Solar Energy Glossary

Plain-English definitions of every solar term — from peak sun hours to TOU rates, net metering to SREC. 65 terms, updated for 2026.

A B C D E F G H I K L M N O P R S T U W

A

AC (Alternating Current): The type of electricity used by household appliances. Solar panels produce DC electricity; an inverter converts it to AC for home use.
Array: A complete set of solar panels wired together to form a system. A 10-panel array at 400W each is a 4 kW array.
Avoided cost rate: The low rate (often $0.03–$0.08/kWh) utilities pay for exported solar in net billing states — much less than retail. Compare to full net metering.

B

Battery storage: A home battery (e.g., Tesla Powerwall, Enphase IQ Battery) that stores surplus solar energy for use when panels aren't producing — at night or during outages.
Break-even point: The year when cumulative solar savings equal the system's net cost. Also called payback year.

C

Capacity factor: Actual annual output divided by maximum possible output (if panels ran at rated power 24/7). US residential solar averages 13–20% capacity factor.
CEC efficiency: California Energy Commission efficiency rating — a real-world weighted efficiency measurement used to compare inverters. Slightly lower than peak efficiency.
CO₂ offset: The tons of carbon dioxide your solar system prevents from entering the atmosphere by displacing grid electricity. An 8 kW system offsets roughly 8–12 tons/year.
COP (Coefficient of Performance): For heat pumps: the ratio of heat output to electricity input. A COP of 3.0 means 3 kWh of heat per 1 kWh of electricity — 300% efficient.

D

DC (Direct Current): The type of electricity solar panels produce. Microinverters or string inverters convert DC to AC for home use.
Degradation rate: The annual percentage drop in a panel's output. Industry standard is 0.5%/year for crystalline silicon. Premium panels degrade at 0.25–0.3%/year.
Demand charge: A utility fee based on your peak power draw (kW) rather than total usage (kWh). Common in commercial rates; emerging in some residential TOU tariffs.
Distributed generation: Energy generated at or near the point of use — like rooftop solar — as opposed to large centralized power plants.
DSIRE: Database of State Incentives for Renewables & Efficiency (dsireusa.org). The authoritative public database of US solar incentives, tax credits, and policies.

E

EPC contractor: Engineering, Procurement, and Construction contractor — the company that designs and installs your solar system. Also called installer or integrator.
Export rate: The price your utility credits you per kWh of solar electricity you send to the grid. Under full net metering this equals your retail rate; under net billing it's much lower.

F

Feed-in tariff (FIT): A policy where utilities pay a set price for all solar electricity exported to the grid, often above retail rate. Common in Europe; rare in the US.
Fixed charge: A monthly utility fee that doesn't depend on how much electricity you use or produce. Solar offsets usage charges but not fixed charges.

G

Ground mount: A solar installation on ground-level racking rather than a rooftop. Common on larger properties; allows optimal angle and easier maintenance.
Grid-tied: A solar system connected to the utility grid. Excess power flows to the grid (credited via net metering); the grid supplies power when panels underperform.

H

Heat pump: A device that moves heat rather than generating it, achieving 200–400% efficiency. Air source heat pumps replace gas or oil heat with electricity, pairing exceptionally well with solar.

I

IEC 61215 / 61730: International standards certifying solar panels have passed simulated weathering, mechanical stress, and safety testing. Look for these certifications on any panel.
Interconnection: The utility approval process to connect your solar system to the grid. Timelines range from 2 weeks (fast states) to 6+ months (slow utilities).
Inverter: Converts DC electricity from solar panels to AC electricity for home use. Types: string inverter (one for the system), microinverter (one per panel), power optimizer + inverter.
ITC (Investment Tax Credit): The federal solar tax credit. The residential Section 25D ITC expired December 31, 2025 for homeowner-owned systems. The commercial Section 48E ITC remains for third-party owned systems (leases/PPAs).

K

kW (kilowatt): Unit of power — the rate of energy production or consumption. A 400W panel produces 0.4 kW at peak. System sizes are measured in kW (e.g., "8 kW system").
kWh (kilowatt-hour): Unit of energy — power multiplied by time. An 8 kW system running at peak for 1 hour produces 8 kWh. Your utility bill charges in kWh. System production is measured in kWh/year.

L

Lease (solar): A financing arrangement where you pay a monthly fee for use of panels owned by a third party. Lower upfront cost, but you don't own the panels or capture tax benefits.
Load shifting: Changing when you use high-draw appliances (dishwasher, EV charger, washer/dryer) to align with solar production hours (9 AM–3 PM) to maximize self-consumption.

M

Microinverter: A small inverter mounted on each individual solar panel. Advantages: no single point of failure, better shading performance, per-panel monitoring. Main brand: Enphase.
Module: Another word for a solar panel. A photovoltaic module converts sunlight directly into DC electricity.
MPPT (Maximum Power Point Tracking): Electronics inside inverters and optimizers that continuously find the voltage/current combination maximizing each panel's output — critical for shaded roofs.

