 1kWh costs, understanding would help put a monetary answer on just how much money is going into continually run appliances. For example, if you have a 1000-watt split system that runs on average for three hours on any given day, you would multiply the kW rate of your split system by the hours you’ve been using it and the usage charge. In this instance, your calculation would look like this;

1kW x 3 hours x 0.21c/kWh (victorian usage charge average) = 0.63c a day. 

This calculation can be used for all your appliances to determine how much your devices cost you. For those who need more time to figure this out, some energy providers offer smart meters that track all your energy use through monetary figures. This will let you easily know exactly how much you're spending on electricity without grabbing a calculator. 

What Determines My Electricity Cost Per Kwh On My Energy Bill?

Your energy bill won't be entirely dependent on your actual energy usage but on a range of factors such as your supplier, the type of meter you have, your region and postcode and whether you're on a flexible or fixed plan. 

All of these elements will affect your unit rate or usage charge. If you're on a fixed plan, this rate will be the same across the duration of your contract. A variable plan, on the other hand, will see fluctuating rates. 

All energy providers will also have a standing charge. This fee is charged daily, no matter how much or little your energy usage is. It's used to pay for the provision of energy to your home from the national grid and other costs your provider covers. 

Average Kwh Usages Over A Year? 

Your home's energy usage will largely depend on your type of home and how many people live in your home, among many other factors. As a general reference against your home's energy usage, we've provided a list of annual home usage rates according to energy industry figures. 

  • If you live alone in a small house or work out of home full time, you could use about 2,000 kWh of electricity in a year.

  • A small family in a 3-bedroom home that works full-time and goes to full-day schooling can use an average of 3,200 kWh.

  • 4 to 5 young adults or students in a share home (for example) who spend most of their time at home in a 4-bedroom house can use around 4,900kWh. 

*These amounts are an average cost and general guideline to follow, not a true figure for all individuals. 

Why Is It Important To Understand Kilowatt Hours? 

Understanding your power bill is a crucial step in furthering your energy literacy. This can help you understand the effectiveness of your appliance's wattage and cost-effectiveness, as well as help lower your bills and carbon footprint. Now that you know the difference between kWh and kW, you can start to check your regular power bills to find out if you're really getting the right deal for your household. 

If you think you can find a better deal for your energy usage or want to get the most from your providers, such as urgent electricity connections or improved rates, then start shopping around to find your match. Contact HOOD to find all the help you need to make the right electricity connection


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