Solar Terminology 101: 25 Terms Every Homeowner Should Know

Solar contract terminology 101 starts with one simple truth: solar companies use jargon, and jargon hides details. A salesperson who says “TPO” instead of “we own it, not you” isn’t lying exactly — but they’re not exactly volunteering the plain-English version either. This glossary breaks down the 25 terms you’re most likely to see in a proposal or contract, translated into language a first-time buyer can actually use.

We built this list from the actual documents we review at Titan Advocacy Group, not from a generic industry glossary. Every term here shows up in real Arizona solar contracts — some in the fine print for a reason, and a few specifically because homeowners have told us they wish someone had explained them before they signed.

1. Why Solar Contract Terminology 101 Matters More Than It Should

Here’s the honest version of why solar contract terminology 101 is worth ten minutes of your time. A 20-page solar contract typically packs in terms from three different fields at once — energy engineering, consumer finance, and real estate law — and expects you to absorb all three while a salesperson is standing in your living room. Nobody does that well on the first pass. The result is that homeowners routinely sign solar agreements without fully understanding whether they’re buying a system or renting one, whether a lien is being placed on their home, or what happens to their monthly payment five years from now.

None of that is because homeowners aren’t smart enough to understand the terms. It’s because the terms were never explained in plain language in the first place. That’s the gap this glossary is built to close.

2. Solar Equipment Terms

Understanding solar contract terminology 101 starts with the hardware itself, since this is usually the first section of any proposal.

1. PV (Photovoltaic): The technology that converts sunlight directly into electricity using semiconductor materials inside each panel.
2. Inverter: Converts the DC power your panels produce into the AC power your home’s outlets and appliances actually use.
3. String inverter: One inverter serving an entire row (“string”) of panels — generally less expensive, but shading on one panel can affect the whole string’s output.
4. Microinverter: A small inverter installed on each individual panel, so one shaded or underperforming panel doesn’t drag down the rest of the system.
5. Module: The technical term for a single solar panel — you’ll see this word throughout spec sheets and permits.
6. System size (kW): Total capacity of your system, measured in kilowatts — the single number that determines roughly how much electricity your system can produce.
7. Degradation rate: How much a panel’s output declines each year as it ages, typically around 0.5% annually — meaning a panel still produces roughly 87–88% of its original output after 25 years.
8. Racking: The mounting hardware securing panels to your roof — worth asking about roof penetration methods and any warranty on the racking itself.
9. Monitoring system: The app or dashboard tracking your system’s real-time and historical production — ask whether you keep access to this if you switch installers or providers later.

3. Solar Financing and Ownership Terms

This section of solar contract terminology 101 covers who owns what, and who’s actually paying for it — arguably the section most worth slowing down for.

10. TPO (Third-Party Ownership): An umbrella term for leases and PPAs, where a company — not you — owns the system for the life of the agreement, typically 15 to 25 years.
11. PPA (Power Purchase Agreement): You pay a per-kWh rate for the power your system produces, rather than a fixed monthly fee — your bill varies with actual production.
12. Escalator clause: A contract provision that raises your lease or PPA payment by a set percentage every year, commonly around 2.9% — compounded over 20 years, this adds up to real money.
13. Buyout clause: An option to pay off a lease or loan early, sometimes to take ownership of the system outright — ask for the exact buyout schedule in writing before you need it.
14. Dealer fee: A markup — often undisclosed in plain language — added to a solar loan’s principal, sometimes called a “program fee” or “finance fee.”

4. Solar Billing and Utility Terms

Solar terminology 101 wouldn’t be complete without the words that show up on your utility bill once your system is live.

15. Net metering: A billing arrangement crediting you for excess power your system sends back to the grid, which offsets power you draw at night or on cloudy days.
16. Interconnection: The formal process and agreement connecting your system to the utility grid — this has to be completed and approved before your system can legally operate.
17. Grid-tied: A system connected to the utility grid, as opposed to a stand-alone off-grid system — almost all Arizona residential systems are grid-tied.
18. Net excess generation: Extra power your system produces beyond what your home uses in a given billing period, which your utility may credit at a specific rate.
19. kWh (kilowatt-hour): The unit your utility bills you in — the amount of energy used, or produced, over time. A 1,000-watt appliance running for one hour uses 1 kWh.

