Glossary and Related Solar Terminology


Alternative compliance payment (ACP)

In lieu of standard means of compliance with renewable portfolio standards, electricity suppliers can make alternative compliance payments to compensate for deficiencies (in megawatt-hours) between the amount of electricity from renewable resources mandated and the amount actually supplied. Payment amounts vary among states.


A group of photovoltaic (PV) modules (also called solar panels) or solar thermal collectors.

Authority having jurisdiction (AHJ)

A federal, state, or local entity having statutory authority for approving equipment, an installation, or a procedure.

Avoided-cost rate

The cost per kilowatt-hour that a utility would have incurred by supplying electricity generated from its traditional sources.


Behind the meter

The location where a generating technology (such as a PV system) is connected to the electricity grid. A behind-the-meter PV system is connected between the utility meter and the facility using the electricity, so all electricity generated by the PV systems that is not being used by the facility flows through the utility meter to the grid.

Binomial tariff

A utility rate structure that includes both a fixed demand charge and a variable (per kilowatt-hour) energy charge.

British thermal unit (Btu)

The amount of heat required to raise the temperature of one pound of water from 60°F to 61°F at a constant pressure of one atmosphere. Water heat is commonly measured in British thermal units.

Build America Bond (BAB)

Build America Bonds are taxable municipal bonds that carry special tax credits and federal subsidies for either the bond issuer or the bondholder.

Building energy code

Establishes minimum energy performance features in buildings.

Building integrated photovoltaics (BIPV)

Standard PV modules, transparent modules, and thin-film covers and tiles are used to replace or enhance conventional building materials such as roofs, walls, facades, awnings, and skylights. These materials generate electricity from sunlight and perform other functions integral to the building's design.

Building integrated solar water heating (BISWH)

Similar to BIPV, BISWH incorporates solar water heating materials into traditional building materials.


A reduction in costs to the purchaser.


Capacity limit for individual systems

A limit placed on the capacity of individual PV systems, usually set to a certain percentage of a customer's energy load (e.g., 125%). Capacity limits can vary by utility type, solar energy system type, or customer type.

Carbon dioxide (CO2)

A colorless, odorless, noncombustible gas present in the atmosphere. CO2 is formed by the combustion of carbon and carbon compounds (e.g., fossil fuels, biomass); by respiration, which is a slow combustion in animals and plants; and by the gradual oxidation of organic matter in the soil. Considered a greenhouse gas that contributes to global warming. See also emissions.


An intensive planning session during which citizens, designers, and others collaborate on a vision for development. Provides a forum for ideas and gives immediate feedback to the designers. Allows everyone who participates to be a mutual author of a development plan.

Clean renewable energy bond (CREB)

Special-purpose tax credit bonds that provide the equivalent of an interest-free loan for certain qualifying energy facilities. Bondholders receive a tax credit on federal income taxes instead of an interest payment from the bond issuer.

Concentrating solar power (CSP) system

Technologies that use mirrors or other highly reflective materials to capture and concentrate sunlight onto receivers. The receivers convert the solar energy to thermal energy, which can then be used to generate electricity via a steam turbine or a heat engine that drives a generator. CSP systems fall into three basic categories—parabolic trough, dish-engine, and power tower.

Credit multiplier

A credit multiplier for solar offers additional credit toward compliance with a renewable portfolio standard for energy derived from solar resources.

Code official

A local government employee who enforces codes and standards, ensuring that solar energy system installations meet applicable safety, building, electrical, and plumbing codes.

Commercial energy conservation ordinance (CECO)

A regulation requiring commercial property owners to complete certain energy conservation measures in buildings upon transfer of property ownership or when additions or renovations are made.

Customer aggregation program

A program that coordinates group purchases of solar energy systems, helping defray some of the up-front costs of solar installations by giving aggregated individuals or businesses a discounted rate for bulk purchases of solar energy systems.

Customer generator

Utility customer that generates electricity on his or her property using a distributed generation technology such as P V.

Customer-sited distributed generation

Distributed generation technologies like PV installed on a utility customer's property.


Demand charge

A charge incurred by a utility customer in return for the utility having built adequate generating capacity to supply the power needed for a facility (e.g., a manufacturing plant) to operate at its maximum capacity.

Direct incentive

Cash given back to consumers for a qualified solar installation. Direct incentives include up-front rebates and grants and production-based incentives that are typically distributed over several years.

