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Solar glossary

Plain-English definitions of 0 solar terms you will see on quotes and inspection reports.

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kW versus kWh. A kilowatt (kW) is system size - how much power the array can produce at once. A kilowatt-hour (kWh) is energy over time - what your utility bills you for. A 12 kW system is a size; the kWh it generates per year depends on your location and roof.

Net metering. The arrangement under which your utility credits power you export to the grid. Full-retail net metering credits at the same rate you pay; other structures credit less. The rules are set by your state and utility.

Interconnection and permission to operate (PTO). Interconnection is the utility's approval to connect your system to the grid; PTO is the final green light to switch it on. These are separate from your building permit.

AHJ. Authority having jurisdiction - the city or county body that issues your permit and inspects the work. Dealer fee is the amount added to your system price to buy down a loan's interest rate. Escalator is the annual percentage increase built into many lease and PPA payments. PPA means you pay per kWh produced by a system someone else owns; a lease means a fixed payment for the equipment regardless of output.

Before you sign

Three rules for every term

  • Check size in kW, savings in kWh Quotes that only give you dollar savings and never the system size in kW are hard to compare. Ask for both.
  • Find out your export arrangement by name Ask your utility whether you would be on net metering, net billing, or an avoided-cost export rate.
  • Look for the escalator in any TPO contract It is often a single line deep in the agreement and it compounds over 20 to 25 years.
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kW is capacity - the size of the system. kWh is energy produced or consumed over time, which is what your utility bill measures. A larger kW system produces more kWh, but how many depends on your sun and roof.
The utility's final approval allowing you to switch on your grid-connected system. It comes after the local inspection and the interconnection agreement, and it is often the slowest step.
A charge the installer pays a lender in exchange for offering you a lower interest rate, then adds to your quoted price. Comparing the cash price to the financed price reveals it.
A lease is a fixed periodic payment for the use of the equipment. A PPA charges you per kWh the system actually produces. In both, a third party owns the panels on your roof.
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Who wrote and checked this

Written by

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Reviewed by

Michael Thompson

Senior Home Improvement Reviewer · 20 years

Senior technical reviewer.

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