Solar glossary

The words in solar quotes, contracts and bills, explained in plain English and why each one matters to your wallet.

A

AC vs DC coupling

How a battery connects to solar: through its own inverter on the AC side, or directly to panels on the DC side.

DC coupling can be slightly more efficient for new systems. AC coupling is often easier when adding a battery to existing solar. Ask your installer which suits your setup.

ADI (Administratively Determined Incentive)

New Jersey's fixed-price solar certificate program, paying per MWh produced for 15 years.

ADI replaced the older SREC market with set prices. Residential net-metered systems registered on or after July 27, 2026 earn $77 per MWh (about 7.7 cents per kWh) for 15 years. See New Jersey solar.

APR (annual percentage rate)

The yearly cost of a loan, including interest and certain fees, as a percentage.

Solar loans often advertise APRs of about 1% to 7%, but the dealer fee is usually folded into the loan principal instead of the APR. A loan with a higher APR and no dealer fee can be cheaper overall. Compare total amount paid, not just APR, with our solar loan calculator.

Authority having jurisdiction (AHJ)

The local government office, usually the city or county building department, that issues permits and inspects your system.

Each AHJ has its own rules and timelines. Permit and inspection delays at the AHJ can push back PTO and savings. Your installer should handle these steps.

Avoided cost

What it would have cost the utility to generate or buy the same electricity elsewhere, usually well below retail.

Many net billing programs pay exports at or near avoided cost, which can be a few cents per kWh compared with 15 to 30 cents or more at retail. If your export credit is based on avoided cost, savings depend mostly on how much solar you use on-site.

Avoided Cost Calculator (ACC)

The California Public Utilities Commission model that sets hourly export values under the state's Net Billing Tariff.

The ACC produces different export values for each month and hour, with separate weekday and weekend sets. Exports in a few summer evening hours can be worth a lot, while midday exports are often worth little. That's why batteries and west-facing panels can help under the NBT.

Azimuth

The compass direction your panels face, in degrees. 180° is due south, 90° is east, 270° is west.

In the U.S., south-facing panels usually make the most energy over a year. East- and west-facing roofs make less in total, but west-facing panels produce more in the late afternoon, which can be worth more on time-of-use rates. Make sure the production estimate uses your real roof direction.

B

Backup / critical loads panel

A separate subpanel for the circuits a battery or generator will power during an outage.

A critical loads panel lets a smaller battery cover essentials like the fridge and lights. Whole-home backup needs more battery capacity and power. Decide which circuits matter before sizing a battery.

Baseline and tiered rates

Rates where your first block of monthly kWh (the baseline) is cheaper and use above it costs more.

On tiered rates, solar first cuts your most expensive top-tier kWh, which can make early savings look large. If you cut usage or switch rates, the value of each solar kWh can change. Make sure a quote uses your actual rate schedule, not an average price.

Bifacial panel

A panel that can collect light on both its front and back sides.

Bifacial panels gain the most when mounted high over a light-colored surface, as on ground mounts or carports. On a typical roof, the back side faces dark shingles a few inches away, so the extra output is small. Don't pay a big premium for bifacial panels on a standard rooftop.

See also: Panel efficiency, Racking, TOPCon

Buy-all/sell-all

An arrangement where all your solar output goes to the utility at a set rate and you buy all your power at retail.

Under buy-all/sell-all, using solar at home doesn't help directly, so savings depend entirely on the sell rate. Some utilities and co-ops use this setup. Compare the sell rate with your retail rate before assuming solar pays off.

Buyout

Paying to take ownership of a leased or PPA system before or at the end of the contract.

Buyout prices are set by the contract or by the provider's appraisal and can be higher than you expect. A buyout may be needed to sell your home if the buyer won't take over the lease. See solar lease buyouts.

C

Capacity factor

Actual yearly output divided by what the system would make running at full nameplate power every hour of the year.

Solar panels make nothing at night and less on cloudy days and at low sun angles, so the capacity factor is far below 100%. As a worked example, a 7 kW system at a 15% capacity factor makes about 7 × 8,760 hours × 0.15, or roughly 9,200 kWh a year. It is a quick sanity check on a production estimate.

