Reference

Solar glossary

Going solar comes with a lot of jargon. Here are the terms that actually matter, in plain English — updated for 2026.

AC (Alternating Current)
The type of electricity your home and the grid use. Solar panels produce DC, which an inverter converts to AC.
Avoided-cost rate
A low, wholesale-style rate some utilities pay for exported solar instead of full retail credit. Typically $0.03–$0.06/kWh — far less than the retail rate you pay to buy power.
Azimuth
The compass direction a roof or panel faces. In the US, due south (180°) generally captures the most sunlight.
Battery storage
A home battery (like a Tesla Powerwall or Enphase IQ Battery) that stores excess solar for use at night or during outages. Increasingly important where net metering is weak.
Bifacial panel
A solar panel that captures light on both its front and back surfaces, gaining extra output from reflected light. More common in ground-mount installations.
Capacity factor
The ratio of a system's actual output to its theoretical maximum if it ran at full power 24/7. Residential solar typically runs 15–25% depending on location.
DC (Direct Current)
The type of electricity solar panels produce. It must be converted to AC by an inverter before your home can use it.
Degradation rate
How much a panel's output declines each year — typically about 0.5% annually, so panels still produce ~85–88% of original output after 25 years.
DSIRE
The Database of State Incentives for Renewables & Efficiency (dsireusa.org) — the authoritative US source for state and utility solar incentive programs.
EIA
The U.S. Energy Information Administration, the official source for average residential electricity rates by state.
Federal solar tax credit (25D)
The 30% residential Clean Energy Credit that was ELIMINATED for new installations after December 31, 2025 by the One Big Beautiful Bill. Cash and loan buyers in 2026 receive no federal credit.
Grid-tied
A solar system connected to the utility grid (the most common setup). It can draw from and export to the grid, and usually shuts off during outages unless paired with a battery.
Interconnection
The utility approval process that allows your solar system to connect to and exchange power with the grid. Required before you can switch the system on.
Inverter
The device that converts the DC electricity from panels into the AC electricity your home uses. The component most likely to need replacement during a system's life.
ITC / Section 48E
The commercial Investment Tax Credit. Unlike the eliminated residential credit, the 48E commercial credit remains available through 2027 — which is why some solar leasing companies can still claim a federal credit.
Kilowatt (kW)
A measure of power (capacity). Residential solar systems are sized in kW — most US homes need a 5–10 kW system.
Kilowatt-hour (kWh)
A measure of energy (power used over time). Your electric bill is charged per kWh, and the US average home uses about 10,800 kWh/year.
LCOE (Levelized Cost of Energy)
The average cost per kWh of electricity from a system over its entire life, including upfront and maintenance costs. A way to compare solar against grid power.
Lease
A financing arrangement where a company owns the panels on your roof and you pay a fixed monthly fee. You don't own the system or qualify for incentives, and it can complicate home sales.
Microinverter
A small inverter installed under each individual panel (e.g., Enphase). Handles shading better than a string inverter and allows panel-level monitoring, at higher cost.
Monocrystalline
The dominant solar panel type, made from single-crystal silicon. More efficient (20–22%) than older polycrystalline panels.
NEM 3.0
California's Net Billing Tariff (since April 2023), which cut export credits by ~75% versus the old rules — making batteries far more valuable for California solar.
Net metering
A billing policy that credits you for excess solar you export to the grid, often at the full retail rate. One of the biggest factors in whether solar pays off.
NREL
The National Renewable Energy Laboratory, the source for solar resource data like peak sun hours used to estimate production.
Off-grid
A solar system not connected to the utility grid, relying entirely on batteries for storage. Rare for typical homes; common for remote properties.
One Big Beautiful Bill
Federal legislation signed July 4, 2025 that eliminated the 30% residential solar tax credit for systems installed after December 31, 2025.
Payback period
The number of years it takes for electricity savings to equal the system's cost. In 2026, without the federal credit, typical paybacks run 10–14 years.
Peak sun hours
The number of hours per day sunlight averages 1,000 W/m² of intensity — a measure of how productive a location is for solar. Ranges from ~3.5 (Pacific NW) to ~6.5 (Southwest).
Performance ratio
A factor (typically ~0.8) accounting for real-world losses — heat, wiring, inverter inefficiency, dust — between a panel's rated and actual output.
Photovoltaic (PV)
The technology that converts sunlight directly into electricity. "PV system" is the technical term for solar panels.
Power optimizer
A device added to each panel (e.g., SolarEdge) that maximizes output and enables panel-level monitoring while still using a central string inverter.
PPA (Power Purchase Agreement)
Like a lease, but you pay per kWh the panels produce rather than a fixed fee. The provider owns the system and claims any incentives.
PTO (Permission to Operate)
The final utility sign-off allowing you to legally turn on your solar system after installation and inspection.
Racking
The mounting hardware that attaches panels to your roof or a ground structure.
Solar farm / community solar
A large shared solar installation you can subscribe to for bill credits without putting panels on your own roof — ideal for renters and unsuitable roofs.
SREC
Solar Renewable Energy Certificate — a tradable credit earned per MWh your system produces, sellable for income in states like New Jersey, Massachusetts, and Maryland.
String inverter
A single central inverter serving a "string" of panels. Cheaper than microinverters but more affected by shading on any one panel.
Tilt
The angle of panels relative to horizontal. Production is usually maximized when tilt roughly matches the site's latitude.
Time-of-use (TOU) rate
A utility rate plan where electricity costs more during peak demand hours (often 4–9 PM). Makes battery storage more valuable for shifting solar to peak times.
Watt (W)
The basic unit of power. A modern residential solar panel is rated around 400 W; 1,000 watts equal one kilowatt (kW).

Learn more

Now that you know the terms, dig into the guides:

The federal tax credit in 2026Net metering explainedIs solar worth it in 2026?How much solar costsSolar incentives by stateCommunity solar

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