Home Solar Glossary: 40 Terms You Need to Know

Solar quotes and installer conversations are full of technical terms that aren’t always explained clearly. Whether you’re just starting to research home solar or you’re deep into comparing quotes, having a reliable reference for the terminology can make the entire process far less confusing. Here are 40 essential terms, organized by category, to help you navigate any solar conversation with confidence.

Solar Basics

1. Photovoltaic (PV) — The technology that converts sunlight directly into electricity. «Solar panels» and «PV panels» refer to the same thing.

2. Solar Cell — The individual small unit within a panel that actually converts sunlight into electricity. Dozens of cells are wired together to form a single panel.

3. Solar Self-Consumption — Using the electricity your panels generate directly in your home, rather than exporting it to the grid. (See our full guide on how solar self-consumption works.)

4. Direct Current (DC) — The type of electricity solar panels initially produce. Must be converted to AC to power most home appliances.

5. Alternating Current (AC) — The type of electricity used by homes and the grid. Your inverter converts your panels’ DC output into usable AC power.

6. Peak Sun Hours — A measurement of how much usable sunlight a location receives daily, used to estimate solar production. Not the same as total daylight hours.

System Types and Components

7. Grid-Tied System — A solar system connected to the utility grid, with no battery. The most common and affordable residential setup. (See our comparison of grid-tied vs. off-grid vs. hybrid systems.)

8. Off-Grid System — A solar system with no utility grid connection, relying entirely on battery storage.

9. Hybrid System — A grid-connected solar system that also includes battery storage, offering both bill savings and backup power.

10. Inverter — The device that converts DC electricity from your panels into usable AC electricity for your home.

11. String Inverter — A single, central inverter that converts power for an entire group («string») of panels together.

12. Microinverter — A small inverter installed on each individual panel, allowing panels to operate independently of one another.

13. Power Optimizer — A device that works alongside a string inverter, optimizing each panel’s output individually without the full cost of microinverters.

14. Racking/Mounting System — The hardware that physically secures panels to your roof or the ground.

15. Monocrystalline Panels — Solar panels made from a single silicon crystal structure, generally the most efficient and most common residential panel type.

16. Polycrystalline Panels — Solar panels made from multiple silicon fragments melted together, typically slightly less efficient and less expensive than monocrystalline.

17. Bifacial Panels — Panels that can capture sunlight on both their front and back sides, often used in ground-mount or elevated installations.

Battery and Storage Terms

18. Battery Storage — A device that stores excess solar electricity for later use, such as overnight or during an outage.

19. Depth of Discharge (DoD) — The percentage of a battery’s total capacity that can be used before it needs recharging, without shortening its lifespan.

20. Backup Power / Whole-Home Backup — The ability of a battery system to power some or all of a home’s circuits during a grid outage.

21. Kilowatt-Hour (kWh) — A unit of energy representing one kilowatt of power used or produced over one hour. Your electricity usage and battery capacity are both measured in kWh.

Sizing and Production Terms

22. Kilowatt (kW) — A unit of power representing a system’s rated capacity or output potential at a given moment, distinct from kWh, which measures energy over time.

23. System Size — The total rated capacity of a solar installation, expressed in kW, based on the combined wattage of all panels. (See our full guide on system size vs. actual usage.)

24. Production Estimate — A projection, usually in annual kWh, of how much electricity a proposed system is expected to generate based on location, orientation, shading, and panel specifications.

25. Degradation Rate — The gradual, expected decline in a panel’s output over time, typically less than 0.5% per year for quality modern panels.

Billing and Incentive Terms

26. Net Metering — A billing arrangement that credits you for excess solar electricity exported to the grid, typically at or near the retail electricity rate. (See our full guide on how net metering works.)

27. Net Billing — Similar to net metering, but crediting exported electricity at a lower rate than retail, often closer to wholesale cost.

28. Time-of-Use (TOU) Rate — An electricity pricing structure where rates vary by time of day, often higher during peak evening demand.

29. Federal Solar Tax Credit — A federal incentive that has historically allowed homeowners to deduct a percentage of solar installation costs from their federal taxes; current eligibility and terms should always be confirmed for the applicable tax year, since federal solar policy has changed significantly in recent years. (See our guide on the current federal solar tax credit status.)

30. SREC (Solar Renewable Energy Certificate) — A tradable credit earned in certain states for the electricity a solar system generates, which can be sold separately from the electricity itself.

31. Interconnection Agreement — A formal agreement with your utility that authorizes your solar system to connect to the grid, typically required before your system can be turned on.

32. Permission to Operate (PTO) — The official authorization from your utility confirming your system has passed inspection and can be legally activated.

Cost and Financing Terms

33. Solar Loan — A loan specifically used to finance a solar installation, allowing the homeowner to own the system outright while paying it off over time.

34. Solar Lease — An arrangement where a third party owns the solar system installed on your home, and you pay a fixed monthly fee to use the electricity it produces.

35. Power Purchase Agreement (PPA) — Similar to a lease, but instead of a fixed monthly fee, you pay for the actual electricity the system produces, usually at a rate lower than your utility’s.

36. Payback Period — The amount of time it takes for a solar system’s cumulative savings to equal its total upfront cost.

37. Return on Investment (ROI) — A measure of a solar system’s overall financial value over its lifespan, factoring in savings, incentives, and costs.

Installation and Permitting Terms

38. Site Assessment — An evaluation (in-person or remote) of a home’s roof, shading, and electrical setup to design an appropriately sized solar system.

39. HOA (Homeowners Association) Approval — Authorization sometimes required from a homeowners association before installing visible home improvements, including solar panels, depending on local rules and state solar rights laws.

40. Solar Rights Laws — State-level laws that, in many cases, limit how much an HOA or local ordinance can restrict a homeowner’s ability to install solar panels.

Why These Terms Matter

Understanding this vocabulary isn’t just about sounding informed — it directly affects your ability to compare quotes accurately, ask the right follow-up questions, and spot potential red flags in a sales pitch. Terms like net metering versus net billing, or solar loan versus lease versus PPA, can represent thousands of dollars of difference in your long-term costs and savings, even when two proposals look similar on the surface.

The Bottom Line

Solar terminology can feel like a foreign language at first, but the concepts behind it are fairly straightforward once explained clearly. Keep this glossary handy as you read quotes, compare installers, or dig deeper into our other guides — and don’t hesitate to ask an installer to explain any term in a proposal that isn’t clear. A trustworthy installer should be happy to walk you through every line of your contract in plain language, not just technical jargon.