CEC equipment list

The California Energy Commission's list of solar panels, inverters and batteries that meet testing and safety standards.

Many incentive programs require listed equipment. Being listed confirms basic certification, not superior quality. Installers should use listed equipment.

See also: Tier 1, PVEL Scorecard, Inverter

Community solar

A subscription to a share of an off-site solar farm that earns credits on your utility bill.

Community solar typically saves around 5% to 15% on the subscribed portion of your bill, with no installation. It's available in 24 states plus DC as of early 2025. Check contract length and cancellation terms, and try our community solar calculator.

Continuous power

How much power (kW) a battery can supply steadily, which limits what appliances can run at once.

A battery with plenty of kWh but low continuous power may not run an air conditioner or well pump. Check both continuous and peak (surge) power ratings. See our battery calculator.

Cooling-off period

A short legal window, usually three business days for door-to-door sales, to cancel a contract without penalty.

The FTC's Cooling-Off Rule covers many sales made at your home, and some states give more time for solar. Be wary of anyone asking you to waive it or rushing installation to start. See how to cancel a solar contract.

D

DC/AC ratio and clipping

The panels' DC size divided by the inverter's AC rating. Above 1, the inverter caps, or clips, output on the sunniest hours.

Ratios often around 1.1 to 1.3 are normal and usually cost-effective, because panels rarely hit full nameplate output. A small amount of clipping on the brightest days is fine. A very high ratio can waste meaningful energy, so ask whether the production estimate accounts for clipping.

Dealer fee

A hidden charge a lender adds to a solar loan to pay for a low advertised interest rate.

The CFPB found dealer fees typically run 10% to 30% of the cash price and sometimes over 50%. A $30,000 system with a $9,000 fee becomes a $39,000 loan. Always ask for the cash price and use our dealer fee calculator.

Degradation

The slow yearly decline in a panel's output as it ages, typically around 0.5% per year for modern panels.

At 0.5% per year, a system makes about 88% of its first-year output in year 25. NREL fleet data found a median of about 0.75% per year for real systems, higher in hot climates. A savings projection should include degradation, and the panel's performance warranty tells you the maximum the maker will accept.

Demand charge

A fee based on your highest power use (kW) during a billing period, not on total energy (kWh).

Demand charges are common for businesses and appear on some residential rates. Solar alone may not lower them much, since one cloudy evening spike sets the charge. A battery and spreading out big loads can help. Check whether your current or required solar rate includes one.

Depth of discharge (DoD)

How much of a battery's total capacity is used before recharging, shown as a percentage.

Some batteries limit DoD to protect battery life. Usable capacity already accounts for DoD limits. Regularly draining a battery deeply can shorten its life.

Discount rate

The yearly rate used to convert future dollars into today's dollars, reflecting what your money could earn elsewhere.

A higher discount rate makes long-term savings worth less today, which hurts solar's NPV. Many people use their loan rate or expected investment return. See our methodology for the defaults we use.

Discounted payback

Payback period calculated after discounting future savings to today's dollars.

Discounted payback is always longer than simple payback because future savings are worth less today. It better reflects what you give up by tying up money in solar. See solar payback period.

Domestic content bonus

An extra 10 percentage points of Section 48E credit for projects using enough U.S.-made steel, iron and manufactured parts.

To qualify, the U.S.-made share of manufactured products must be at least 50% for construction starting in 2026 and 55% after. It applies to providers of leases and PPAs, not to homeowners buying their own system. It doesn't mean the equipment is better.

E

Escalator

A clause that raises your lease or PPA payment by a fixed percentage every year.

Escalators of 0.99% to 2.99% a year are common, and 0% options exist; a 2.9% escalator raises a $150 payment to about $300 by year 25. U.S. electricity rates rose about 3.1% a year from 2005 to 2025 but only about 0.5% a year after inflation, so an escalator can outpace your utility. See escalator clauses.

Export credit

The value your utility gives you for each kWh your solar sends to the grid.

