A
AC (Alternating Current): The form of electricity used in your home. Solar panels produce DC; an inverter converts it to AC.
Amortization: The schedule of how a loan is paid down over time. Solar loans typically amortize over 10–25 years.
Array: The full collection of solar panels installed on your roof or property.
Azimuth: The compass direction your panels face. South = 180° (best in the Northern Hemisphere). East = 90°, West = 270°.
B
Battery storage: A home battery that stores excess solar production for use later (overnight, during outages, or when rates are higher). Common brands: Tesla Powerwall, Enphase IQ Battery, FranklinWH.
Bifacial panel: A solar panel that captures light on both sides. Useful for ground mounts; minimal benefit for rooftop installs.
BOS (Balance of System): Everything in a solar system that isn't the panels — inverters, racking, wiring, monitoring, etc.
C
Capacity factor: Actual energy produced divided by theoretical maximum. Residential solar is typically 15–22% capacity factor.
Clipping: When solar panels produce more DC power than the inverter can convert to AC. Some clipping is intentional with DC/AC oversizing — see inverter guide.
Commercial ITC (Section 48E): The federal Investment Tax Credit for business-owned solar. Still available in 2026 for third-party-owned residential systems (lease/PPA).
Cost per watt ($/W): Total system price divided by system size in watts. The best metric for comparing solar bids. See $/W guide.
D
DC (Direct Current): The form of electricity solar panels produce. Converted to AC by an inverter.
DC/AC ratio: The ratio of installed DC panel capacity to AC inverter rating. Typical 1.10–1.50:1. Higher ratios increase production in real-world conditions.
Dealer fee: The hidden markup baked into financed solar pricing to subsidize a low APR. Often 20–35% of the cash price.
Degradation: The gradual decline in solar panel output over time. Premium panels: 0.25–0.4%/year. Budget: 0.5–0.7%/year.
E
Efficiency: Percentage of sunlight a panel converts to electricity. Modern residential panels: 19–22.8%.
Escalator: The annual percentage increase in lease or PPA payments. Typical 1.9–3.9%. Demand 0% if signing a lease.
Export: Excess solar production sent back to the utility grid.
F
Federal solar tax credit (Section 25D): The 30% residential clean energy credit. Expired December 31, 2025. No longer available for cash or loan purchases.
Fixed connection fee: Monthly utility charge that applies regardless of usage. $10–$30 in most states. You still pay this with solar.
G
Grid-tied: A solar system connected to the utility grid (the standard setup). Allows net metering and grid backup.
Ground mount: Solar panels mounted on the ground rather than on a roof. Useful when roof isn't suitable.
H
HelioScope: A common shading and production analysis software. If your proposal includes a HelioScope report, that's a good sign.
I
Inverter: The device that converts DC from panels to AC for your home. See inverter comparison.
Interconnection: The utility approval process for connecting your solar system to the grid. Typically takes 30–90 days after install.
ITC: Investment Tax Credit. The 25D residential version expired Dec 31, 2025; the 48E commercial version remains.
Irradiance: Solar energy hitting a surface, measured in W/m². Determines how much your panels can produce.
K
kW (kilowatt): A unit of power. System sizes are typically expressed in kW (e.g., 8 kW system).
kWh (kilowatt-hour): A unit of energy. Your utility bill measures usage in kWh. 1 kW running for 1 hour = 1 kWh.
kWh/kW/year (specific yield): How much energy each kW of installed solar produces per year. Range: ~1,000 (Pacific NW) to ~1,700 (Southwest).
L
Lease: A solar financing option where a third party owns the system and you pay monthly to use the electricity. Has escalators. See comparison.
Levelized Cost of Energy (LCOE): The total lifetime cost of solar divided by total lifetime production. The best apples-to-apples comparison metric for energy.
M
Microinverter: A small inverter attached to each panel. Better for shaded/complex roofs. Enphase IQ8 is the dominant brand.
Module: Industry term for a solar panel.
