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Reference 34 terms

Solar glossary.

Definitions for the technical, financial, and regulatory terms a residential solar buyer will encounter in a quote, a utility tariff, or one of our calculator outputs.

A B C D E G I K M N P S T

A

AC vs. DC

Solar panels produce direct current (DC). The home grid runs on alternating current (AC). An inverter converts DC to AC at 95–98% efficiency. System sizes can be quoted in either; we use kW DC throughout.

Annual Production

Total kWh a system delivers in a year. system_kW × peak_sun × 365 × performance_ratio.

Avoided Cost Rate

The wholesale value a utility ascribes to a customer-generated kWh delivered to the grid. Typically 4–10 ¢/kWh vs. retail of 15–35 ¢/kWh. Used as export credit under net-billing tariffs.

Azimuth

Compass direction a roof faces, in degrees from true south (180° in the Northern Hemisphere). Due south is optimal; east/west ≈ 88%; north 60–70%.

B

Battery Storage

Behind-the-meter battery (5–20 kWh, typically LFP or NMC chemistry) that stores surplus solar for later use. Quintessential under TOU rates and net-billing regimes.

C

Capacity Factor

Actual annual output ÷ nameplate × 8,760 hours. US residential solar: 15–22%. Utility-scale tracking arrays in the Southwest exceed 30%.

Clean Energy Credit (§25D)

The 30% non-refundable federal tax credit for residential solar installed 2022–2032. See our guide.

Cost Per Watt ($/W)

Standard pricing unit for residential solar. Industry midpoint: $2.90/W DC pre-incentive. Quotes well above $3.30 or below $2.20 warrant scrutiny.

D

Demand Charge

Bill component based on the highest 15-minute load during the period. Rare residentially today; Salt River Project (AZ) is the notable exception. Solar offsets demand charges poorly without storage.

Derating

Reduction of solar output from nameplate due to real-world factors: temperature, soiling, wiring loss, inverter conversion, mismatch. Rolled into the performance ratio.

DSIRE

Database of State Incentives for Renewables & Efficiency, operated by NC State University. The authoritative source for state, utility, and federal renewable-energy incentive programs. CC BY-SA 4.0.

E

EIA

U.S. Energy Information Administration. Federal agency producing US electricity-rate, consumption, and generation statistics.

G

Grandfathering

A regulatory provision under which existing solar customers remain on the NEM tariff in effect at the time of their interconnection, typically for 10–20 years.

I

Inflation Reduction Act (IRA)

P.L. 117-169 (2022). Established the current 30% federal residential solar credit through 2032, extended the commercial ITC, and added domestic-manufacturing incentives.

Interconnection

The process by which a residential solar system is approved by the utility for grid connection. Time from application to Permission to Operate: 4 weeks (TX, FL) to 6+ months (parts of CA).

Inverter

Device that converts panel DC to grid-compatible AC. Three topologies: string inverter (cheaper), microinverter (better shading performance), DC optimizer + string inverter (hybrid).

K

Kilowatt-Hour (kWh)

Standard unit of electricity consumption: one kW of power for one hour. Your bill is denominated in kWh. Typical US home: ~900 kWh/month.

kW DC vs. kW AC

DC kW = sum of panel nameplate output at standard test conditions. AC kW = maximum inverter output to the grid. AC is usually 80–95% of DC.

M

Module

A solar panel. Modern residential modules are 350–450 W nameplate, made of 60–66 monocrystalline silicon cells.

N

Net Billing

Successor to net metering: exports paid at avoided-cost / wholesale rates while imports billed at retail. California NEM 3.0 (April 2023) is the largest US example.

Net Metering (NEM)

Tariff structure crediting solar exports at full retail rate, offsetting later imports 1-for-1. Increasingly replaced by net billing — see our guide.

NREL

National Renewable Energy Laboratory, operated under U.S. Department of Energy contract. Source of NSRDB peak-sun-hour data and the PVWatts modeling tool.

P

Payback Period

Years required for cumulative bill savings to equal the net upfront cost of a solar installation. We compute via linear interpolation within the crossing year.

Peak Sun Hours

Daily average hours during which solar irradiance averages 1,000 W/m². State averages: 3.0 (Alaska) to 6.5 (Arizona).

Performance Ratio (PR)

Unitless factor (0–1) representing real-world delivery vs. theoretical nameplate. Industry default: 0.80.

Permission to Operate (PTO)

Formal utility approval allowing a newly installed solar system to begin delivering energy. Until PTO, the system must remain off.

PPA (Power Purchase Agreement)

Financing arrangement: third party owns the system; homeowner pays for the electricity produced, typically below utility rates. Third party claims §25D. Generally inferior to cash or solar loan.

PVWatts

NREL's free site-specific solar production calculator. Accepts roof azimuth and tilt directly — the standard tool for sanity-checking installer projections.

S

Site Assessment

On-site visit by an installer to measure roof, document shading, evaluate electrical service, assess structural adequacy. A serious quote depends on a real site assessment.

SREC

Solar Renewable Energy Credit. Tradeable certificate for 1 MWh of solar generation. Active markets in NJ, MA, PA, DC, MD, IL. Prices range $10–$400.

Standard Test Conditions (STC)

Lab conditions for panel nameplate ratings: 1,000 W/m² irradiance, 25 °C cell temp, AM 1.5 spectrum. Real rooftops rarely match.

String Inverter

Single inverter handling all panels in a series string. Cheaper than microinverters but underperforms when any panel is shaded.

T

Tiered Rate

Rate structure where each successive block of monthly consumption is billed at a higher per-kWh rate. Common in CA, AZ, and the Northeast. Favourable for solar because it offsets the top tier first.

Time-of-Use (TOU)

Rate structure where electricity price varies by hour of day, typically with peak prices late afternoon/evening. Default residential rate for new CA IOU customers.

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