Every solar term, in plain language

The standard industry measure of residential solar pricing, calculated as total contract price ÷ system size in watts. A 9.6 kW system at $46,800 is $4.875/W. Used to compare proposals across different system sizes — a smaller system at higher $/W is not necessarily a better deal than a larger system at lower $/W.

Why it matters: $/W is the single most useful comparison metric across proposals. It strips away differences in system size and lets a homeowner see whether they're being quoted at fair market pricing for their region. The current Bay Area benchmark for residential systems with battery is approximately $3.20/W (Q1 2026); without battery, approximately $2.40–$2.70/W.

Related: APR, Dealer Fee, Cash vs Financed Pricing

The yearly cost of a loan including interest and required fees, expressed as a percentage. Distinct from the simple interest rate because APR includes mandatory fees that affect the true cost of borrowing.

Why it matters: Small APR differences compound to large dollar amounts over 20-year solar loans. The difference between a 6.99% and an 8.99% APR on a $40,000 loan is approximately $11,000 in additional interest over the term. APR is also the most common surface where dealer fees hide — a low advertised APR is often paid for through a higher contract price.

Related: Dealer Fee, Solar Loan, Cash vs Financed Pricing

A markup paid by a solar lender to an installer in exchange for the installer routing the financing through that lender, recovered through the contract price charged to the homeowner. Typically not separately disclosed verbally or itemized in writing — calculable only by comparing the financed contract price against the cash-purchase price for identical equipment.

Typical range: 15–25% of contract price for higher-APR loan products (8–10% APR). Lower-APR products (3–5% APR) often carry dealer fees closer to 25–35% — the installer accepts a larger upfront markup in exchange for offering a more attractive monthly payment.

Why it matters: Dealer fees are the single biggest source of pricing opacity in residential solar and the single biggest contributor to why financed systems often cost 30–60% more than cash-purchase systems for the same hardware. A homeowner cannot identify a dealer fee from a proposal alone, but can identify its *likelihood* by asking the installer in writing whether the same system is available at a different price for cash or customer-sourced financing.

Related: APR, Cash vs Financed Pricing, $/W

An annual percentage increase in the rate charged per kWh under a Power Purchase Agreement (PPA) or solar lease, compounded over a 20–25 year contract term. A 2.9% escalator on a $0.211/kWh PPA produces a year-25 rate of approximately $0.42/kWh.

Industry-typical range: - 0% (fixed rate): ~12% of PPAs - 1.5–1.9%: ~28% (conservative, generally defensible) - 2.0–2.5%: ~41% (industry median) - 2.6–3.0%: ~15% (elevated) - 3.1%+: ~4% (aggressive)

Why it matters: Escalators compound. A "low" Year-1 rate combined with a high escalator can produce a contract where the homeowner is paying more than utility rates by year 14–16, well within the contract term. The savings claim in a PPA proposal depends entirely on the assumption that utility rates will rise faster than the escalator — a forecast, not a guarantee. PG&E residential rates have averaged ~2.1% annual growth over the past decade.

Related: PPA, Solar Lease

A federal income tax credit historically claimed by residential homeowners on their personal tax return for solar PV and energy storage systems they directly owned (cash or loan-financed). Most recently at 30% of system cost under the Inflation Reduction Act of 2022.

⚠️ Section 25D — the residential homeowner credit — expired December 31, 2025. This is the credit most homeowners think of as "the 30% federal solar tax credit." It was eliminated by the One Big Beautiful Bill Act (OBBBA) signed July 4, 2025. Any 2026 proposal that claims a homeowner cash or loan purchase will receive "the 30% federal tax credit" on their personal return is misrepresenting current law.

However, the 30% federal credit still exists in a different form — Section 48E (the Commercial ITC). It is claimed by the *system owner*, not the homeowner. For solar leases, PPAs, and other third-party-owned (TPO) arrangements, the leasing company claims the 30% credit and may pass some of that value through as lower lease payments. The homeowner does not file Form 5695 and does not claim the credit on their personal return.

For standalone energy storage, the picture is more favorable. Section 48E for standalone storage continues at 30% through 2032 with phase-downs starting 2034 — a much longer runway than the solar timeline (which requires construction start by July 4, 2026 or placed-in-service by Dec 31, 2027). But again: the credit applies to TPO storage; homeowner-owned (cash/loan) storage purchased in 2026 does not qualify under §25D.

