Solar glossary for home sales

Assumption

When a home buyer takes over the seller's solar lease, PPA or loan instead of it being paid off. The solar company or lender usually has to approve the buyer.

Buyout

A one-time payment that ends a solar lease or PPA early so the homeowner owns the system. The company sets the price; ask for it in writing.

Dealer fee

A charge a solar lender takes from the installer for offering a low interest rate. It is usually built into the price the homeowner borrows.

Delivered kWh

Electricity the utility delivered to the home from the grid during the billing period, shown on the electric bill. Some bills call it kWh In.

Escalator

A clause that raises a solar lease or PPA payment or rate by a fixed percentage every year, commonly 0% to 3.9%.

Export credit

What the utility pays or credits for solar power the home sends back to the grid. In many states it is now less than the retail rate.

Fixture filing

A filing in the county real property records giving notice of a lender's or solar company's interest in equipment attached to the home. See UCC-1.

Interconnection agreement

The agreement between the homeowner and the utility that allows the solar system to connect to the grid. It usually has to be transferred to a new owner.

Investment tax credit (ITC)

A federal tax credit for buying a solar system. On many solar loans the payment assumes the owner pays the credit amount toward the loan.

kWh (kilowatt-hour)

The unit electricity is sold in: using 1,000 watts for one hour. Bills, PPAs and production estimates are all in kWh.

kW (kilowatt)

The size of a solar system: its rated power output. A typical home system is about 5 to 12 kW.

Lease

A contract where a solar company owns the panels on the home and the homeowner pays a monthly amount to use them.

Net billing

A way utilities credit exported solar power at a set export rate rather than the full retail rate, with credits applied to the bill.

Net metering

A way utilities credit exported solar power, often at or near the retail rate, so the meter effectively runs backward.

PACE

Property Assessed Clean Energy financing. The solar cost is repaid through the property tax bill and is usually tied to the property, not the owner.

Payoff letter

A written statement from the lender of the exact amount needed to pay off a loan through a specific date. Escrow or title usually orders it.

PPA (power purchase agreement)

A contract where a solar company owns the panels and sells the electricity they make to the homeowner at a set rate per kWh.

Price per watt

A system's price divided by its size in watts. It is the common way to compare solar prices.

Production guarantee

A promise in some solar contracts that the panels will make a certain amount of electricity, sometimes with a payment if they fall short.

Received kWh

Solar electricity the home sent to the grid during the billing period, shown on some electric bills. Some bills call it kWh Out.

Step-up payment

A higher monthly payment on a solar loan that starts when an expected lump-sum paydown (often the tax credit amount) is not made.

Time-of-use rate

A utility rate that costs more at peak hours, often late afternoon and evening, and less at other times.

Transfer

Moving a solar lease or PPA from the seller to the buyer. It usually needs the buyer to apply and be approved, and can take weeks.

UCC-1

A public notice that a lender or solar company has an interest in the solar equipment. It is usually terminated when the loan is paid off or the contract ends.

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