Export credits range from the full retail rate under net metering to a few cents under avoided-cost programs. This single number can change solar savings more than panel choice does. Make sure any quote uses your utility's real export rate, not your retail rate.

F

Federal solar tax credit (ITC / Section 25D)

The former 30% federal tax credit for homeowner-owned solar. It ended for systems whose installation completed after December 31, 2025.

If you buy solar with cash or a loan and installation finishes in 2026, the federal credit is $0. Paying a deposit in 2025 doesn't count, because the test is when installation is completed. A salesperson promising a 30% credit on a purchased system in 2026 is wrong. See the federal tax credit in 2026.

FEOC (foreign entity of concern) rules

Federal rules that deny clean energy credits if too much of a project's equipment cost comes from prohibited foreign entities.

For lease and PPA systems starting construction in 2026, at least 40% of solar equipment cost (55% for storage) must come from non-prohibited sources. The thresholds rise each year. This mostly affects what equipment providers can use, and it may affect lease and PPA prices.

Fixed charge

A flat monthly fee on your electric bill that you pay no matter how much electricity you use.

Solar can't reduce a fixed charge, so even a 100% offset leaves a bill. Fixed-charge increases were among the most common state utility actions in 2026. Higher fixed charges lengthen solar payback.

Flashing

The waterproofing piece that seals each spot where a solar mount passes through your roof.

Each mount is a hole in your roof, and flashing is what keeps water out for decades. Good installers use flashing systems approved for your roof type. Ask how penetrations are sealed and who pays if one leaks.

G

Generator interlock

A device that prevents your main breaker and generator breaker from being on at the same time.

An interlock lets a portable generator safely power your panel during outages. It's often a cheaper backup option than a battery. See generator vs battery backup.

Grid-tied system

A solar system connected to the utility grid, the most common setup for homes.

Grid-tied systems rely on the grid at night and for extra power, and send surplus solar back. Without a battery, they shut off during outages. See off-grid vs grid-tied.

H

HELOC (home equity line of credit)

A revolving loan secured by your home's equity, sometimes used to pay for solar instead of a solar loan.

The national average HELOC rate was about 7.34% as of mid-October 2026, per Bankrate. A HELOC usually has no dealer fee, but rates are often variable and your home is collateral. Compare it with other financing options.

Heterojunction (HJT)

A solar cell design that layers thin amorphous silicon over crystalline silicon, known for strong heat performance.

HJT panels usually have very good temperature coefficients, which helps in hot climates. They often cost more per watt than TOPCon. Whether the premium pays off depends on your climate and roof space.

Hybrid inverter

An inverter that handles both solar panels and a battery, so one box manages charging, discharging and grid power.

A hybrid inverter can make adding a battery simpler and cheaper, either now or later. If you never add a battery, you may have paid extra for nothing. Ask whether the inverter can back up your home in an outage, since not all can.

Hybrid system

A grid-tied solar system with a battery that can also provide backup power during outages.

Hybrid systems combine the savings of grid-tied solar with outage protection. They cost more, so weigh backup value against price. See best home batteries.

I

Interconnection

The utility's application and approval process for connecting your solar system to the grid.

Your installer usually files the interconnection application, and the rules depend on your utility. The date your application is filed can decide which net metering rules you get, which matters when a state is changing policy. Ask when it will be submitted. See interconnection and PTO.

Internal rate of return (IRR)

The yearly return solar earns on your money, comparable to an interest rate.

IRR lets you compare solar with paying down a mortgage or investing. It is sensitive to the same assumptions as NPV. A high IRR built on very optimistic rate increases is not reliable.

Inverter

The device that converts the panels' DC electricity into AC electricity your home and the grid can use.

The inverter is the part most likely to need replacement during a system's life. String inverters typically last 10 to 15 years, while microinverters often carry 25-year warranties. Budget for a replacement or check that the warranty covers labor. See our inverter guide.

Islanding

When a home system keeps powering itself while disconnected from the grid during an outage.

Standard grid-tied solar shuts off in an outage to protect line workers. A battery with the right equipment can island safely and keep power on. Solar without a battery usually won't help in a blackout.

