Home Solar Glossary: 40 Terms You Need to Know

Researching home solar means running into a lot of unfamiliar terminology, often used casually by installers and sales reps who assume you already know what it means. This glossary breaks down the 40 terms you’re most likely to encounter, organized by category, so you can reference it as you work through quotes, contracts, and other guides on this site.

System Components

1. Solar panel (PV module): The physical panel made of photovoltaic cells that converts sunlight into direct current (DC) electricity.

2. Photovoltaic (PV) cell: The individual silicon-based unit within a solar panel that generates electricity when exposed to sunlight.

3. Inverter: The device that converts DC electricity from your panels into the alternating current (AC) electricity your home’s appliances use.

4. String inverter: A single, central inverter that converts electricity from a group («string») of panels connected together.

5. Microinverter: A small inverter installed on each individual panel, converting DC to AC at the panel level rather than centrally.

6. Power optimizer: A device installed at each panel that improves performance and monitoring, working alongside a central string inverter rather than replacing it entirely.

7. Battery (energy storage system): A device that stores excess solar electricity for later use, such as at night or during a power outage.

8. Racking/mounting system: The hardware that physically attaches panels to your roof or the ground, determining their tilt and orientation.

9. Monitoring system: Software and hardware that track your system’s real-time and historical energy production, usually accessible via an app or web portal.

How Solar Systems Work

10. Self-consumption: The portion of solar electricity your home uses directly, as it’s generated, rather than exporting to the grid.

11. Grid-tied system: A solar system connected to the utility grid, allowing you to draw power when needed and export excess production.

12. Off-grid system: A solar system with no connection to the utility grid, relying entirely on panels and batteries for power.

13. Hybrid system: A system that stays grid-connected but also includes a battery for storage and potential backup power.

14. Net metering: A billing arrangement that credits you for excess solar electricity exported to the grid, based on your utility’s specific rate structure.

15. Net billing: A variation of net metering where exported electricity is credited at a reduced rate rather than the full retail price.

16. Interconnection agreement: The formal agreement with your utility that governs how your solar system connects to and interacts with the grid.

17. Peak sun hours: A measure of solar energy availability in your location, representing the equivalent hours per day of maximum-intensity sunlight.

18. kW (kilowatt): A unit measuring your system’s rated capacity, or how much power it can produce under standard conditions.

19. kWh (kilowatt-hour): A unit measuring actual energy produced or consumed over time; this is what shows up on your utility bill.

20. System efficiency factor: An adjustment used in production estimates to account for real-world losses from wiring, inverter conversion, dust, and other factors.

Panels and Equipment Types

21. Monocrystalline panel: A solar panel made from a single continuous silicon crystal, generally offering higher efficiency at a higher price point.

22. Polycrystalline panel: A solar panel made from multiple silicon crystal fragments melted together, typically slightly less efficient but more affordable than monocrystalline.

23. Bifacial panel: A panel designed to capture sunlight on both its front and back sides, potentially increasing total output in certain installations.

24. Panel wattage: The rated power output of a single panel under standardized test conditions, typically between 350-450 watts for residential panels.

25. Panel degradation: The gradual, expected decline in a panel’s output over its lifespan, usually a small percentage per year.

Cost and Financing

26. Solar loan: A loan used to finance a solar purchase, where the homeowner owns the system outright and pays it off over time.

27. Solar lease: An arrangement where a third party owns the solar system and the homeowner pays a fixed monthly fee to use the electricity it produces.

28. Power purchase agreement (PPA): A financing arrangement where a third party owns the system and the homeowner pays only for the electricity actually produced, often at a set rate per kWh.

29. Cost per watt: A common way to compare solar quotes, calculated by dividing total system cost by system size in watts.

30. Payback period: The amount of time it takes for a solar system’s energy savings to equal its upfront cost.

31. Return on investment (ROI): A measure of the overall financial return a solar system provides over its lifetime, relative to its cost.

Incentives and Policy

32. Federal solar tax credit (Section 25D): A federal tax credit for residential solar installations; its availability and terms have changed significantly and should be verified for the current year.

33. State solar tax credit: A tax credit offered by individual states, separate from and often in addition to any federal incentive, with rules that vary widely by state.

34. SREC (Solar Renewable Energy Credit): A tradeable credit representing the environmental benefit of solar electricity generation, available in certain state markets, which homeowners can sometimes sell for additional income.

35. Rebate: A direct, often one-time payment or discount offered by a state, utility, or program to reduce the upfront cost of a solar installation.

36. HEEHRA (High-Efficiency Electric Home Rebate Act): A federal rebate program aimed at supporting home electrification upgrades, which can complement solar installations for some households.

Installation and Permitting

37. Permitting: The process of obtaining local government approval before installing a solar system, typically involving building and electrical permits.

38. Interconnection application: The formal request submitted to your utility for permission to connect your solar system to the grid.

39. HOA approval: Authorization from a homeowners association, where applicable, confirming that your planned solar installation complies with community rules.

40. Solar rights law: State-level legal protections that limit how much an HOA or local ordinance can restrict a homeowner’s ability to install solar panels.

How to Use This Glossary

This list covers the terms you’re most likely to encounter across quotes, contracts, and general research, but a few are worth flagging as especially important to get right before you sign anything:

• Net metering vs. net billing (terms 14-15) directly affects how much your exported solar electricity is actually worth, and it’s one of the most misunderstood distinctions among new solar shoppers.
• Solar loan vs. lease vs. PPA (terms 26-28) represent fundamentally different ownership and savings structures, not just different payment plans, and can lead to very different long-term outcomes.
• Federal and state tax credits (terms 32-33) are worth confirming directly for the current year, since incentive programs and eligibility rules can change with little notice.

The Bottom Line

You don’t need to memorize all 40 of these terms before getting a solar quote, but recognizing them when your installer or a contract uses them can help you ask better questions, spot potential red flags, and compare quotes more accurately. Bookmark this glossary and refer back to it as you work through the rest of your solar research.