What is the difference between kW and kWh in solar?

kW is power — the rate of production at a single moment. kWh is energy — total production over time. Your electric bill is in kWh. Solar system size is quoted in kW. Annual production is in kWh. Formula: kWh = kW × hours × efficiency × peak sun hours.

What is LCOE in solar?

Levelized Cost of Energy (LCOE) is your total lifetime system cost divided by lifetime electricity production, expressed as cents per kWh. Solar LCOE is typically 4–8¢/kWh — far below the US average utility rate of 13–30¢/kWh. It is the definitive metric for comparing solar economics to grid electricity.

What is NEM and how does it affect solar savings?

Net Energy Metering (NEM) is a utility billing arrangement that credits exported solar to your bill. Full retail NEM credits exports at the same rate you pay to import — the best arrangement. Avoided-cost NEM credits only 3–8¢/kWh for exports. California NEM 3.0 (2023) drastically reduced export rates, making batteries essential for new solar owners.

What is the ITC for solar in 2024?

The Investment Tax Credit (ITC) is 30% of total solar system cost through 2032 under the Inflation Reduction Act. It is a dollar-for-dollar federal tax reduction — not a rebate. On a $25,000 system, the ITC reduces your federal taxes by $7,500. Battery storage added at the same time also qualifies.

Solar Terms Glossary Calculator

20 solar terms with plain-English definitions and real-world impact for your system size. Filter by beginner, financial, technical, or advanced.

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PSH — Peak Sun Hours

beginner

Peak Sun Hours is the number of hours per day when sunlight intensity is strong enough to deliver the energy equivalent of 1,000 W/m² (full sun). A location with 5 PSH receives the energy of 5 hours of full-intensity sunlight, even if the sun is out for 12 hours.

Real-World Impact for Your 8 kW System

12,556kWh/yr

Annual production at 5.0 PSH for a 8 kW system

Why It Matters

PSH is the single most important factor in solar production. A system in Phoenix (6.5 PSH) produces 85% more than the same system in Seattle (3.5 PSH). Your PSH determines your system size and payback period.

Related Terms

20 terms total • 20 shown in current filter

How to Use This Glossary

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Use the scenario buttons to filter to the terms most relevant to where you are in your solar journey. Beginner Basics covers the 5 concepts every new solar buyer needs to know before talking to an installer. Financial Terms covers everything on your quote and contract. Technical Terms covers inverter types and system losses. Advanced covers the metrics used by solar analysts and sophisticated buyers.

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Choose any term from the dropdown to see its plain-English definition, real-world impact calculated for your specific system size, why it matters, and links to related terms.

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Enter your system size in kW to see how each concept affects your installation specifically — not a generic example. The impact figures recalculate instantly as you change your system size.

Explore related terms

Each term links to 2–3 related concepts. Use these to build a connected understanding of solar — concepts like PSH, kWp, degradation, and soiling all affect your annual production calculation in compounding ways.

All 20 Solar Terms at a Glance

Term	Category	One-Line Summary
PSH	Beginner	Hours of full-intensity sun — the key solar sizing metric
kWp	Beginner	Rated system capacity under lab conditions
DC vs AC	Beginner	Panels make DC; inverter converts to AC for your home
MPPT	Technical	Algorithm keeping panels at maximum power output
ITC	Financial	30% federal tax credit on total system cost
NEM	Financial	Grid billing arrangement that credits exported solar
SREC	Financial	Tradable certificates worth $20–$400 per MWh produced
LCOE	Advanced	Lifetime cost per kWh — the definitive solar economics metric
IRR	Advanced	Annualized investment return percentage over 25 years
Payback Period	Financial	Years until cumulative savings equal system cost
Degradation	Technical	~0.5%/yr production decline from panel aging
Soiling Loss	Technical	Production loss from dust and dirt on panels
Mismatch Loss	Technical	Weakest-panel-limits-string effect in series arrays
Clipping	Advanced	Inverter DC-to-AC capacity overflow on bright days
Microinverter	Technical	Per-panel DC-to-AC conversion — eliminates mismatch
String Inverter	Technical	Central inverter for all panels — lowest cost option
Hybrid Inverter	Technical	Solar + battery inverter in one unit
Autoconsumption	Advanced	Ratio of solar used on-site vs. exported to grid
EPBT	Advanced	Years for panels to generate their manufacturing energy
BOS	Advanced	50–65% of system cost that isn't the panels