K

Kilowatt (kW)

A unit of power: how fast electricity is made or used at one moment. 1 kW equals 1,000 watts.

Solar systems are sized in kilowatts, such as a 7 kW system. Power is a rate, not an amount, so kW alone tells you nothing about your bill. What you pay for is energy, measured in kilowatt-hours. Mixing up the two is one of the most common ways quotes confuse people.

Kilowatt-hour (kWh)

A unit of energy: 1 kW of power used for one hour. Your electric bill charges you per kWh.

A 1,000-watt microwave running for an hour uses 1 kWh. Your bill lists monthly kWh use and a production estimate is stated in kWh per year, so comparing the two shows how much of your usage a system could cover. The U.S. residential average price was about 18.3 cents per kWh in July 2026, per EIA.

Kilowatt-peak (kWp)

A system's DC size: the panels' combined rated output under standard lab test conditions, not real-world output.

A system with twenty 400 W panels is 8 kWp, or 8 kW DC. Quotes usually price on DC size, but the inverter's AC rating can be lower, and real output on a roof is almost always below the nameplate. Check which size a quote uses before you compare price per watt, because a price on AC watts looks higher than the same price on DC watts.

L

Levelized cost of energy (LCOE)

The average cost of each kWh your solar system will produce over its life.

Divide total lifetime cost by total lifetime kWh, ideally discounted. Compare the result with what you'd pay your utility or a PPA provider per kWh. If your solar LCOE is higher than your expected export credit plus avoided usage, savings will be thin.

LFP (lithium iron phosphate)

A battery chemistry known for long cycle life and good thermal stability, common in newer home batteries.

LFP batteries are heavier for the same capacity, but that rarely matters at home. Many current home battery models use LFP. It's a good sign but not a reason to overpay.

Light-induced degradation (LID)

A one-time drop in panel output, often around 1%, during the first weeks or months in sunlight.

LID happens before normal yearly degradation starts. Many performance warranties allow a larger drop in year one for this reason. Good production estimates include a small first-year loss for it.

M

Main panel upgrade (MPU)

Replacing your home's main electrical panel so it can safely accept solar or battery connections.

Older or smaller panels often can't take solar without an upgrade, under an electrical code limit often called the 120% rule. An upgrade can add thousands of dollars and sometimes needs utility work. Make sure the quote states whether one is needed and included. See hidden electrical upgrades.

Microinverter

A small inverter mounted under each panel, so every panel converts its own power independently.

Microinverters limit shade losses to the affected panel, give panel-level monitoring, and often carry 25-year warranties. They usually cost more upfront, and any repair means a trip onto the roof. Compare them in our microinverters vs string inverters guide.

Minimum bill

The lowest amount your utility will charge each month, even if solar credits would push your bill lower.

A minimum bill limits how far solar can reduce your bill in low-use months. It works like a fixed charge for solar customers. Include it when checking a salesperson's savings estimate.

See also: Fixed charge, True-up, Net zero

Module-level power electronics (MLPE)

The umbrella term for microinverters and power optimizers: electronics attached to each individual panel.

MLPE improves shade tolerance, enables panel-by-panel monitoring and helps meet rapid shutdown rules. It also adds electronics on the roof that can fail and are costly to reach. Check the warranty length and whether it covers labor.

Monocrystalline

Panels made from single-crystal silicon. Nearly all residential panels sold today are monocrystalline.

Monocrystalline used to be the premium choice over polycrystalline, but it is now the standard. A salesperson calling it a special feature is describing almost every panel on the market. Compare model numbers, warranties and price instead.

See also: Panel efficiency, TOPCon, Tier 1

N

NABCEP certification

A professional credential from the North American Board of Certified Energy Practitioners for solar installers and designers.

NABCEP certification shows a worker passed exams and met experience requirements. It isn't required everywhere, and it doesn't guarantee good business practices. It's still a useful signal when comparing installers.

NEM 3.0 / Net Billing Tariff (NBT)

California's net billing rules for solar customers who applied to interconnect on or after April 15, 2023.

