Solar & Energy Glossary: 2026 Terms Explained
Every guide and calculator on this site leans on a handful of terms that installers, utilities and the tax code use precisely — and sales pitches use loosely. Here is what each one actually means in 2026, in two or three sentences, with a link to the page where it matters most. Each entry has its own anchor, so you can link straight to a definition.
Billing and rates
Net metering
A billing arrangement where every kilowatt-hour your panels export to the grid earns a credit at the full retail rate — a kilowatt-hour out cancels a kilowatt-hour in, roughly 1-for-1. It’s the policy that made rooftop solar pencil out for two decades, and it’s steadily being replaced by less generous successors. See net metering explained .
Net billing
The successor policy replacing net metering in a growing list of states: your exports are credited at a lower wholesale “avoided-cost” rate — often 4–8¢/kWh — while you still buy grid power at full retail, which can be 30¢ or more. The gap between those two prices is what shrinks your savings and makes batteries matter. See net metering vs. net billing .
TOU (time-of-use) rate
An electricity plan where the price per kilowatt-hour changes by time of day — cheap overnight and midday, expensive in the evening peak, sometimes by a factor of two or three. TOU rates reward shifting big loads (EV charging, laundry, battery discharge) into the cheap hours. See the EV + TOU whole-home calculator .
Export credit
The value your utility assigns to each kilowatt-hour your solar system sends to the grid. Under net metering it equals the retail rate; under net billing or avoided-cost tariffs it can drop to a few cents, and in California it varies by the hour. This one number drives more of your payback math than panel efficiency ever will. See California’s NEM 3.0 explained .
Self-consumption
The share of your solar production you use in your own home instead of exporting to the grid. When export credits are weak, every kilowatt-hour you consume on-site is worth full retail while an exported one earns pennies — which is why batteries and load-shifting have become the main way to protect solar savings. See the home battery calculator .
kWh vs. kW
A kilowatt (kW) measures power — how fast energy flows at an instant, like the size of a solar system or the draw of an appliance. A kilowatt-hour (kWh) measures energy — one kW sustained for one hour, and the unit your utility actually bills. An 8 kW solar system might produce 11,000 kWh a year; confusing the two is the most common math error in solar quotes. See the electricity cost calculator .
Money and payback
Payback period
The number of years it takes for a system’s cumulative savings to equal what you paid for it — the single most useful measure of whether solar is worth it where you live. In 2026, with the federal residential credit gone, typical paybacks run from around 8 years in high-rate states to several decades in the cheapest-power states. See solar payback period in 2026 .
Dealer fee
A hidden markup — commonly 15–30% of the system price — that solar lenders charge installers to offer you a low advertised interest rate, and that installers roll into your quote. A “1.99% loan” on a system inflated by a 25% dealer fee usually costs more than a plain loan at a higher rate. Always ask for the cash price and the financed price side by side. See solar loan vs. cash .
TPO (third-party ownership: lease / PPA)
An arrangement where a company — not you — owns the panels on your roof: you either pay a flat monthly lease, or buy the power they produce at a set rate under a power-purchase agreement (PPA). In 2026 TPO is the only route by which a homeowner benefits from the surviving ~30% federal credit, because the owner claims the commercial §48E credit — but escalator clauses and transfer terms can eat the advantage. See solar lease vs. buy .
Incentives and tax credits
ITC (Investment Tax Credit)
The umbrella term for the federal tax credits worth a percentage of a clean-energy system’s cost. For homeowners the ITC meant the 30% residential credit (§25D), which ended December 31, 2025 — a 2026 cash or loan buyer gets $0 federal. The commercial version (§48E) survives, which is why the “30%” now only reaches homes through leases and PPAs. See which energy tax credits survive in 2026 .
§25D (Residential Clean Energy Credit)
The federal tax credit that paid homeowners 30% of the cost of purchased solar and home batteries. It expired for systems placed in service after December 31, 2025 — the test is when installation is completed, not when you signed or paid — so a 2026 cash or loan purchase earns $0 federal credit. Unused credit from a 2025 installation still carries forward. See energy tax credits in 2026 .
§48E (Clean Electricity Investment Credit)
The surviving commercial federal credit, worth roughly 30% to the business that owns a solar or battery system. Homeowners can’t claim it directly; it reaches your roof only through a lease or PPA, where the installer owns the equipment, claims the credit, and (ideally) passes part of it on through lower payments. See solar lease vs. buy .
§30C (EV charger credit)
The last consumer-facing federal energy credit to expire: 30% of a home EV-charger installation, capped at $1,000, for addresses in eligible (broadly low-income or non-urban) census tracts. It ended June 30, 2026 — equipment in service by that date is still claimed on that year’s return; later installs get $0. The EV purchase credits (§30D new, §25E used) had already ended September 30, 2025. See energy tax credits in 2026 .
SREC (Solar Renewable Energy Certificate)
A tradable certificate you earn for every 1,000 kWh (1 MWh) your panels produce, sellable for cash in the handful of states whose clean-energy rules include a solar carve-out. Prices range from roughly $350–$400 in Washington DC down to single digits in Pennsylvania, and several states have swapped open trading for fixed-payment successor programs. It’s income on top of bill savings — but local, variable, and taxable. See SRECs explained .
DSIRE
The Database of State Incentives for Renewables & Efficiency — the standard public registry of every state, local and utility energy incentive in the US, run by the NC Clean Energy Technology Center. It’s the primary source this site (and most honest research) uses to verify what your state actually offers. See solar incentives by state .
Equipment efficiency ratings
COP (Coefficient of Performance)
How much heat a heat pump delivers per unit of electricity it consumes, at a given moment: a COP of 3 means three units of heat out for one unit of power in — 300% “efficient,” which is how heat pumps undercut gas even at higher electricity prices. COP falls as outdoor temperature drops, which is why cold-climate performance matters. See the heat pump vs. furnace calculator .
HSPF2
The seasonal heating efficiency rating for heat pumps under the tougher test procedure adopted in 2023 — total heat delivered over a season divided by electricity used. Higher is better; today’s units run from the 7s (baseline) into the 9s and above (high-efficiency), and HSPF2 numbers read lower than the old HSPF scale, so don’t compare across the two. See the dual-fuel switchover calculator .
SEER2
The seasonal cooling efficiency rating for air conditioners and heat pumps under the same revised 2023 test — cooling delivered per unit of electricity across a season. Federal minimums sit around 14.3–15.2 depending on region, and high-efficiency units reach the 20s; a higher SEER2 mostly pays off where summers are long and rates are high. See the electricity cost calculator to price the difference.
Sources: U.S. Energy Information Administration (EIA) electricity rates · DSIRE incentive records · public IRS/OBBBA guidance. Figures are modeled estimates, not quotes or tax advice. See our methodology.