Sweet Answer from Solar Mango: (updated Jul 2015)
You might have read about kWp or Wp, referred to as kilowatt peak or watt-peak (the letter “p” stands for peak). You might have wondered what the term “peak” means in these.
In general, peak capacity is the term used to denote the maximum that a particular system can deliver. The term means pretty much the same in the context of solar panels too.
Peak capacity of solar panels refers to the amount of power generated by the solar panels under the best possible solar radiation.
That is, on any day, if there is there is an ideal amount of sunshine during some points of time (typically in the afternoons), the solar panel will work at peak capacity during those times.
If we can have sunlight all 24 hours at ideal sunshine (measured by parameters such as DNI and GHI), a 1 kW solar panel can generate 24 kWh (1kW*24 = 24 kWh) as it will be operating at peak capacity all the time.
However, only during short periods during the day, the solar radiation is at its ideal for a 1 kWp solar panel to operate at full capacity. Thus, over the day, a 1 kWp solar panel generates only about 4 kWh.
In fact, if we were to operate solar panels in space, where sunlight is available at all times at close to ideal radiation, a solar panel of 1 kW peak operates at close to its peak capacity most or all the time, and could hence generate much higher than 4 kWh, perhaps close to 24 kWh!
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