Under the NBT, exports are credited at hourly values from the Avoided Cost Calculator, which are usually far below retail. Customers who receive PTO from April 15, 2023 through December 31, 2027 lock their export prices for 9 years. A battery and right-sized system usually matter much more here. See our NEM 3.0 guide.

Net billing

A billing rule where power you export earns a credit below the retail rate, often based on the utility's avoided cost.

Under net billing, solar you use at home is worth much more than solar you export. That changes the best system size and makes batteries more attractive. California, Idaho Power and some Illinois utilities are examples of net billing as of 2026.

Net metering

A billing rule where each kWh you send to the grid earns a credit equal to the retail price you pay.

Full retail net metering makes the grid work like a free battery, which is why solar pays off fastest under it. Many states and utilities have moved to lower export credits, and policies can change after you install. Check your state on our net metering page.

Net present value (NPV)

The total value of all future savings and costs in today's dollars, minus what you pay upfront.

A positive NPV means solar is expected to beat your next-best use of the money at your chosen discount rate. NPV depends heavily on your assumptions about rates, export credits and system life. See undiscounted savings claims.

Net zero

Producing as much electricity as you use over a year, at least on paper.

Net zero energy rarely means a $0 bill, because fixed charges, minimum bills and lower export credits remain. Be skeptical of promises of no electric bill. See zero electric bill promises.

See also: Offset, Fixed charge, Minimum bill

NMC (nickel manganese cobalt)

A lithium-ion battery chemistry with higher energy density, used in many EVs and some older home batteries.

NMC packs more energy into less space but generally has a shorter cycle life than LFP. Check the warranty's throughput and years. It's still widely used and safe when properly installed.

Non-bypassable charges

Per-kWh charges that solar export credits can't offset, so you pay them on all grid power you use.

These charges fund things like public purpose programs and are common in California and some other states. They make each kWh you import cost more than your export credit. A savings estimate that ignores them is too rosy.

O

Off-grid system

A solar and battery system with no utility connection, which must supply all of a home's power.

Off-grid setups need large batteries and often a generator, making them far costlier than grid-tied systems. They make sense mainly where a grid connection is very expensive. See off-grid vs grid-tied.

Offset

The share of your yearly electricity use a solar system is expected to produce, usually shown as a percentage.

A system estimated to make 9,000 kWh for a home that uses 10,000 kWh a year has a 90% offset. A 100% offset does not mean a $0 bill, because fixed charges remain and exports may be credited at less than retail. Under net billing, a slightly smaller system that you use on-site can pay off better than a 100% offset.

Orphaned system

A solar system whose installer has gone out of business, leaving warranty and service gaps.

Equipment warranties from manufacturers may still apply, but workmanship coverage usually ends. You may need a new installer for repairs, often at full price. See what to do if your solar company went out of business.

P

PACE financing

Property Assessed Clean Energy: financing repaid through your property tax bill and secured by a lien on your home.

PACE liens can take priority over your mortgage, which can complicate selling or refinancing. Payments can raise your property tax bill sharply, and regulators have taken action against some PACE lenders. See PACE financing risks.

Panel efficiency

The share of sunlight hitting a panel that it converts to electricity. The 2025 median for U.S. home installs was 21.3%.

Higher efficiency means more watts from the same roof area, which matters when space is tight. It does not mean more value per dollar, so compare price per watt and warranties instead. On a large, unshaded roof, a slightly less efficient panel is often the better buy.

Payback period

How many years it takes for solar savings to equal what you paid for the system.

Simple payback divides net cost by yearly savings. It's easy to understand but ignores the time value of money and future costs like inverter replacement. Use our payback calculator.

Peak sun hours

The number of hours per day that equal full-strength sunlight (1,000 watts per square meter) at your location.

Five hours of weaker morning and afternoon light might add up to three peak sun hours. More peak sun hours means more kWh from the same panels, so the same system makes more energy in Arizona than in Washington State. Production models like PVWatts use local weather data, which is better than a single rule-of-thumb number.

Performance warranty

The panel maker's promise that output will stay above a set percentage of the original rating for a set number of years.

Typical performance warranties promise roughly 80% to 90% of original output after 25 to 30 years. They protect against unusually fast degradation, not against shade or poor installation. Proving a claim usually requires testing.