Distributed generation (DG)

Electricity production that takes place on site (or close to the load center) and is interconnected to the utility's electric distribution system.


Electric capacity

The amount of electricity-generating resources a utility must supply to meet the demands of a particular facility or region.

Electricity distribution system

The portion of the electricity grid that distributes lower voltage electricity from high-voltage transmission lines to individual homes and businesses.

Electric utility

A corporation, agency, authority, or other legal entity aligned with distribution facilities for delivery of electricity primarily for use by the public. Investor-owned electric utilities, municipal and state utilities, federal electric utilities, independent system operators, and rural electric cooperatives are included.


In the context of global climate change, emissions refer to a release of greenhouse gases into the atmosphere (e.g., CO2, methane, and oxides of nitrogen).

Energy audit

A survey that determines the amount of energy used in a home, which helps identify ways to use less energy.

Energy conservation mechanism (ECM)

A training program, facility improvement, or equipment purchase used to reduce energy or operating costs in a building.

Energy services company (ESCO)

A company that offers energy management services to reduce a client's utility costs. Cost savings are often split with the client through an energy performance contract or a shared-savings agreement.

Energy service performance contract (ESPC)

An agreement between a building owner (or facilities manager) and a private energy services company that uses future energy savings to pay for the entire cost of a building's electricity and energy efficiency retrofits.

Environmental justice

The fair treatment and meaningful involvement of all people, regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies.

Expected performance rebate

A cash incentive based on the expected energy output from a solar energy system over a given period.

External utility-accessible AC disconnect switch

A hardware feature that enables a utility employee to manually disconnect a customer-owned PV system (or other type of generation) from the electricity grid.


Federal investment tax credit

A credit against federal income taxes, usually computed as a percentage of the cost of investment in solar energy assets. The federal investment tax credit for installing solar energy systems is set at 30% of the installed system cost, and expires in 2016.

Feed-in tariff (FIT)

A renewable energy policy that typically offers renewable energy project developers a guaranteed payment for electricity produced by their renewable energy system over a fixed period, usually 15 to 20 years.


General fund

The primary operating fund of a governmental entity, usually in place to support operating expenditures.

Generating capacity

The amount of power-generating resources a utility can supply to meet the demands of a particular facility or region.

Geothermal system

Hot water or steam extracted from geothermal reservoirs in the earth's crust and supplied to turbines that drive generators to produce electricity.

Gigawatt (GW)

A unit of power equal to 1 billion watts, 1 million kilowatts, or 1,000 megawatts.

Greenhouse gas

Atmospheric gases that absorb and emit radiation. Common greenhouse gases in the earth's atmosphere include water vapor, CO2, methane, oxides of nitrogen, ozone, and chlorofluorocarbons.

Green pricing

A mechanism for utility customers to support their utility's investments in renewable energy projects via direct charges on their monthly utility bills. Green pricing is a market-based solution to account for the nonmarket (environmental) benefits of renewable energy.


IEEE 1547

IEEE was originally an acronym for the Institute of Electrical and Electronics Engineers, Inc. Today, the organization's scope has expanded to include so many related fields that it's simply referred to as IEEE ("I-triple-E"). IEEE 1547 is the Standard for Interconnecting Distributed Resources with Electric Power Systems.


The process of connecting an electricity-producing technology (such as a PV system) to the electricity grid.

Interconnection agreement

An agreement between a utility and a customer that specifies the terms and conditions under which solar electric systems or other approved customer-owned generation will be connected and operated.

Interconnection standard

A technical, legal, and procedural requirement that customers and utilities must follow for connecting any customer's PV system to the grid.

Installation baseline

An accounting of all existing solar energy installations.

Installation target

A goal set for installing solar energy systems in a community by a specific date. A solar installation target often is set to achieve broader environmental, climate, or sustainability goals.

Installed capacity

Usually measured in terms of size (e.g., in kilowatts or megawatts for PV), the total capacity of solar energy systems operating in a given region or sector.

Investment tax credit (ITC)

A tax incentive that allows businesses or homeowners to deduct a specified percentage of investment costs for solar energy systems from their tax liability.


Kilowatt (kW)

A standard unit of electrical power equal to 1,000 watts.

Kilowatt-hour (kWh)

A unit of energy; 1,000 watts acting over 1 hour.


