Solar Acronyms, Abbreviations & Terms
The Busy Decision-Maker’s Glossary
TECHNICAL (Solar-Specific Terms)
| Term | Definition |
|---|---|
| AC (Alternating Current) | The type of electricity your building uses. Solar panels produce DC power, which is converted to AC by an inverter. |
| AHJ (Authority Having Jurisdiction) | The local authority responsible for permitting and inspections. |
| BESS (Battery Energy Storage System) | A complete battery system including batteries, controls, and safety components. Used for backup, peak shaving, and load shifting. |
| DC (Direct Current) | The electricity generated by solar panels before conversion to AC. |
| DER (Distributed Energy Resource) | On-site energy assets such as solar panels or battery storage. |
| eGauge | A real-time monitoring system that tracks production, usage, and savings — allowing businesses to watch system performance. |
| EPC (Engineering, Procurement & Construction) | A full-service delivery model where one contractor handles design, equipment sourcing, installation, and commissioning. |
| kW (Kilowatt) | A unit of power — how much electricity is being used at a specific moment. Demand charges are based on kW. |
| kWh (Kilowatt-hour) | A unit of energy — how much electricity is used over time. Your utility bill charges for kWh consumption. kW = speed | kWh = distance |
| Microgrid | A localized energy system that can operate independently from the utility grid, typically combining solar + storage. |
| NEM (Net Energy Metering) | A billing mechanism that credits system owners for excess electricity sent back to the grid. Rules vary by state. |
| Peak Shaving | Using batteries to reduce short periods of high power usage in order to lower demand charges. |
| PV (Photovoltaic) | The technical term for solar panels that convert sunlight into electricity. |
| TOU (Time-of-Use Rates) | A pricing structure where electricity costs vary depending on time of day. |
CORPORATE (Financial & Strategic Terms)
| Term | Definition |
|---|---|
| CAPEX (Capital Expenditure) | When your company purchases and owns the system. The asset appears on your balance sheet and qualifies for tax incentives. |
| Demand Charges | A portion of a commercial electricity bill based on the highest power usage (kW) during a billing period — often a major driver of total costs. |
| Energy Community | A federally defined area that may qualify for additional tax credit incentives under current legislation. |
| Federal ITC (Investment Tax Credit) | A federal tax credit currently equal to 30% of eligible commercial solar project costs under federal law. |
| LCOE (Levelized Cost of Energy) | The lifetime cost per unit of electricity produced by a system. Used to compare solar vs grid energy costs. |
| MACRS | The IRS depreciation schedule allowing commercial solar systems to be depreciated over five years. |
| NOI (Net Operating Income) | A key real estate metric. Lower operating expenses can increase NOI and potentially increase property value. |
| OPEX (Operating Expenditure) | Solar structured as a service agreement (like a PPA). Payments are treated as operating expenses rather than capital assets. |
| PPA (Power Purchase Agreement) | A third-party ownership model where you purchase electricity from the system rather than owning it. |
| ROI (Return on Investment) | Measures financial return relative to total project cost. |
| Solar Offset | The percentage of total facility energy usage covered by solar production. |
| WACC (Weighted Average Cost of Capital) | Used by finance teams to evaluate whether an investment outperforms the company’s cost of capital. |
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