Performance-based incentive (PBI)

An incentive paid per kWh your system actually produces, rather than as a lump sum upfront.

PBIs reward systems that perform well, so production estimates and shading matter more. Payments may last 10 to 20 years and can change for new enrollees. Read the program rules for who receives the payments.

Permission to operate (PTO)

The utility's written approval to turn on your solar system after it passes inspection.

Until you get PTO, the system should stay off and saves you nothing, even if loan payments have started. PTO delays of weeks or months are common in some areas. Try to tie final payments to PTO, not just to installation. See PTO delays.

Permit

Official approval from your local building department to install solar on your home.

Permits ensure the system meets electrical and building codes. Unpermitted solar can cause problems with insurance, utility approval and home sales. Make sure your installer pulls permits before work begins.

Plug-in solar

Small solar kits that plug into a standard outlet, often sold as balcony solar.

Plug-in kits are cheap and don't need an installer, but they produce only a small amount of power. They are legal in some states, such as Utah and Maryland, and many others are considering rules as of 2026. See plug-in balcony solar.

Power optimizer

A box under each panel that tunes its output before sending DC power to a central string inverter.

Optimizers reduce shade losses and allow panel-level monitoring while keeping one central inverter. They add parts on the roof, and the central inverter may still need replacing before the panels wear out. They are a middle ground between plain string inverters and microinverters.

Power purchase agreement (PPA)

A contract where a company owns solar on your roof and you pay for each kWh it produces.

Your payments go up and down with production, rather than a flat monthly fee as in a lease. Compare the PPA rate with your utility rate, including any escalator, over the full contract. Use our lease vs buy calculator.

Prepaid lease

A solar lease where you pay most or all of the cost upfront instead of monthly.

Because providers can still claim the 48E credit, EnergySage found prepaid leases were about 39% cheaper per kWh than cash purchases in H1 2026. You still don't own the system, and you depend on the provider staying in business. Read the buyout and transfer terms closely.

Price per watt ($/W)

The total system price divided by its DC size in watts. The fairest single way to compare solar quotes.

A $24,000 quote for an 8 kW system is $3.00/W. LBNL found a median of about $3.0/W for cash purchases and $4.5/W for loan-financed systems installed in 2025, a gap consistent with hidden dealer fees. Always ask for the cash price so you can compare like with like. See what a good price per watt looks like.

Product warranty

The manufacturer's promise to repair or replace equipment that fails due to defects.

Panel product warranties commonly run 12 to 25 years and are separate from performance warranties. Check whether labor and shipping costs are covered, since roof work is expensive. See panel lifespan and warranties.

Production estimate

The installer's forecast of how many kWh your system will make in a year, usually for the first year.

Every savings number in a quote rests on this estimate, so it is worth checking. You can rerun it yourself with the free PVWatts model using the same size, tilt and direction, or with our production checker. An estimate well above PVWatts with no shading report behind it is a warning sign.

Production guarantee

A promise that your system will make at least a set amount of energy, with compensation if it falls short.

Read how shortfalls are calculated and paid; some guarantees only pay a low rate per kWh or exclude weather. A guarantee set well below the sales estimate offers little protection. See weak production guarantees.

Property tax exemption

A state or local rule that keeps the value solar adds to your home out of your property tax assessment.

Without an exemption, solar could raise your property tax bill each year. Many states offer one, but rules differ. Check your state page and see solar, property taxes and insurance.

R

Racking

The metal rails and mounts that attach solar panels to your roof or to a ground frame.

Racking rarely gets attention in a quote, but poor mounting is where roof leaks start. Ask which brand and attachment method will be used and whether it meets the roofing manufacturer's guidance. See our racking guide.

Rapid shutdown

An electrical code requirement that rooftop solar wiring can be quickly de-energized so firefighters can work safely.

The National Electrical Code requires rapid shutdown on rooftop systems, which is one reason panel-level electronics are now common. You don't choose whether to have it, but the method affects which equipment the installer uses. Your local inspector checks it.

Rate escalation

The assumed yearly increase in electricity prices used in solar savings projections.