Watch for this misrepresentation in 2026 sales conversations: "The 30% federal credit still applies" is technically true under §48E for TPO systems, but functionally misleading if the homeowner believes they will claim it on their personal taxes. They will not. The leasing company will. Whether the homeowner sees that value depends entirely on how it's structured into the lease or PPA payment.

Related: Section 48E, TPO, IRA, OBBBA, Cash Purchase, Solar Lease, PPA

A federal tax credit for clean electricity generation and energy storage projects, claimed by the *system owner* — typically a business, leasing company, or PPA provider, not an individual homeowner. Replaced and broadened the legacy Section 48 ITC under the Inflation Reduction Act.

Section 48E is "technology neutral": it applies to any zero-emission electricity generation (solar PV, wind) and to standalone energy storage systems of 3 kWh or larger.

Current deadlines (post-OBBBA, as of 2026): - Solar PV: 30% credit available for projects that begin construction by July 4, 2026 OR are placed in service by December 31, 2027 — whichever date applies under the safe-harbor rules. - Standalone energy storage: 30% credit continues through 2032, with phase-down beginning 2034 (26% in 2033, 22% in 2034, expiring afterward absent further legislation). This is a longer runway than the solar timeline.

Why this matters for homeowners. Section 48E is the legal mechanism by which residential solar leases, PPAs, and third-party-owned battery systems continue to claim the 30% federal credit in 2026 — even though the residential homeowner credit (§25D) has expired. The leasing company or PPA provider claims §48E; the homeowner does not file Form 5695 and does not directly receive the credit.

The economic question for a 2026 homeowner being pitched a lease or PPA is: how much of the §48E credit value flows through to me in the form of lower payments? A well-structured lease may pass through a meaningful share. A high-dealer-fee structure may absorb most of it. The homeowner cannot directly observe this; it requires comparing the lease's all-in cost to the equivalent purchased-system cost in the same market.

Related: ITC, TPO, Solar Lease, PPA, Dealer Fee

A California program administered by the CPUC that historically paid homeowners for installing battery storage. Multiple budget tiers existed: General Market (broadly available, modest amounts), Equity (income-qualified, mid-range), and Equity Resiliency (income-qualified + in high-fire-risk or PSPS-affected area, highest amounts).

⚠️ All three ratepayer-funded SGIP budgets — General Market, Equity, and Equity Resiliency — closed December 31, 2025. PG&E, SCE, and SDG&E are no longer accepting new applications under these tiers. There is no announced reopening date.

One pathway remains open: RSSE. The Residential Solar and Storage Equity program, funded by $280 million under California's AB 209 (separate from the closed ratepayer-funded SGIP tiers), continues to accept applications — but for income-qualified households only (under 80% of Area Median Income), and as of Q1 2026, the program is fully reserved with new applications going to a waitlist as existing reservations cancel. RSSE rebate amounts are substantial — up to $3,100/kW for paired solar and $1,100/kWh for batteries — but the eligibility criteria exclude the majority of California homeowners.

Why this matters in 2026 sales conversations. Some installers continue to reference "SGIP rebates" in their proposals to typical (non-income-qualified) homeowners. For most homeowners receiving such a proposal, the rebate they're hearing about is either (a) the closed General Market tier, in which case the math is wrong, or (b) the income-qualified RSSE program for which they don't qualify. Verify which specific SGIP tier the proposal assumes and confirm current funding status at selfgenca.com before relying on the rebate in any financial analysis.

Related: RSSE, Battery, DAC-SASH, PSPS

A solar system ownership structure in which a third party — typically a solar company, leasing company, or special-purpose financing entity — owns the system on the homeowner's roof, while the homeowner consumes the electricity it produces. The two primary TPO structures are solar leases (flat monthly payment) and PPAs (per-kWh payment).

Why TPO matters in 2026. With the §25D residential ITC expired, TPO is the *only* pathway by which the 30% federal tax credit (under §48E) continues to flow into residential solar economics in 2026. The TPO company claims the §48E credit on the system; how much of that value passes through to the homeowner depends entirely on how the lease or PPA is priced. A well-structured TPO can offer meaningful savings; a poorly structured one absorbs the credit value into installer/lender margin and offers little.

The honest comparison. For a homeowner evaluating TPO versus cash purchase in 2026: - Cash purchase: no federal credit, but lower lifetime cost if the homeowner has the capital and can secure a reasonable APR if borrowing. - TPO: federal credit flows through (some portion), but the homeowner does not own the equipment, may face escalators or buyout provisions, and is exposed to the TPO company's longevity (a TPO bankruptcy creates a different orphan-system scenario).