Levelized cost (of energy) (LCOE)

A means of calculating the cost of generating energy (usually electricity) from a particular system that allows comparison of the cost of energy across technologies. LCOE factors in the installed solar energy system price and associated costs like financing, land, insurance, and operations and maintenance.

Leadership in Energy and Environmental Design (LEED)

Operated by the U.S. Green Building Council, LEED is a voluntary, consensus-based national rating system for developing high-performance sustainable buildings.


The amount of power (amps) consumed by an electrical circuit or device. Loads are usually expressed in amps, sometimes in watts.


Megawatt (MW)

The standard measure of electric power plant generating capacity equal to 1,000 kilowatts (1 million watts).

Megawatt-hour (MWh)

A unit of energy; 1,000 kilowatt-hours or 1 million watt-hours

Metric ton of carbon dioxide equivalent (MtCO2e)

The standard measurement of the amount of CO2 emissions reduced or secluded from the environment.

Municipal bond

A type of bond issued by state and local governments, generally to finance capital-improvement projects.


Net metering

A billing mechanism that credits solar energy system owners for the electricity exported to the electricity grid. Under the simplest implementation of net metering, a utility customer's billing meter runs backward as solar electricity is generated and exported to the electricity grid and forward as electricity is consumed from the grid.


Passive solar

Using building design elements and energy efficient materials to collect, store, and distribute solar energy. Unlike active solar systems, passive solar designs don't need mechanical or electrical devices to move the heated or cooled air. Passive solar features can be designed into new buildings or retrofitted onto existing structures.

Peak sun hours

The equivalent number of hours per day when solar irradiance averages 1,000 watts per square meter.

Permitting incentive

Incentive that reduces or waives local permit fees, plan check fees, design review fees, or similar charges that consumers and businesses could otherwise incur when installing a solar energy system.

Photovoltaic (PV) system

A set of components that converts sunlight into electricity. Comprises the solar modules or array that captures the sunlight, along with balance-of-system components such as the array supports, electrical conductors/wiring, fuses, safety disconnects and grounds, charge controllers, inverters, and battery storage.

Production-based (or performance-based) incentive (PBI)

A cash payment to project owners based on electricity production on a dollar-per-kilowatt-hour basis over a specified period.

Project developer

A company that provides services for solar installations including planning, organizing, executing, and managing resources for installation projects.

Property assessed clean energy (PACE)

PACE financing is a way to finance solar systems or energy efficiency retrofits, where the city offers property owners a loan and they pay it back through their property tax bills over 15 to 20 years. The amount borrowed is typically repaid via a special assessment on property taxes, or another locally collected tax or bill such as utility bills or water or sewer bills. If a property owner participating in a PACE program sells the property, then the repayment obligation will legally transfer with the property.

Property tax incentive

An exemption, abatement, or credit that mitigates or eliminates the increase in taxes owed resulting from an increase in assessed value of a property resulting from the value added by solar energy installations, or that provides an additional incentive to invest in a solar installation.

Power purchase agreement (PPA)

A legal contract between an electricity generator and an electricity purchaser. Solar PPAs typically provide a long-term contract to purchase electricity generated from a solar installation on public or private property. A type of third-party ownership model.

Public benefits fund

A fund dedicated to supporting renewable energy and energy efficiency projects. The fund is typically financed through a small charge on the bill of utility customers (sometimes referred to as a system benefits charge) or through specified contributions from utilities, although other means of funding like legislative appropriations are possible.


Qualified energy conservation bond (QECB)

A qualified tax credit bond that is similar to a new CREB. Can be used by state, local, and tribal governments to finance certain types of energy projects.

Qualified school construction bond (QSCB)

Bonds authorized by the federal government through the American Recovery and Reinvestment Act of 2009. The bonds provide federal tax credits for bond holders in lieu of interest, to significantly reduce an issuer's cost of borrowing for public school construction projects.

Qualified zone academy bond (QZAB)

Financial instruments designed to help schools raise funds to renovate and repair buildings, invest in equipment and up-to-date technology, develop challenging curricula, and train quality teachers.


Radial electric distribution system

The dominant electric distribution system in the United States; electricity is supplied from a single source and there are no closed "loops" in the system.

Real-time pricing (RTP)

The instantaneous pricing of electricity based on the cost of the electricity at the time it's used by a utility customer. RTP rates are volatile and are generally very high when demand for electricity is high.