Why Solar Terminology Matters for Buyers

Solar quotes contain terms that sound technical but have real financial implications. A common example: a salesperson says "your system will produce 10,000 kWh." But are they using DC production (before inverter losses) or AC production (what actually flows into your home)? The difference is 14–20% — thousands of kWh per year.

DC production (kWp × PSH × 365) = HIGHER number — often quoted AC production (DC × system efficiency) = LOWER number — what you actually get A 10 kW system at 5.0 PSH: DC production: 10 × 5.0 × 365 = 18,250 kWh/yr AC production (×86% efficiency): 18,250 × 0.86 = 15,695 kWh/yr The 2,555 kWh difference = ~$357/yr at $0.14/kWh

Understanding these terms protects you from optimistic production estimates, overpriced quotes, and missed incentives. The 20 terms in this glossary cover every major concept you'll encounter from initial quote to 25-year system life.

FAQ

What solar terms should I know before meeting with an installer? ▼

Five terms are essential: (1) PSH — your location's peak sun hours determine everything. (2) kWp vs actual kWh — ask for the estimated annual kWh, not just system size. (3) ITC — confirm the 30% tax credit is included in their net price. (4) NEM policy — ask what rate you get for exported solar in your utility territory. (5) Payback period — calculated on net cost after ITC with realistic production estimates. Start with these and you'll ask better questions than 90% of buyers.

What's the difference between kW and kWh in solar? ▼

kW (kilowatt) is power — the rate of energy production or consumption at a single moment. kWh (kilowatt-hour) is energy — the total amount produced or consumed over time. A 10 kW solar system at full sun produces 10 kW of power. Over 5 hours at that rate, it produces 50 kWh of energy. Your electric bill is in kWh. Solar system size is quoted in kW. Annual production is in kWh. The formula connecting them: kWh = kW × hours (modified by efficiency and sun hours for solar).

Is the ITC a rebate or a tax credit — what's the difference? ▼

Critical distinction: a rebate is money back in your pocket. A tax credit reduces your tax bill. If your federal tax liability is $8,000 and your ITC is $7,200, you owe $800 instead of $8,000. But if your tax liability is only $3,000, you can only use $3,000 in year 1 — the remaining $4,200 carries forward to next year's taxes. If you have very low tax liability (retired, low income, already use many deductions), the ITC may be worth less than the quoted 30%. Ask your tax advisor.

How does panel degradation affect my 25-year savings projection? ▼

At 0.5%/yr degradation, your year 25 output is 88% of year 1 (100% × 0.995^24 = 88.7%). The total 25-year production is about 89% of what you'd get with no degradation — so projections that ignore degradation overestimate savings by ~11%. To calculate properly: sum 25 years of (Year1Production × 0.995^year). Most installer projections include this. Budget panels with 0.8%/yr degradation produce only 82% at year 25 — a significant difference over the system life.

When does it make sense to choose microinverters over string inverters? ▼

Microinverters make economic sense when: (1) Your roof has partial shading from trees, chimneys, or neighboring buildings — even 1–2 hours/day of partial shade can cost 15–30% of string inverter production. (2) Panels face multiple directions (east-west split, complex roof). (3) You want panel-level monitoring for troubleshooting. (4) System expansion is likely — microinverter systems are modular. For a simple unshaded south-facing roof, string inverters with optimizers are often the best value. The microinverter premium is typically $500–$1,500 for a residential system.