The unit terms frequently seen in energy storage pricing, such as €0.40/kWh, kW, kWh, MW, MWh, and GW, can be confusing for many non-professionals. What do they actually mean? What are their differences and relationships? And what implications do they have for investors and developers? This article provides a clear and unified explanation.
MW (megawatt) is a unit of power. 1 MW equals 1,000 kilowatts (kW). It describes the maximum rate at which an energy storage system or power generation equipment can output or absorb energy at a given moment. To put it simply, it's like the "horsepower" of a car—the greater the horsepower, the faster the acceleration.
For example, in a photovoltaic (PV) system, a 1 MW solar farm is mentioned. If one PV module has a power rating of 710 W and the price is €0.69/W, then the price of that module is 710 × €0.69 = €490 (rounded).
1 GW = 1,000 MW = 1,000,000 kW = 1,000,000,000 W
For example, an energy storage system rated at "50 MW" means that at any given moment, it can discharge or absorb up to 50 megawatts of power. In applications such as grid frequency regulation or peak load response—where instantaneous demand is critical—a high power rating means the storage system can quickly release a large amount of energy, helping to ensure stable operation of the power system.
The higher the power, the faster the system can "do work," but that does not indicate how long it can sustain that output—that depends on the capacity.
Wh (watt-hour), kWh (kilowatt-hour), and MWh (megawatt-hour) are units of energy. 1 MWh means being able to output 1 MW of power for one hour – in other words, the total amount of energy that can be delivered over a sustained period.
If power is the "horsepower" of a car, then capacity (in MWh) is the "size of the fuel tank"
MWh determines the system's endurance, which is especially critical in applications such as energy storage systems, virtual power plants, and peak shaving / load shifting.
MW and MWh are linked by a basic physical relationship:
Energy (MWh) = Power (MW) × Time (h)
For example: an energy storage system with a power rating of 50 MW operating continuously for 2 hours will output an energy of:
50 MW × 2 h = 100 MWh
If a region needs 200 MWh of electricity supply during a 2‑hour peak period, the minimum power required would be:
200 MWh ÷ 2 h = 100 MW
This is why we often see combinations such as “60 MW / 120 MWh” — the second value (energy) is typically 1 to 4 times the first value (power), indicating the configured discharge duration.
In wind farms and solar photovoltaic plants:
MW describes the installed capacity, i.e., the design power generation capability of the equipment. For example, a solar PV plant with an installed capacity of 100 MW means that under ideal conditions, it can generate a maximum of 100 MWh per hour. Actual generation depends on weather, sunlight, wind speed, etc., so in real operation it may not reach the theoretical maximum.
MWh is often used to describe the total annual energy generation of a plant or the energy output of a storage system. For example:
A 100 MW solar PV plant with an average annual effective sunlight hours of 1,400 hours would have an annual energy generation of approximately:
If an energy storage system is used to smooth out fluctuations in solar PV generation, it needs to be equipped with a corresponding MWh capacity to absorb the PV output.
Peak‑to‑valley price arbitrage is one of the main revenue models for energy storage. For example, if the daily peak‑to‑valley price difference in a certain region is €0.04/kWh, a system configured as “1 MW / 2 MWh” that discharges once per day would have a theoretical daily revenue of:
2 MWh × €0.04/kWh = €80/day
This application requires a system with high power response – i.e., a high MW rating – even if the MWh capacity is relatively small. Frequency regulation contracts prioritize response speed, not total energy delivered.
When an enterprise installs an energy storage system, the main consideration is “how long can it last during a power outage?” – so the focus is on the MWh capacity and whether it can sustain several hours of office work or production.
Click here for How Long Will a 20kWh Battery Run?Whether for household users installing an energy storage system, renewable energy investors, project developers, or professionals in the new energy technology sector, understanding MW and MWh is essential:
When designing an energy storage project, participating in market transactions, or formulating a business model, both are indispensable.