U.S. residential rates rose about 3.1% a year from 2005 to 2025, but only about 0.5% a year after inflation, per EIA and BLS data. Quotes assuming 5% or more a year are likely inflating savings. See the real numbers in our electricity rate history tool.

Reamortization

When a loan's monthly payment is recalculated, usually upward, if you don't make an expected lump-sum prepayment.

Many solar loans assumed you would pay down about 30% using a federal tax credit, often around month 18 to 19. With 25D gone for 2026 installs, there's no credit to fund that payment, so the higher payment may arrive. See reamortization balloons.

Rebate

A one-time cash payment from a utility, state or program that lowers the cost of solar or batteries.

Rebate budgets often run out or close, so confirm the program is open and who receives the money: you or the installer. Make sure the quote shows prices before and after the rebate. Our incentives page lists programs by state.

Right of rescission

A federal right to cancel certain loans secured by your home within three business days.

Under the Truth in Lending Act, this applies to some home-secured credit, such as many HELOCs. It doesn't cover every solar loan, so read your documents. Use our contract cancellation tool.

Rollover credits

Unused export credits that carry forward from one month to the next on your bill.

Credits earned in sunny months can cover winter bills when rollover is allowed. At the end of the year, leftover credits may be paid out at a low rate or simply expire. That's one reason oversizing a system rarely pays.

See also: True-up, Net metering, Export credit

Roof penetration warranty

The installer's promise to repair leaks caused by the holes they drilled to mount your panels.

Leaks can appear years later, so the length of this warranty matters, and so does whether the company will still exist. Installing solar may also affect your existing roof warranty, so check with your roofer. If your roof is near the end of its life, see whether to replace it first.

Round-trip efficiency

The share of energy put into a battery that you get back out, after charging and discharging losses.

Home batteries often fall around 85% to 90%; Tesla lists about 89% for Powerwall 3. Lower efficiency means more lost energy and less savings from shifting solar. Check the spec sheet before buying.

S

Sales tax exemption

A state rule that removes sales tax from solar equipment purchases.

Where it applies, a sales tax exemption lowers the upfront price directly. Quotes in exempt states shouldn't include sales tax on equipment. Check your state page under /solar/.

Section 48E credit

A federal business tax credit that lease and PPA providers can still claim on residential solar and batteries.

Providers can generally claim 30% for solar placed in service by the end of 2027, or begun by July 4, 2026, if FEOC rules are met. Batteries remain eligible longer. You benefit only if the provider passes it through in a lower price, so ask whether your price depends on the credit.

Shading loss

Production lost because trees, chimneys, vents or nearby buildings block sunlight on the panels during part of the day.

Shade costs real money every year for the life of the system. A good installer measures it with a site survey or software and shows the result per roof face. If a quote ignores a large tree, ask for a shade report, and see our guide to inflated production estimates.

SMART program

Massachusetts' Solar Massachusetts Renewable Target: a fixed per-kWh payment for 20 years, on top of net metering.

Under SMART 3.0, the 2026 residential base rate was about 3 cents per kWh, with adders for low-income customers and storage. Rates reset each year, so check the current block. See Massachusetts solar.

Solar lease

A contract where a company owns panels on your roof and you pay a fixed monthly fee to use them.

Leases need little or no money upfront, and the provider handles maintenance. You don't own the system, payments often rise each year, and selling your home means transferring or buying out the lease. See is a solar lease a bad idea?.

SREC (solar renewable energy certificate)

A tradable certificate earned for each 1,000 kWh (1 MWh) your solar produces, sellable in some states.

SRECs exist in states with solar requirements for utilities, such as DC, Maryland, Pennsylvania and Ohio. Prices vary widely by state and over time, and some installers buy them upfront. Ask who owns the SRECs in your contract. Check our incentives page.

String inverter

One central inverter, usually on a wall near your electrical panel, that converts power from a whole string of panels.

String inverters are usually the cheapest option and easy to service, but shade or a problem on one panel can drag down the whole string. They typically last 10 to 15 years, and replacement often runs about $1,500 to $3,000. Paired with optimizers, they handle shade better.

