Solar glossary
Plain-English definitions of the terms you’ll see in quotes and utility bills.
- Alternating current (AC)
- The type of electricity used by home outlets and the grid. Solar panels produce DC, which an inverter converts to AC.
- Battery storage
- A home battery that stores electricity — from your panels or the grid — for use later, such as in the evening or during an outage.
- Community solar
- A shared solar project that multiple households subscribe to, usually receiving bill credits. Useful for renters or homes with unsuitable roofs. Availability depends on your state and utility.
- Cost per watt
- System price divided by system size in watts. A common way to compare quotes of different sizes.
- Degradation rate
- How much a panel’s output declines each year. Panel warranties usually guarantee a minimum percentage of original output after a set number of years.
- Demand charge
- A utility charge based on your highest rate of power use during a billing period, rather than total energy used. Some residential rate plans include them.
- Direct current (DC)
- The type of electricity produced by solar panels and stored in batteries.
- Export rate
- The rate a utility pays or credits for electricity your system sends back to the grid. May be lower than the retail rate you pay to buy power.
- Federal solar tax credit (ITC / Residential Clean Energy Credit)
- A federal income-tax credit for qualifying home solar. Per the IRS, the residential credit (Section 25D) is not available for property placed in service after December 31, 2025. [Verify current status before publishing.]
- Grid-tied system
- A solar system connected to the utility grid. Most home systems are grid-tied. Without a battery, they typically shut off during outages for safety.
- Interconnection
- The utility approval process for connecting a solar system to the grid.
- Inverter
- Equipment that converts DC electricity from panels into AC for your home. Types include string inverters, microinverters and hybrid inverters.
- Kilowatt (kW)
- A unit of power. Solar system size is usually described in kW (e.g., a 7 kW system).
- Kilowatt-hour (kWh)
- A unit of energy — 1 kW used for one hour. Your electric bill measures usage in kWh.
- Lease
- A plan where a company owns the system on your roof and you pay a fixed monthly amount to use it.
- Microinverter
- A small inverter mounted on or near each panel, so each panel operates independently.
- Monocrystalline panel
- A panel made from single-crystal silicon cells; the most common type for homes today, generally with higher efficiency.
- Net billing
- A crediting approach where energy you export is credited at a set export rate (often below retail), separate from the energy you import.
- Net metering
- A billing arrangement where electricity you send to the grid offsets electricity you use, often at or near the retail rate. Rules vary by state and utility.
- Payback period
- How long it takes for savings on your electric bill to equal what you paid for the system.
- Power purchase agreement (PPA)
- A plan where a company owns the system and you buy the electricity it produces at an agreed per-kWh rate.
- Solar loan
- Financing used to buy a system. You own the system and repay the loan over time.
- Time-of-use (TOU) rate
- A utility rate plan where electricity costs more during certain hours (peak) and less at others (off-peak).
- Watt (W)
- The basic unit of power. Panels are rated in watts, e.g., a 400 W panel.