Understanding your annual output estimate
The basic formula behind every solar estimate
Multiply your system's DC size in kilowatts by your location's daily peak sun hours, then by 365 days, then by a derate factor that accounts for real-world losses. An 8 kW system with 4.5 peak sun hours and a typical 80% derate factor produces roughly 10,500 kWh per year. This same basic formula sits behind most solar sizing tools and installer proposals, just with different levels of detail layered on top. A DOE study of 75 federal PV systems found an average energy ratio of roughly 75%, a useful sanity check against any single-formula annual estimate.
What actually goes into the derate factor
Most residential systems use a derate factor between 0.75 and 0.85, accounting for inverter efficiency, wiring loss, soiling, temperature effects, and other combined real-world factors. PVWatts, the NLR modeling tool used across the industry, defaults to 0.86 for a well-designed system. Every other tool in this section, from shading loss to snow loss to temperature derate, breaks one piece of this combined factor out for closer examination.
Why identical systems produce different output by city
Peak sun hours vary significantly by location based on latitude, typical cloud cover, and local climate. A system in Phoenix might see 6 or more peak sun hours a day, while the same system in Seattle might see closer to 3.5, leading to a large output difference. This single input often explains more of the variation between two systems than any other factor. The solar panel calculator turns that figure into a panel count.
DC versus AC output
This estimate already reflects AC output at the meter, since the derate factor accounts for inverter conversion loss along with other system losses. The DC rating on your panels themselves is always higher than what actually reaches your home or the grid, which is why a "10 kW system" never quite produces a straight-line 10 kW worth of usable power.
What to do with this number next
Break your annual figure down further with the monthly output estimator or the daily output estimator, or run it against your household's actual usage. Once you have an annual figure you trust, the cost per kWh produced calculator can turn it into a real cost comparison against your utility rate.