Monitoring: Software showing your system's real-time and historical production. Microinverters and DC optimizers provide per-panel monitoring.
N
NABCEP: North American Board of Certified Energy Practitioners. The industry standard certification for solar installers.
Net metering: Utility policy that credits you for excess solar production. Full retail (best) vs net billing vs avoided cost. See offset guide.
NEM 3.0: California's net billing successor to net metering, effective April 2023. Cut export credits by ~75%.
NREL: National Renewable Energy Laboratory. Maintains PVWatts, the gold-standard production calculator.
O
Offset: The percentage of your annual electricity usage your solar system is sized to produce. 100% offset doesn't mean $0 bill. See offset guide.
Optimizer (DC optimizer): A small device on each panel that allows independent operation with a string inverter. SolarEdge is the dominant brand.
P
Payback period: Years for solar savings to equal net cost. National 2026 average: ~12 years for cash. See payback guide.
PPA (Power Purchase Agreement): A solar contract where you pay $/kWh for power produced. Similar to a lease but pay-per-production.
PTO (Permission to Operate): Final utility approval to turn your solar system on. The official "in service" date.
PVWatts: Free NREL tool for estimating solar production. The industry-standard validation tool.
R
Racking: The metal framework that mounts solar panels to your roof. Common brands: IronRidge, Unirac, SnapNrack.
Rapid shutdown: NEC-required safety feature that de-energizes panels during emergencies. Microinverters/optimizers comply natively.
Re-amortization: When a loan recalculates payment based on remaining principal. Older solar loans assumed a tax credit paydown — now a payment-shock risk.
S
SEG Solar: Houston-based solar panel manufacturer with US production in Texas. Mid-market option with strong domestic-content compliance.
Shading analysis: A study of how shadows affect your roof. A real proposal includes one (HelioScope, Aurora, Solar Pathfinder).
SMART: Massachusetts solar incentive program with performance-based payments.
SREC (Solar Renewable Energy Certificate): Tradable certificate for each MWh produced. Valuable in NJ, MD, MA, DC, OH, IL, PA.
STC (Standard Test Conditions): Lab conditions used to rate panel output. Real-world output is typically 80–90% of STC.
String inverter: A central inverter connected to a series of panels. Cheapest option, allows aggressive DC/AC oversizing.
T
Tier 1 panel: Loose marketing term for "reputable manufacturer." Not a meaningful technical spec — always check the actual model and warranty.
Tilt: The angle of your solar panels relative to horizontal. Typically matches roof pitch on rooftop installs.
True-up: Annual settlement of net metering credits. If you over-produced, you may get a small payment; if under, you owe the balance.
TSRF (Total Solar Resource Fraction): Percentage of ideal solar a roof receives, accounting for shading and orientation. 90%+ is ideal, below 75% is poor.
U
Utility rate: The price you pay per kWh. Higher rates = faster solar payback. Use your marginal rate (not average) for accurate calculations.
W
Warranty (product): Covers panel manufacturing defects. Typically 12–25 years.
Warranty (performance): Guarantees panel output won't drop below a certain threshold (usually 80–87%) over 25 years.
Warranty (workmanship): Covers installation quality. 10 years minimum from reputable installers; 25 years from top-tier installers.
Watt: Basic unit of power. 1 kW = 1,000 watts. Solar panels are typically 350–450W each.
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Analyze My Bid →Frequently asked questions
What's the most important term to understand?
$/W (cost per watt). It strips out system size differences and lets you compare bids apples-to-apples.
What's the difference between a kW and a kWh?
kW is power (rate); kWh is energy (amount). A 1 kW system running for 1 hour produces 1 kWh.
What does "tier 1" panel actually mean?
It's a financing-industry term about manufacturer bankability — it doesn't tell you anything about panel quality. Always look at the actual model and warranty.
Is bigger system size always better?
No. Sizing should match your usage and net metering structure. Oversizing without battery often produces low-value exports. See sizing guide.