N

NABCEP: North American Board of Certified Energy Practitioners. The leading professional certification for solar installers and PV system designers. Look for NABCEP-certified installers.
Nameplate capacity: A battery's total rated energy (e.g., 13.5 kWh for Powerwall 3). Usable capacity is lower after accounting for depth-of-discharge limits.
NEM (Net Energy Metering): See: Net metering.
NEM 3.0: California's 2023 net metering reform (officially Net Billing Tariff), which reduced solar export credits from retail rate to ~$0.05–$0.08/kWh. Made batteries near-essential for California solar.
Net billing: A net metering alternative that credits solar exports at avoided cost or wholesale rates — much lower than retail. States like California, Nevada, and Hawaii have moved to net billing.
Net metering: A utility policy crediting solar homeowners at the retail electricity rate for surplus power sent to the grid. Available in ~28 states with full retail credit as of 2026.
NPV (Net Present Value): The present-day value of all future solar savings, discounted to account for the time value of money (we use 4%). Positive NPV means solar beats leaving money invested elsewhere.
NREL: National Renewable Energy Laboratory — the US Department of Energy lab that produces the PVWatts calculator, solar resource data, and most authoritative US solar research.

O

Off-grid: A solar system not connected to the utility grid. Requires enough battery storage to cover all needs without grid backup. Much more expensive than grid-tied.
Offset target: The percentage of your annual electricity usage you want solar to cover. 100% offset means solar generates as much as you use annually.

P

Panel: A photovoltaic module that converts sunlight to DC electricity. Modern residential panels are 380–430W. Multiple panels wired together form an array.
Panel lifespan: Solar panels typically carry 25-year production warranties but last 30–40 years in practice. At 0.5%/year degradation, a panel still produces ~80% of original output at year 25.
Payback period: Years until cumulative solar savings equal the system's net cost. After payback, electricity is effectively free for the remaining panel life. US average in 2026: 9–14 years.
Peak sun hours: The number of hours per day that sunlight averages 1,000 W/m² at your location. US range: 3.5 (Seattle) to 6.5 (Phoenix). Determines how much your panels produce daily.
PPA (Power Purchase Agreement): A financing arrangement where you buy the electricity produced by solar panels owned by a third party, at a fixed or escalating rate per kWh. No upfront cost; you don't own the system.
Production ratio: Annual kWh output per kW of installed capacity at a given location. A production ratio of 1,400 means a 1 kW system produces 1,400 kWh/year. Range: 1,100–1,700 across the US.
PV (Photovoltaic): The technology that converts sunlight directly to electricity using semiconductors. All residential solar panels use photovoltaic cells, almost always crystalline silicon.
PVWatts: NREL's free online solar production calculator. Uses actual weather data for any US location to estimate annual and monthly production. The model Wattcrunch's address-based tool is built on.

R

ROI (Return on Investment): Your total 25-year net profit expressed as a percentage of your net system cost. A 200% ROI means you earned twice your investment on top of getting it back.
Roof setback: Required clear space between the panel array edge and the roof edge or ridge. Setback rules (typically 18 inches) reduce usable roof area and must be factored into system design.

S

Section 25D: The IRS code section for the residential clean energy credit (solar tax credit). This credit was 30% of system cost for homeowner-owned systems; it expired December 31, 2025.
Section 48E: The IRS code section for the commercial clean electricity investment credit — still active in 2026 for third-party owned systems (leases, PPAs). Installers can pass part of this credit through to customers via lower pricing.
Self-consumption: The share of solar production you use directly in your home rather than exporting to the grid. Higher self-consumption is more valuable in net billing states.
Shading loss: Production reduction caused by shadows from trees, chimneys, or dormers crossing panels. String inverters amplify shading loss; microinverters minimize it.
Solar irradiance: The power of sunlight per unit area, measured in W/m². Standard test conditions use 1,000 W/m². Varies by location, season, and time of day.
SREC (Solar Renewable Energy Certificate): A tradeable certificate representing 1 MWh of solar electricity generated. Available in some states (NJ, MA, MD, PA, OH, DC). SRECs can add $50–$400/MWh in additional income.
String inverter: A single central inverter for the whole panel array. Less expensive than microinverters but has one point of failure and amplifies shading loss.
System size: Total installed capacity of a solar array in kilowatts (kW) or watts (W). Calculated by dividing annual electricity usage by production ratio.

T

TOU (Time-of-Use) rates: Electricity pricing that varies by time of day. Peak hours (typically 4–9 PM) can cost 2–4× off-peak. TOU rates change the economics of solar and often make batteries more valuable.
True-up: The annual settlement between you and your utility for net metering. At true-up, any remaining credits from surplus solar may be carried forward, paid out at a reduced rate, or forfeited.

U

Usable capacity: The actual kWh a battery can deliver, accounting for depth-of-discharge limits. A 13.5 kWh Powerwall 3 has 13.5 kWh usable (100% DoD). Older units may only allow 80–90% DoD.
Utility rate escalation: The annual percentage increase in electricity prices. The US 20-year average is ~2.5%/year. Rising rates make solar more valuable over time and are factored into our 25-year savings projections.

W

Watts (W): Unit of power. A 400W solar panel produces 400 watts at peak. System sizes are usually expressed in kilowatts (kW = 1,000W).

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