Related: PPA, Solar Lease, Section 48E, ITC, Solar Loan

A California program funded by $280 million in state appropriations through Assembly Bill 209, administered through the SGIP framework but with separate funding from the now-closed ratepayer-funded SGIP tiers. RSSE provides substantial rebates for solar and battery storage for income-qualified households.

Eligibility: Household income under 80% of Area Median Income (AMI) for the applicant's county, plus at least one of the following: residence in a CalEnviroScreen-designated disadvantaged community (DAC), enrollment in CARE, FERA, ESA, SASH, DAC-SASH, MASH, or SOMAH programs.

Rebate amounts (as of Q1 2026): Up to $3,100 per kW of paired solar and up to $1,100 per kWh of battery storage. For a 6 kW solar + 10 kWh battery system, the combined rebate can exceed the system's installed cost.

Current status (as of Q1 2026): Fully reserved. New applications go to a waitlist; funding becomes available as existing reservations cancel. Applications must be submitted *before* installation — post-installation applications are rejected.

Why it matters. For income-qualified California homeowners, RSSE is the most substantial residential solar incentive currently available — capable of producing near-zero out-of-pocket cost for a solar-plus-storage system. For homeowners who do not qualify on income grounds, this program is not accessible.

Related: SGIP, DAC-SASH, Battery

The number of years required for cumulative electricity-bill savings (or PPA-payment savings) to equal the upfront cost of the solar system. A $30,000 cash purchase that saves $2,500/year on utility bills has a 12-year simple payback.

Why it matters: Payback figures in proposals depend heavily on assumptions about future utility rate escalation, system production, and discount rate. A proposal claiming "6-year payback" usually assumes aggressive utility rate growth (4–5% annually) that may not materialize. Conservative payback estimates use 2.0–2.5% utility escalation, which roughly matches PG&E's historical pace. Always ask the installer what utility-rate-escalation assumption the payback figure is based on.

Related: $/W, Escalator, LCOE

The structural pricing gap that often exists between the price an installer will charge for a cash purchase versus a financed purchase of the same system. The gap typically reflects the installer's dealer fee plus their financing-margin preference, recovered through the financed contract price.

Why it matters: Most installers will quote a different price for cash than for financing — sometimes a difference of $8,000–$15,000 on a typical residential system. This is the single most useful question a homeowner can ask in writing: "Is the same system available at a different price if I pay cash or use my own financing?" The answer reveals the dealer-fee structure even when it isn't itemized.

Related: Dealer Fee, APR, Solar Loan

A loan used to purchase a residential solar system, typically 10–25 year terms, with APR in the 6.99–10.99% range as of Q2 2026 for borrowers with good credit. Major lenders include GoodLeap, Mosaic, Sunlight Financial, and Service Finance. Most solar loans file a UCC-1 on the equipment but not against the home itself.

Why it matters: A solar loan is conceptually similar to any other consumer loan, but the proposal-driven sales process often obscures comparison. Homeowners with strong credit can frequently access better APRs through their own bank or credit union than through the installer's preferred lender — but only if they ask for cash pricing first and arrange financing separately.

Related: APR, Dealer Fee, UCC-1 Filing, Cash vs Financed Pricing

• Cross-references: PPA in Industry Acronyms

See full definition under PPA in Industry Acronyms. From a pricing-and-financing perspective, the key features are: (a) the homeowner pays per kWh for power produced, not for the system itself; (b) the rate typically escalates annually; (c) the contract is long (20–25 years); (d) early termination usually requires buying out the contract at a pre-agreed price.

Why it matters from a pricing perspective: A PPA is not "free solar." Over 25 years with even a 2.5% escalator, a PPA can produce total payments that exceed the cost of an outright purchase. The savings claim depends on utility rates rising faster than the escalator.

Related: PPA, Escalator, Solar Lease

A contract where a solar company owns the system on the roof and the homeowner pays a fixed monthly lease payment (rather than a per-kWh rate, as under a PPA). Typically 20–25 year terms with annual escalators.

Why it matters: Solar leases and PPAs are similar in structure (third-party owned, long-term contract) but billed differently. A lease is a flat monthly payment regardless of how much power the system produces; a PPA pays per kWh. From the homeowner's perspective, a lease shifts production risk to the leasing company; a PPA shifts it to the homeowner.

Related: PPA, Escalator

Buying the solar system outright at the time of installation, with full payment due at or shortly after Permission to Operate (PTO). No loan, no PPA, no lease — the homeowner owns the system from day one.

