7 Solar Energy Terms Every Arizona Homeowner Should Know

As solar energy continues to become the more affordable and cleaner alternative to conventional utility power, early adopters are becoming more eager to share their solar success stories with their friends and neighbors. As these pro-solar discussions become more common, so are frequent references to the solar industry acronyms and technical jargon.

Knowing common solar terms is a great first step when researching whether solar fits you. To help you get started, here are seven solar energy terms that you’re most likely to hear as you begin your research:

1. Photovoltaic (PV): A device that generates electricity from sunlight. Solar panels are photovoltaic devices. A solar energy system is generally referred to as a solar PV system.

2. Federal Investment Tax Credit (ITC): The ITC reduces the total cost of a solar purchase by 30 percent through a tax credit that can be filed with your federal tax return. In December 2015, Congress extended the 30% Solar ITC for residential and commercial projects through the end of 2019. It then drops to 26% in 2020 and 22% in 2021 before dropping permanently to 10% for commercial and 0% for residential projects.

3. Solar Incentives: In addition to the ITC, some local governments also issue incentives to go solar. Arizona has a $1,000 tax credit that can be added to the ITC to help further offset your solar purchase.

4. The Grid: This term refers to the elaborate electric utility network that creates and delivers electricity across vast distances to provide uninterrupted power to homes and businesses day and night.

5. Net Metering: Net metering is a great way to see additional savings when going solar. During our cooler months, most Arizona solar customers produce more electricity than they consume. Net metering allows these customers to exchange this excess power for energy credits that can be used to help further offset their electric bills when the weather turns hot and the AC is cranking. Different utilities have different net metering rules, so it’s best to consult a solar expert to explain the programs available in your area.

6. Solar Leases and Solar Loans: There are multiple ways to finance a solar purchase. A solar lease generally requires minimal to no money down, and you agree to pay the leaseholder a fixed monthly fee to “rent” the panels in exchange for a reduced monthly electric bill. At the end of the lease, you either return the system or negotiate a buyout. With a solar loan, you work with a bank, credit union, or other lending institution to finance the solar PV system's cost. At the end of the loan, the system is yours to keep.

7. Demand Fees: Many Arizona utilities introduce demand fees into the monthly billing cycle. Under these new demand-based plans, customers continue to pay for their total electricity usage during the month (known as consumption). Still, they are also assessed an additional demand fee based on their highest single hour or half hour of energy use.

We want to learn more about how Arizona’s most abundant natural resource can put money back in your pocket? We invite you to watch our solar explainer video or download our complimentary solar whitepaper.

And don't forget, if you’re an APS customer, now is the time to lock in today's better rates for the next 20 years before the upcoming ACC vote changes everything! Contact us today to schedule a free consultation, and a member of our team will be in touch shortly!