5. Solar Contract and Legal Terms

The last stretch of solar contract terminology 101 covers the words that matter most if something goes wrong — and the ones we see homeowners wish they’d understood sooner most often.

20. UCC-1 filing: A public lien-like filing a lender or lease company can record against your property to secure their interest in the equipment. It’s a real, searchable document — not a scare word — and it can surface during a home sale or refinance if you weren’t expecting it.
21. Right of rescission: Your legal right to cancel a contract within a set window — in Arizona, at least three business days under Arizona Revised Statutes § 44-1763.
22. Production guarantee: A promise, if included, that your system will produce a minimum amount of power — read the fine print on what remedy you actually get if it doesn’t.
23. Assignment/transfer clause: The section governing what happens to your lease or loan if you sell your home — whether the buyer must qualify to assume it, and what happens if they don’t.
24. Interconnection agreement: The formal document between you (or your installer) and your utility permitting your system to connect to the grid — separate from your solar contract itself.
25. Consent agreement: A settlement between a company and a regulator — for example, the Arizona Attorney General’s consent agreement with Sunrun, court-approved May 22, 2025, which gave eligible customers access to restitution, repairs, or service contract modification.

6. How to Use This Glossary When Reading a Proposal

A practical way to put solar contract terminology 101 to work: read your actual proposal or contract with this list open beside it, and circle every term that appears here. If a term shows up that isn’t explained in plain language anywhere in the document, ask the salesperson to define it in writing before you sign. This single habit — asking for a written definition of any unfamiliar term — catches more problems than almost any other single step in the process, because it forces vague language into something specific and documented.

Key Takeaways

• Solar contract terminology 101 breaks into four buckets: equipment, financing/ownership, billing, and contract/legal terms.
• TPO, PPA, and escalator clause are the three terms most likely to affect your long-term cost.
• A UCC-1 filing is a real, recorded document — not a scare word — and it’s worth knowing whether one exists against your property.
• Arizona’s right of rescission gives you at least three business days to cancel after signing.
• Ask for a written definition of any unfamiliar contract term before you sign — it’s a simple habit that catches real problems.

Frequently Asked Questions

What’s the most important term in solar contract terminology 101 to know before signing?

“Third-party ownership” (TPO). It determines whether you’ll ever own your system and whether you can claim any tax credit — a distinction that changes your entire financial picture.

What is a UCC-1 filing, in simple terms?

A public record showing a lender or lease company has a financial interest tied to your solar equipment — similar in spirit to how a car loan lien works, but tied to your home’s address rather than a vehicle title.

Is “net metering” the same everywhere in Arizona?

No. Billing structures vary by utility (APS, SRP, TEP, and others), and some have moved toward different export-credit structures over time. Ask your specific utility how it currently credits exports before assuming a proposal’s estimate is accurate.

Where can I look up a term that isn’t on this list?

Ask your installer for a written definition first. If the term relates to a legal right or financing structure and the answer still isn’t clear, that’s a reasonable time to get a second, independent opinion.

Why You Can Trust This Article

This glossary reflects terminology Titan Advocacy Group encounters routinely while reviewing Arizona solar contracts, cross-checked against Arizona Revised Statutes § 44-1763 and public Arizona Attorney General consumer records, both linked above. We are not a law firm and this is not legal advice — it’s a plain-language reference built from real documents, not a marketing glossary written by a company trying to sell you a system.

Resources

Sources cited in this article:

• Arizona Revised Statutes § 44-1763 — Distributed Energy Generation System Agreements
• Arizona Attorney General — Sunrun Consumer Consent Agreement

Next Step

If a term in your own solar contract doesn’t make sense — or worse, if it makes sense and you’re not happy with what it means — don’t guess. Titan Advocacy Group provides a free, no-obligation assessment of your solar transaction to help you understand your options. For homeowners who qualify, we also provide attorney-supported services to help resolve a solar contract dispute.

Titan Advocacy Group provides administrative and consulting support. For eligible homeowners, we also provide an attorney-supported service.