PV - Photovoltaic; pertaining to the ability to convert electricity from light.
Module - A configuration of PV cells laminated between a clear superstrate and encapsulating surface. The term is typically used interchangeably with "panels."
Inverter - An electric device that converts direct current (DC) to alternating current (AC).
Kilowatt - A unit of power, 1000 Watts.
Kilowatt hour - Amount of work done or energy used when a kW of power works for an hour.
Incentive – Different utilities offer different incentives. Be sure the installer uses the correct incentive (visit utility links). Utility incentives also are classified as taxable income, so make sure the installer factors that into account when providing a cost breakdown.
Up Front Incentives (UFI) - Provides a customer a one-time payment based on their PV system size. Customers sign a credit purchase agreement with the utility typically for 20 years. The incentive is considered taxable income.
Distributed Generation (DG) - Renewable energy projects that generate power on the customer side of the meter. The generated energy is feed into the customer’s distribution system, and reduces the energy which registers on the utility revenue meter. Excess energy produced by the customer’s system is delivered through the customer meter to the utility (see net metering).
Net Metering - Offers bi-directional metering and allows a customer to first consume energy generated within their home and collect credit for the energy they send back onto the grid at a retail rate. If a customer overproduces over the span of more than a year, the excess credits may be transferred to a payment at the wholesale cost. This "true-up" occurs in October in the TEP service area.
Lease or Power Purchase Agreement (PPA) - Financial arrangement whereby a third party absorbs all the tax credits and incentives, then sells the solar electricity back to the homeowner at a specified rate that could be equal to or less than the cost they would normally pay for electricity. Leases can last 20 years and the host (customer) must have an excellent credit rating.
Avoided cost - The price you currently pay the utility for electricity (per kWh). How much you currently pay for electricity is an important factor when calculating the savings of a solar PV system. All rate plans have some fixed costs that are on the bill even if you are 100 percent solar. Be sure the installer uses the correct rate. The common residential rate in TEP service territory has an avoided cost rate of around $.10 per kWh.
Energy inflation rate - The year-to-year percentage increase in one's avoided cost rate. The rate at which the price of electricity from the utility will go up is very important when calculating the financial savings from solar energy. Historically, price increases from Southern Arizona utilities average 2 percent a year. Although rate increases and fuel costs may be more dramatic in the future, no one knows for sure. Therefore, ask to see the savings projections using historical inflation numbers. Just a 2 percent increase to the rate can make a big difference in projected savings.
Lease escalator -The year-to-year percentage increase in the price one pays for solar from a third party. A common practice in third-party financing is to add a yearly escalator onto the lease payments. This increase can range from 1 percent to 4 percent. A homeowner must be careful when engaging in an arrangement with an escalator because the lease rate of increase could be higher than the rate increase from the utility company. For example, if the escalator rate is 3.5 percent and the energy inflation rate is only 2.5 percent then savings could turn negative.
Insurance - New solar equipment is typically covered by homeowners insurance in case of vandalism, fire, etc. A medium to large residential solar PV system may require increasing the coverage limit. This may bring about a small increase in insurance rates.