A cash incentive issued to a purchaser of a solar energy system to help defray the up-front cost of installing the system.

Renewable energy certificate or credit (REC)

A REC represents the property rights to the environmental, social, and other nonpower qualities of renewable electricity generation. A REC and its associated attributes and benefits can be sold separately from the underlying physical electricity associated with a renewable-based generation source. Solar RECs are sometimes called SRECs.

Renewable energy certificate (REC) marketer or aggregator

A REC marketer or aggregator buys RECs at wholesale prices and sells RECs at retail; similar to a commodities dealer.

Renewable energy certificate (REC) trading mechanism

An exchange for trading RECs; similar to how the New York Stock Exchange is used for trading shares in companies.

Renewable energy

Energy coming from resources that naturally replenish themselves and are virtually inexhaustible. Such resources include biomass, hydropower, geothermal, solar, wind, ocean thermal, and wave and tidal action.

Renewable portfolio standard (RPS)

A mandate requiring that renewable energy provides a certain percentage of total energy generation. The mandate is sometimes referred to as a renewable electricity standard (RES).

Residential energy conservation ordinance (RECO)

A law that requires residential property owners to complete certain energy conservation measures in their buildings upon transfer of property ownership or when additions or renovations are made.

Revolving loan fund

A source of money from which loans are made. As loans are repaid, funds become available for new loans.


Sales tax incentive

An exemption from or refund of sales tax for purchasing and installing solar energy components and systems.

Secondary network distribution system

A type of electric distribution system that serves central business districts in many cities. Such systems contain multiple feeders and transformers to provide excellent service reliability and the capacity to serve large loads like high-rise buildings.

Service entrance capacity

The amount of power a building is designed to handle. A service entrance is the point at which electricity enters a building. A service entrance switchboard has metering equipment and devices for overcurrent protection and electrical control.


A mandate or goal for some fraction of a renewable portfolio standard to be met with designated technologies such as PV.

Solar access

The ability of one property or area to continue to receive sunlight without obstruction from a nearby home or building, landscaping, or other impediment.

Solar access permit

When a permit for installing a solar energy system is granted, a solar easement designed to protect a property owner's access to sunlight can be created. Local governments can also protect solar access by, for example, specifying certain setbacks in zoning ordinances that require buildings to be built far enough apart that they don't shade neighboring rooftops.

Solar aggregation purchasing program

See customer aggregation program.

Solar bulk purchasing

See customer aggregation program.

Solar Decathlon

An international competition between colleges and universities in which teams compete to design, build, and operate the most attractive, effective, and energy-efficient solar-powered house. The competition is sponsored by the U.S. Department of Energy and takes place every 2 years in Washington, D.C.

Solar easement

A type of solar access law that grants the owners of solar energy systems the right to continued access to sunlight without obstruction from a neighbor's property, and which limits future property developments that could restrict solar access.

Solar electricity

See photovoltaic system.

Solar energy

Electromagnetic energy transmitted from the sun (solar radiation). The amount that reaches the earth is equal to one billionth of total solar energy generated, or the equivalent of about 420 trillion kilowatt-hours.

Solar farm

A large-scale solar installation.

Solar installer licensing

Licensing requiring a baseline of quality below which operating as a solar installer is illegal.

Solar permitting process

A process for obtaining the appropriate permits to install solar. To install a grid-connected PV system, for example, the homeowner or builder must obtain an electrical permit and in some cases a building permit from the local government. The installation must also be inspected when complete. Solar water heating systems require a plumbing permit, and sometimes require a building or mechanical permit or both.


A solar-ready home or building is designed as if a solar energy system were to be installed during construction. Architects and builders take precautions to ensure a viable site for solar technologies by leaving adequate roof space that is free from vents, chimneys, and equipment; planning landscaping to avoid shading the unobstructed roof space in the future; planning extra space for equipment in mechanical rooms; preinstalling roof-mounting systems and conduit; and labeling structural reinforcements and end points of wires or pipes.

Solar resource

The amount of sunlight a site receives, usually measured in kilowatt-hours per square meter per day. See also peak sun hours.

Solar right law

A law or ordinance that furnishes protection for homes and businesses by limiting or prohibiting restrictions (e.g., neighborhood covenants and bylaws, local government ordinances, and building codes) on the installation of solar energy systems.