Why it matters: Cash purchases consistently produce the lowest total cost of ownership for solar — typically 30–50% lower over 25 years than the same system financed through an installer's preferred lender. The trade-off is the substantial upfront capital requirement. For homeowners with the capital or with access to lower-cost financing (HELOC, cash-out refinance, low-APR personal loan), cash purchase is almost always the financially optimal path.

Related: Solar Loan, Cash vs Financed Pricing, Dealer Fee

The physical rectangular unit mounted on the roof that converts sunlight to direct current (DC) electricity. A residential system typically uses 15–30 modules; current generation modules are rated at 400–450 watts each. Major manufacturers include Qcells, REC, Maxeon (formerly SunPower), JinkoSolar, LONGi, and Tesla.

Why it matters: Module quality varies enormously, but most installers offer credible Tier-1 modules. The more important questions are (a) the warranty terms (product warranty + performance warranty), (b) the manufacturer's likelihood of being in business in 25 years to honor warranties, and (c) the degradation rate.

Related: Tier 1 Module, Bifacial Module, Degradation Rate

A manufacturer ranking developed by Bloomberg New Energy Finance based on financial stability and project-finance bankability — specifically, whether a module manufacturer's products have been accepted as collateral in non-recourse project financing by major banks.

Why it matters: "Tier 1" is often invoked in sales conversations as if it indicates product quality. It does not directly. Tier-1 status indicates the manufacturer is financially stable enough that lenders will finance projects using their modules — which matters for warranty backing over a 25-year period, but is not a direct quality statement. Most credible residential modules sold in California are Tier-1; absence of Tier-1 status is more meaningful than presence.

Related: Module, Equipment Warranty

A small inverter mounted at each individual solar panel, converting the panel's DC output to AC at the panel itself. Compared to a single string inverter for the whole system, microinverters are more redundant (one panel's underperformance doesn't affect others), produce per-panel monitoring data, and handle partial shading more gracefully — but cost more per watt of capacity.

Enphase is the dominant microinverter manufacturer in the U.S. residential market; current generation is the IQ8 family (IQ8+, IQ8M, IQ8H).

Why it matters: Microinverters carry 25-year manufacturer-direct warranties that transfer with the property, which is the strongest warranty structure available in residential solar. The 25-year warranty also means homeowners are protected from installer bankruptcy on the inverter side.

Related: String Inverter, Optimizer, Inverter

A single large inverter that converts the entire solar array's DC output to AC at a central unit (typically mounted on an exterior wall near the electrical panel). Common manufacturers include SolarEdge (which pairs the string inverter with per-panel optimizers), SMA, Fronius, and Tesla.

Why it matters: String inverters cost less per watt than microinverters but introduce a single point of failure — if the inverter fails, the whole system stops producing. String inverters also have shorter manufacturer warranties (typically 10–12 years standard, extendable to 25 years on some products). When a string inverter needs replacement (often year 12–15), the homeowner typically pays for the replacement out of pocket.

Related: Microinverter, Optimizer, Hybrid Inverter

A small DC-to-DC device mounted at each solar panel that optimizes the panel's output before sending it to a central string inverter. Provides per-panel monitoring and shade tolerance similar to microinverters, but the actual DC-to-AC conversion still happens at the central inverter. Dominant manufacturer is SolarEdge.

Why it matters: Optimizer systems split the difference between string inverters (single point of failure on inverter) and microinverters (redundant). The trade-offs depend on the specific system: SolarEdge optimizers carry 25-year warranties but the inverter itself carries a shorter warranty.

Related: Microinverter, String Inverter

An inverter that handles both solar PV conversion and battery management in a single unit, including the ability to draw from or charge a battery and provide backup power during grid outages. Tesla Powerwall 3 includes an integrated hybrid inverter.

Why it matters: Hybrid inverters simplify the equipment stack for systems with battery storage, reducing component count and (in some cases) installation cost. For systems designed without battery initially, choosing a hybrid inverter at install time can make future battery addition simpler — though the upfront cost premium may not be justified if battery is never added.

Related: String Inverter, Battery, Backup Capacity

A lithium-ion battery system that stores electricity produced by the solar array for later use — typically used to shift daytime production into evening consumption (important under NEM 3.0), provide backup power during grid outages, or both. Current generation batteries are sized at 5–20 kWh of usable capacity per unit; many homes install multiple units.

Major products in the California residential market include Tesla Powerwall 3 (13.5 kWh), Enphase IQ Battery 10/5P (10.5/5 kWh per unit), FranklinWH (13.6 kWh), and Sonnen (multiple sizes).

