Common Terms for Solar Energy

When getting into solar energy, you will come across many terms and acronyms that can be confusing. This article will explain the various terms and acronyms used when talking about solar energy. These terms can refer to individual components and parts of your solar energy system, all the way to specific government bodies or policies that deal with solar energy.

Solar Energy System Terms

These terms are used when talking about solar energy systems and the electrical systems of your home.

  • Arc-Fault Protection: Arc-Fault Protection is a safety measure that works by detecting the electric arcs that happen when there are loose connections in electrical wiring. This process is done by an arc-fault circuit interrupter (AFCI) or arc-fault detection device (AFDD) and is in-built into an inverter. 
  • Azimuth: The direction that your roof faces the sun. The azimuth of your solar energy system will be measured in degrees on a compass, relative to the direction of true north.
  • Ballasts: This is a method of securing solar panels by using concrete blocks.
  • Battery Bank: A battery bank is an array of interconnected battery units that function as one whole battery. This can either come with smaller backup banks or large banks for off-grid homes.
  • Building-integrated photovoltaic (BIPV): These are solar panels that are integrated with a building’s roof tiles. These tend to come in the form of solar shingles and aren’t mounted on a roof.
  • Inverter: An inverter is a component of a solar panel system that converts the direct current (DC) that your solar panels produce into alternating current (AC) that your home can use.
  • Kilowatt-hour (kWh): Is that standard unit for measuring electricity usage. You will typically see the kWh value of your monthly electricity usage on your utility bill.
  • Off-grid: This refers to a home or property that isn’t connected to the electrical grid. This often is the case with properties that don’t have proper access to a utility electrical grid. Off-grid homes generally have a solar energy system that also has long-lasting battery storage.
  • Photovoltaic (PV): This refers to a device that can generate electricity directly from sunlight. This is a result of the photovoltaic effect. The silicon solar cells in panels are photovoltaic devices.
  • Power rating: The power rating of a solar panel is the amount of power it can produce in watts each hour. This is meant to give you an idea of a panel’s performance in ideal conditions.
  • Racking: Racking is a mounting system that utilizes mounts, rails, and clamps to hold solar panels in place. These systems are used on both rooftop and ground-mounted 
  • Rapid Shutdown: Rapid shutdown is a mechanism built into your inverter that stops your solar energy system from working. It triggers when there is an issue with your home electrical system or solar energy system. 
  • Solar panel efficiency: This refers to the efficiency of a panel to convert sunlight into electricity. This tends to be around 15-20% although it can reach 42% in rare cases. Performance values tend to come from lab testing.
  • Solar-plus-storage: This refers to a solar energy system that also includes a battery to store excess energy. This storage is normally in the form of backup batteries such as Tesla’s PowerWall.
  • Thin-Film Solar Panels: Thin-film panels are flexible panels that can be laid out and easily installed. They also use photovoltaic cells and are much cheaper to manufacture because of their structure and size.
  • Tracking Systems: Tracking systems use motors to tilt solar panels to keep them facing the sun. This is to maximize the sunlight exposure that the panels can get.
  • Temperature coefficient: This refers to how well a solar panel functions at high temperatures. As the performance of solar panels can degrade at higher temperatures like most electronics.

Solar Incentives, Financing, and Policy Terms

There are also additional terms that are referred to when talking about solar energy. These terms cover the finances, incentives, and policies that are involved with solar.

  • Community solar: This is a solar energy system that serves as a power plant for more than one home. These can come in the form of solar gardens or a shared renewable energy plant.
  • Federal investment tax credit (ITC): The Federal Solar Tax Credit is the most well-known tax credit provided for solar energy. This tax credit can be claimed on your federal income taxes for a percentage of your solar photovoltaic (PV) system’s cost. The program provides a 26% tax credit for systems installed between 2020 – 2022, and 22% for systems installed in 2023.
  • Grid parity: This is the point where your solar energy system’s power generation reaches about the same amount as conventional resources like natural gas.
  • Levelized cost of energy (LCOE): The per-unit cost of energy from a solar energy system. LCOE is calculated by dividing the money you have paid for the system by the estimated total amount of energy the system will produce over its lifetime.
  • Net metering: This is a policy that gives you credits for the excess electricity generated by your grid-connected solar energy system. This is a way of storing the excess energy you generate to turn into useable credits. The credits are spent whenever your panels don’t produce enough electricity to fulfill your use and power is drawn from the grid.
  • Property-Assessed Clean Energy (PACE): This is a type of loan that is available to make energy efficiency and renewable energy improvements. It is paid back over time through a voluntary assessment of the property. It is available for commercial properties and residential properties.
  • Payback period: The time it takes to break even on your solar energy investment. The average payback period for solar homeowners in the U.S. is just over seven years.
  • Performance-based incentive (PBI): This is a financial incentive that pays a homeowner for how much energy their solar energy system produces. This amount is generally paid per kilowatt-hour generated by their system and is seen on feed-in tariffs.
  • Power purchase agreement (PPA): This is a type of lease contract, where you agree to pay the company a per kilowatt-hour rate for the electricity produced by the solar panels. Although you will not be able to take advantage of the incentives and benefits of the system.
  • PowerSaver: This is a program from the Federal Housing Administration (FHA) which provides loans for energy-saving home upgrades. Solar energy systems are also included in this program. 
  • Permission to operate (PTO):  This is the written authorization given by your utility company to interconnect your solar energy system to the electrical grid.
  • Solar lease: This type of lease contract involves paying a fixed monthly fee to install and rent the solar energy system. You will be able to benefit from the power savings while the installer will be able to claim any incentives on the system.
  • Solar lease escalator: This is a clause that is included in most leases and PPAs. It involves increasing payment rates by a fixed amount per year.
  • Solar loan: A specific type of loan that is provided by a bank, credit union, or specialty provider to finance your purchase of a solar energy system.
  • Solar renewable energy credit (SREC): This is an incentive that allows homeowners to earn SERCs for the energy their system generates. These SRECs can be sold in certain states for additional incomes.
  • Third-party owner (TPO): In a lease or PPA, the owner of the solar energy system (typically a solar corporation). By entering into a solar lease or PPA, you sign an agreement with the third-party owner.

Get started with solar energy today

If you are looking to start your transition to solar energy, we are here to help. Our website also has a free online estimate tool that generates a personalized report for you from a simplified questionnaire. That report will contain the potential savings you can net, and the cost of a solar energy system installed on your property. You can also contact us directly via phone at +1 (602) 363-8919 or via email at for more information regarding solar energy for your property.