System losses

All the ways real output falls below panel nameplate: dirt, wiring, heat, shade, mismatch, inverter conversion and downtime.

PVWatts uses default losses of about 14% before inverter conversion, which is a reasonable starting point for an unshaded roof. A quote that assumes almost no losses will overstate savings. Ask what loss figure the installer used.

T

Tax credit carryforward

Rolling an unused tax credit into future tax years when your tax bill is too small to use it all at once.

Homeowners who installed solar in 2025 or earlier can still carry forward unused 25D credit. The credit only reduces taxes you owe, so it is worth less than promised if your tax bill is small. A tax professional can confirm what you can use.

Temperature coefficient

How much a panel's power drops for each degree Celsius its cells heat above 25°C, shown as a negative percentage.

Typical modern panels fall roughly between −0.25% and −0.40% per °C. Panels on a summer roof can run far hotter than the air, so a lower (closer to zero) number helps most in hot climates. It is listed on the panel datasheet as the Pmax temperature coefficient.

Throughput warranty

A battery warranty limit based on total energy cycled through it, which can end coverage before the time limit.

Heavy daily cycling or VPP participation can use up throughput faster. Check both the years and the throughput cap in the warranty. Some warranties also guarantee a minimum remaining capacity.

Tier 1

A BloombergNEF list of panel makers considered bankable by lenders, not a measure of panel quality.

Tier 1 is about financial track record, not durability or performance. Salespeople often misuse it as a quality badge. See Tier 1 claims without model numbers.

Tilt

The angle of the panels from flat, in degrees. Most roof systems simply follow the roof pitch.

Tilt changes yearly output less than many people expect over the normal range of roof pitches. Very flat or very steep arrays lose some production, and flat panels also shed dirt and snow less well. Your production estimate should use the actual pitch of each roof face.

Time-of-use (TOU) rates and peak/off-peak hours

Electricity rates that cost more during set peak hours, often late afternoon and evening, and less during off-peak hours.

On TOU rates, when your solar produces matters as much as how much, because solar peaks at midday while peak prices often run into the evening. Shifting laundry, dishwashing and EV charging to off-peak hours saves money with or without solar. Exact hours vary by utility and season, so check your rate sheet and see time-of-use rates and solar.

TOPCon

Tunnel oxide passivated contact: a common n-type solar cell design that improved on older PERC cells.

TOPCon panels typically offer higher efficiency and slower degradation than older PERC panels, and they are now widely sold for homes. The cell type matters less than the specific model's warranty, test results and price. Look for the exact model number on your quote.

True-up

The annual settlement where the utility totals a year of charges and credits and sends you a final bill.

Some utilities bill solar customers monthly only for fixed charges, then settle energy charges once a year. A large true-up bill surprises many new owners, so it's wise to set money aside monthly. Ask your utility how and when your true-up works.

U

UCC-1 fixture filing

A public record a lender or leasing company files to claim the solar equipment on your property.

A UCC-1 is common with solar loans and leases. It can delay a home sale or refinance until it's removed or subordinated. Ask who files it and how to have it released when you pay off or sell.

See also: Solar lease, PACE financing, Buyout

Usable capacity

The amount of energy (kWh) a battery can actually deliver, which may be less than its total rated capacity.

Compare batteries by usable capacity, not total capacity. A 13.5 kWh usable battery can run a 1 kW load for about 13 hours, minus efficiency losses. See do solar batteries pay off.

V

Virtual power plant (VPP)

A program that pays you to let the utility or an aggregator draw on your home battery during high-demand events.

VPP payments can help a battery pay off. For example, ConnectedSolutions in Massachusetts, Rhode Island, Connecticut and New Hampshire paid about $275 per kW of average event performance as of 2026. Programs change and can be cut, so treat VPP income as a bonus. See do batteries pay off.

W

Workmanship warranty

The installer's promise to fix problems caused by how the system was installed, such as wiring or leaks.

Workmanship warranties typically range from a few years to 25 years. They are only as good as the company behind them, so check the installer's track record. If the installer goes out of business, the coverage usually ends with it.