Solar site assessment

An evaluation of a site being considered for a solar energy installation. A trained solar site assessor collects data such as roof or property orientation and slope, dimensions of available installation space, electrical and plumbing configuration, and shading on the site location.

Solar space heating and cooling

Using solar energy to heat or cool indoor building spaces. In an active heating system, solar energy is collected and stored, then circulated into the building using either fans or pumps. Passive heating systems rely on design features and special materials in the walls or floors that absorb heat during sunny periods and release that heat when it's needed. Active solar space cooling systems fall into two categories: absorption chiller and desiccant systems. An absorption chiller uses solar heat to evaporate a fluid that removes heat. In a desiccant system, air passes over a common desiccant like silica gel to remove moisture, cooling the air. Solar thermal energy regenerates the desiccant by drying it out.

Solar thermal

Solar energy conversion technologies that convert solar energy to thermal energy (heat) used to heat water or generate energy for space heating and cooling in active solar space heating or cooling systems.

Solar ventilation preheating (SVP)

A technology that uses a south-facing wall made of dark sheet metal and perforated with tiny holes. The wall acts as a solar energy collector, drawing outdoor air through the holes and heating it as it passes through and absorbs the wall's warmth. The heated air rises in the space between the solar wall and the building wall and moves into the air-duct system, usually propelled by a fan, to heat the building or supplement a conventional heating system.

Solar water heating (SWH)

A technology that uses the sun to heat water directly or via a heat-transfer fluid in a collector. The heat-transfer fluid is chosen based on the local climate to prevent freezing. Most SWH systems need a well-insulated storage tank, and systems can either be active, which have circulating pumps and controls, or passive, which do not.


A market in which commodities are bought and sold for immediate delivery.


The result of preparing a building for future equipment installations. To prepare for solar electric systems, conduits are run through the building so wires can connect a PV system to an electrical panel. For solar water heating systems, open-ended pipes are placed in an accessible location to connect solar collectors to hot-water storage.

Sustainable solar infrastructure

The social, economic, policy, and physical networks and institutions that enable solar energy to be used as a mainstream energy source even in the absence of significant government subsidies.

System benefits charge

A small charge on a utility customer's bill, which supports public policy initiatives such as renewable energy and energy efficiency programs.

System capacity

The maximum expected energy production from a photovoltaic system.

System rating

A rating of the maximum power a solar energy system can produce under standard test conditions (STCs). Conditions are a solar irradiance of 1,000 watts per square meter, a temperature of 77° Fahrenheit, and an air mass of 1.5. Solar irradiance is measured in watts per square meter of light incident on Earth.



A document that lists the terms and conditions— including a schedule of prices—under which utility services will be provided. The document is approved by the responsible regulatory agency.

Tax abatement

A stay of tax payment granted by a taxing authority for a short term or long term, and for a total or percentage of the tax.

Tax exemption

An exemption from liability for taxes levied by a taxing authority.

Tax-exempt bond

A type of municipal bond that is a source of capital for solar projects. Can be either a general obligation bond, which is backed by the full taxing authority of the local government, or a revenue bond, which is backed by project revenue.

Tax-exempt commercial paper (TECP)

Short-term, unsecured debt that can be used to finance capital projects in between longer term municipal bond issuances.

Time-of-use (TOU) pricing (or tariff)

A rate schedule in which the utility customer is charged different amounts for power based on the time of day and the season. Typically, peak rates are during summer afternoons. Solar customers who generate power during peak rates are credited by the utility company at those peak rates.

Transmission and distribution loss

The energy lost when transporting electricity over long distances through the electricity grid's transmission and distribution systems from central generation plants to the point where electricity is consumed (homes and businesses).

True up

When a utility calculates the "net" consumption versus generation over a given period (month or year). Compensation for net excess generation often is limited to the amount of electricity used during the true-up time period. Monthly true-up cycles don't capture the actual value of a PV system's generation because excess generation in the summer (when PV is producing at its peak) is lost and consumption during winter (when PV systems are producing at their minimum) is charged.


Virtual net metering

An agreement under which dispersed individual ratepayers can draw electricity from a shared power grid. Allows all ratepayers to participate in renewable energy generation, no matter where the ratepayer's electric meter may reside.


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U.S. Department of Energy, Solar Glossary of Terms. - S. Accessed March 2010