Solar “Jargon”: What Every Potential Buyer Should Know

Solar jargon every buyer should know

Renewable forms of energy have been in the news a lot lately, and California has long led the country in solar energy usage. Solar energy offers potential cost savings and decreased reliance on the grid. If you’re a home or business owner, you might be wondering if switching to solar is the right move.

But what exactly is a “Power Purchase Agreement”? Is it better than purchasing your own equipment? You’re trying to make sense of all the information, but solar energy seems to have a language all its own!

Solar Energy Terminology

Even though we speak the language every day, we understand that solar energy jargon can be overwhelming for the average person. To make your research a little easier, we’ve identified the top 10 solar terms every potential buyer should know. Understanding these terms will help you make the best choice for your residential or commercial energy needs.


The solar panels create DC electricity and feed it through an inverter that converts it to AC electricity in real-time and then sends that electricity into your home’s electrical panel for your home to use.

Levelized Cost of Energy (LCOE)

The Levelized Cost of Energy helps you determine, “Am I going to get my money’s worth by switching to solar?” To calculate your LCOE, divide your out-of-pocket costs by the total amount of energy the system is expected to produce in its lifetime. Glazing over? Don’t worry. DC Solar breaks all of this down for you, showing you what your total costs are, what you’ll be saving each year, and how many thousands you can save over the life of your system!


Microinverters are small individual inverters about the size of an e-tablet, fastened to the back of each solar panel on your roof. The benefit of using microinverters versus a traditional inverter is that each panel is operating individually, maximizing your system’s production. They also make adding to your system in the future as your needs change a breeze.


There may be times when your solar panels produce more energy than you are currently using. Net-metering allows you to “store” your excess solar energy on the electric grid. Think of your utility as your “bank account” storing all your excess energy produced in the form of a credit, for later use.

Payback Period

Your payback period is the amount of time it takes for you to break even on your solar investment. 

Permission to Operate (PTO)

98% of residential solar systems are ” grid-tied” meaning once you get your system installed, the proper paperwork must be submitted to your utility to review and approve, once this is done they will grant you “Permission to Operate” meaning your system can be turned on and you will start producing your own electricity and receiving credits.

Power Purchase Agreement (PPA)

In a Power Purchase Agreement, a solar company installs panels on your home or business. The company owns the panels, and you pay a set rate for the energy. Terms of a PPA can vary, so what one company offers may be different than what another company offers. 

Solar Loan

If you’re not able to finance solar on your own, don’t worry! As the solar industry continues to grow rapidly so do the Solar financing options! Many banks and financial institutions offer several different options

Curious About Solar? Contact DC Solar Electric Today.

If you’re just learning about solar power, you probably have lots of questions. Please contact us for more information about solar terminology or any other questions you may have. We’ve been in the solar energy business for two generations and can answer any questions that come up. We look forward to hearing from you!

Interested in solar for your home or business?