Why it matters: Under NEM 3.0, the financial case for residential solar in California typically depends on having a battery. Without one, daytime excess production is exported to the grid at low NBT rates (~$0.07–0.08/kWh average); with one, it can be stored and used later in place of grid power at full retail rate (~$0.45/kWh peak).

Related: NEM 3.0, SGIP, AC vs DC Coupled Battery

The two ways a battery can be wired into a solar system.

AC-coupled batteries (Tesla Powerwall 3, Enphase IQ Battery) connect to the home's AC side — after the solar array's inverter. They have their own internal inverter that converts AC back to DC for storage, then back to AC when discharging. Easier to retrofit to existing solar systems.

DC-coupled batteries (some Sol-Ark, FranklinWH configurations) connect on the panel side, before the array's inverter. The solar DC charges the battery directly, with a single conversion to AC at the hybrid inverter. Slightly more efficient (one conversion instead of three) but more complex to retrofit.

Why it matters: For new installations, the choice depends on the inverter architecture and which specific products are being installed; both work. For battery additions to existing solar systems, AC-coupled is usually simpler.

Related: Battery, Hybrid Inverter, Microinverter

The structural hardware that attaches solar modules to the roof. Standard residential mounting uses aluminum rails (IronRidge XR, Unirac SolarMount) bolted to roof rafters via lag screws through flashed roof penetrations. For composition shingle roofs, this is the standard approach. Tile roofs use specialized tile hooks; flat roofs typically use ballasted (weighted, no penetration) systems.

Why it matters: Mounting hardware itself rarely fails, but the roof penetrations it creates are the single most common source of post-installation problems — leaks, particularly. Roof penetration warranties (typically from the installer, not the manufacturer) are the relevant protection. When the installer goes out of business, the roof-penetration warranty is gone.

Related: Roof Penetrations, Workmanship Warranty

The device that converts the direct current (DC) produced by solar panels into alternating current (AC) used by the home and the grid. Inverters come in three primary architectures: string (central), microinverter (per-panel), and hybrid (string + battery management).

Why it matters: The inverter is typically the first component of a solar system to fail — module lifespans are 25+ years; string inverter lifespans are often 12–15 years. The choice of inverter architecture significantly affects long-term cost of ownership and warranty exposure.

Related: String Inverter, Microinverter, Hybrid Inverter

A separate electrical subpanel containing only the circuits that should remain powered during a grid outage — typically refrigerator, some lighting, internet/router, medical equipment, and one or two outlets. Used when the battery system isn't sized to power the entire home during an outage.

Why it matters: Battery backup is sold three ways: critical-loads-panel backup (smaller battery, lower cost, only essentials run), partial-home backup (medium battery, most loads except air conditioning and EV charging), and whole-home backup (largest battery, runs everything). The choice substantially affects battery sizing and cost. Homeowners often default to whole-home backup without realizing the cost premium; critical-loads is often sufficient for shorter PSPS events.

Related: Battery, Backup Capacity, PSPS

The amount of time a battery system can power the home (or critical loads) during a grid outage, depending on (a) the battery's usable capacity, (b) the home's electrical demand, and (c) whether the solar array is operating to recharge during daylight hours.

Typical figures: A 13.5 kWh battery powering a typical California home's full load (without aggressive conservation) provides roughly 6–10 hours of evening backup; with daylight solar recharging, the system can run indefinitely as long as solar production exceeds home consumption.

Why it matters: Backup figures in proposals are often computed under optimistic assumptions — most importantly, assuming sunny days throughout the outage and conservation behaviors most households don't actually adopt. For PSPS planning, a more conservative figure (50% of the manufacturer's claim) is a safer baseline.

Related: Battery, Critical Loads Panel, PSPS

The annual reduction in a solar module's maximum power output over time, typically expressed as a percentage. Modern Tier-1 modules degrade at approximately 0.4–0.6% per year, with the first-year degradation often slightly higher (1–2%).

Why it matters: Over a 25-year warranty period, total degradation typically reaches 10–15%. The performance warranty in a module's warranty document specifies the guaranteed output level at year 25 — typically 85–87% of original nameplate. Production estimates in proposals should account for degradation; if they don't, year-1 production is being compared against year-25 production unfairly.

Related: Module, Performance Warranty

A solar module that produces electricity from both its front (sun-facing) and back surfaces — the back surface collecting reflected light from the roof or ground. Bifacial modules typically offer 5–15% additional production over equivalent monofacial modules, depending on the reflective conditions.

