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Solar Vocabulary

The following are key words and concepts and how they are used in the solar energy industry.

Kilowatt Hour: A kilowatt-hour (kWh) is a unit of energy equal to the work done by the power of 1000 watts operating for one hour. Electric utilities bill customers in kWh.

The Grid:  The grid is a network of powerlines that carries and transmits electricity from large centralized power plants to individual homes. The phrase “going off the grid” refers to a household that generates all of its own power and no longer relies on the grid. Homeland Solar systems are connected to the grid so you can still power your house at night or when the sun isn’t shining.

Net Metering:  When you install a solar system that is connected to the Grid, your utility monitors how much electricity your solar panels produce and how much electricity you use through a process called net metering. If your solar system generates more electricity than you use, you export it to the grid and receive a credit from your utility. When you use more electricity than you generate, like at night, you draw it back off the grid as needed. Your utility determines the difference between the electricity you generate and what you use from the grid, and bills you for the difference. The balance is reconciled at the end of each year.

Batteries: Batteries are not needed with a solar system that is connected to the Grid because the grid serves the purpose of providing electricity when your solar system isn’t producing power. But with fast developing advances in battery technology occurring within the electric car industry and with the decrease in price, it is becoming possible to add batteries to your solar system so you can store your extra solar electricity for use at night.  With batteries it is becoming more feasible to go off the Grid and become completely energy independent.

PACE: PACE stands for Property Assessed Clean Energy. Many counties and cities in Michigan are setting up PACE programs that help commercial business to finance a solar system by paying it off through the annual property tax bill.  With the loan being attached as an assessment to the property tax bill, it provides an increase level of security to the lender, which can result in a lower interest rate for the loan.  Although PACE is not currently available for residential customers, work is being done to make that available in the future.

PPA: A Power Purchase Agreement (PPA) is a contract used by a party who wants to buy solar generated electricity from a third party who owns the solar system. In many cases the party signing a PPA cannot take advantage of tax credits in purchasing a solar system. A third-party who is able to take advantage of tax credits in purchasing a solar system will then sell the solar electricity to that first party through a PPA.

Community Solar: Is an arrangement where people, who may not be able to install a solar energy system where they live because their house doesn’t face south or they live in an apartment, can still support solar and receive lower costing electricity, by purchasing solar panels from a solar system located someplace in the community.  The individual person enters into a contract to purchase the solar panels and therefore the electricity they produce and the lower costing electricity is reflected on the utility bill the panel owner receives wherever they live.