Technological terms, by nature, can be a mouthful.  But their acronyms can be just as esoteric.  PBI, kWh, SREC?  Enough is enough.  Today we’re going to unpack these solar abbreviations and show home solar for what it really is: simple and relevant.

Let’s start with the basics:

• PV (photovoltaic): is a cell that converts solar radiation into direct current (DC) electricity.
• Si (silicon): a semiconducting material found in most solar cells.  It absorbs photons in sunlight and creates energy.
• kWh (kilowatt hour): a unit commonly used to measure energy delivered to customers by electric utilities.  It can be understood as the amount of energy consumed by a 1000-Watt appliance running for 1 hour.  For example, the average American household uses 920 KWh/month.  This is equivalent to running your microwave for 920 hours in a single month.
• MWh (Megawatt-hour): 1 MWh is 1000 kWh.  This unit is often used to measure larger amounts of electrical energy in power generation and that consumed by industrial customers.
• DG (distributed generation): also known as on-site generation, DG is when electricity is generated close to where it is used, such as your roof.  Generally, DG reduces the amount of energy lost, size and number of power lines and power plants necessary to transmit energy from generating stations.
• NEG & NEM (net energy generation & net energy metering): with home solar, you can end up generating more or less electricity than you use.  NEG is the total electricity your panels produce minus the electricity you use from the grid.  NEM means that the electricity you do generate will feed into the grid and earn you credits against the electricity you do pull from the grid.  Your utility bill will then reflect only the net energy you’ve pulled from the utility.

The next step is paying for solar.  Following is a list of abbreviations that address solar financing and government incentives.

• PPA (power purchase agreement): a financing option for residential solar in which a solar company owns (and installs, monitors, maintains) your solar panels; you pay for electricity.  With PPAs, you avoid the high upfront costs of installing solar and pay a monthly rate that depends on how much energy your panels produce.
• UFI (up-front incentive): a payment or rebate up front for installing solar panels.
• PBI (performance based incentive): a payment or rebate paid based on actual energy production, compared to a UFI, on a $/kWh basis.  A PBI benefits those with larger solar power systems.
• ITC (investment tax credit): the federal ITC is a 30% tax credit for installing a solar system in your home.  You can apply this credit to your tax bill in the following spring.
• PTC (production tax credit): the federal PTC is a per-kilowatt-hour tax credit for generating electricity, for a certain period of the solar system’s operation.  Those who are less interested in PTCs can apply for an ITC, and vice versa.
• EPBB (expected performance-based buy-down): an EPBB is a type of up-front incentive based on an estimate of your solar system’s expected performance.  The performance estimate is based on system size, geographic location, orientation at time of application.  The EPBB incentive is offered only to systems smaller than 30 kW AC in California, under the California Solar Initiative.
• PACE (property assessed clean energy): cities are beginning to offer PACE programs which provides a loan for your solar panels.  The program pays for the panels and you pay for the solar system on your property tax bill, over approximately 20 years, with interest.  PACE provides loans for the cost of the panels, before the federal ITC is rewarded – this means that you will need to make payments on a larger, pre-ITC loan.
• SBC (societal benefits charge): funding for programs that provide benefits to society, such as low-income, energy efficiency, and renewable energy programs

Some states not only offer financial incentives but also encourage solar energy production through other means.

• RPS (renewable portfolio standard): an RPS provides states with a way to increase the generation of renewable energy using a market-based approach.  It requires utilities and energy providers to supply a certain percentage of their electricity from renewable sources.  Right now, states with RPS requirements require between 4 and 30 percent of electricity to be generated by a specified date.
• SREC (solar renewable energy certificate): an SREC is the property right to the environmental benefits associated with generating solar electricity.  Homeowners who generate solar electricity are credited with 1 SREC for every MWh of electricity they produce.  Utilities that have to fulfill an RPS requirement can purchase these SRECs on the open market.
• ACP (alternative compliance payment): Utilities that have to comply with RPS requirements but find SRECs to be scarce or unavailable can provide an alternative payment (i.e. $300/MWh)

Whether you want to learn more about solar or help bring solar to your state, you’re not alone!

• ASES (american solar energy society): the nation’s leading non-profit association of solar professionals and advocates.  ASES publishes a solar magazine, organizes conferences, and has over 13,000 national members.
• SEIA (solar energy industry association): the national trade association of the solar industry.  SEIA works to make solar mainstream by advocating for federal policy that removes barriers and improves market conditions for the U.S. solar market.
• CSI (california solar initiative): the second largest solar initiative in the world, after Germany, and the largest program of its kind in the United States.  The CSI is part of the Go Solar California campaign and aims to ensure that California generates solar and reward systems that provide maximum solar generation.  This initiative builds on years of state rebates and offers incentives based on performance factors, in order to lower the cost of solar systems for consumers and build a self-sustaining solar market.

We hope that this helps make residential solar easier to understand.  Though it can seem complicated — especially if you’re dealing with installation and financing on your own — home solar is one of the simplest ways you can save energy, cut costs, and help the environment.

This entry was posted on Thursday, January 28th, 2010 at 4:30 pm and is filed under Solar Questions and Answers, solar, solar energy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.