Why it matters: On residential composition shingle roofs, the bifacial gain is minimal (asphalt shingles are not very reflective) — typically 2–4%. The premium price for bifacial modules in residential applications is rarely justified by the production gain. In commercial flat-roof or ground-mount applications with high-albedo surfaces (white roofs, light-colored ground), bifacial economics improve substantially.

Related: Module

A warranty that covers the physical hardware — panels, microinverters, optimizers, battery — issued by the manufacturer. Typical terms: 25 years for panels and microinverters; 12–25 years for string inverters; 10–15 years for batteries.

Why it matters: Equipment warranties transfer with the property and survive installer bankruptcy because they're between the homeowner and the manufacturer directly. This is the strongest form of protection in residential solar. Equipment warranties are also the form of protection most likely to actually pay out, because the manufacturers are financially stable enterprises with established RMA processes.

Related: Workmanship Warranty, Production Guarantee, Performance Warranty

A warranty covering the installation labor — mounting, wiring, sealing, roof penetrations — issued by the installer (not the manufacturer). Typical residential terms: 10 years, with some installers offering 15-year or 25-year upgrades.

Why it matters: Workmanship warranty is the form of protection most likely to be needed (roof leaks at penetrations are the most common post-installation issue) and the form most likely to fail when needed — because if the installer goes out of business, the workmanship warranty is gone. Manufacturer warranties survive installer bankruptcy; workmanship warranties don't. This asymmetry is the central protection problem in residential solar.

Related: Equipment Warranty, Orphaned System, Roof Penetrations

A contractual commitment from the installer regarding how much electricity the system will produce, typically expressed as a percentage of the proposal's estimated production over a specified period.

Quality varies enormously. Strong guarantees commit to 90–95% of estimated production for 10–25 years with a defined remedy (e.g., the installer credits the homeowner for production shortfalls at current utility rates). Weak guarantees commit to 80–90% for years 1–5 only, with vague "review" language and no defined remedy.

Why it matters: The distinction between a strong and weak production guarantee is the difference between a meaningful contractual protection and marketing language. Ask the installer for the production-guarantee remedy in writing — specifically, what they will do if the system underproduces. Vagueness in the answer is itself the answer.

Related: Performance Warranty, Equipment Warranty

A manufacturer warranty (typically on modules) that guarantees a minimum output level at specified intervals over the warranty period. Distinct from a production guarantee — the production guarantee is from the installer and concerns total system production; the performance warranty is from the manufacturer and concerns individual module output.

Typical terms: Modules guaranteed to produce ≥85–87% of nameplate output at year 25, with linear degradation curves specified in the warranty document.

Why it matters: The performance warranty is the homeowner's protection against accelerated module degradation. It's distinct from — and generally stronger than — the installer's production guarantee, because it's from a financially stable manufacturer and concerns measurable per-module performance.

Related: Module, Degradation Rate, Equipment Warranty, Production Guarantee

A public record filed by a lender with the California Secretary of State to claim a security interest in specific property. For solar loans, the UCC-1 is filed on the equipment itself — the panels, inverters, and battery — not on the home or the underlying real estate. It does not become a lien against real property and does not affect the homeowner's title.

Why it matters: Solar loan UCC-1 filings sometimes cause confusion or panic when discovered during refinancing or property transactions. The UCC-1 is standard, it's a fixture filing on the equipment, and it does not impair the home's title. It can be looked up by anyone at the California Secretary of State's UCC search portal.

Related: Solar Loan, Mechanic's Lien

• Cross-references: Solar Lease in Pricing & Financing

See full definition under Solar Lease in Pricing & Financing. From a contracts perspective, the key terms to review are: (a) length of term, (b) escalator percentage, (c) buyout terms (typically defined at years 5, 7, or 10), (d) assignment terms if the home is sold, (e) end-of-term disposition (does the system come down, transfer to homeowner, or get re-leased).

Related: Solar Lease, PPA

Under California Business and Professions Code §7159, a homeowner has the right to cancel a home solicitation sales contract — including most residential solar contracts — within three business days of signing, without penalty. The contract must include written notice of this right.

Why it matters: A homeowner who signed a contract under pressure has a hard legal right to cancel within the rescission period. The cancellation must be in writing (typically by certified mail to the installer). Installers who attempt to discourage rescission, or who delay providing equipment serial numbers and installation dates to push past the rescission period, are violating consumer protection law.

Related: Solar Loan, PPA, Solar Lease

A lien against real property filed by a contractor or material supplier who has not been paid for work performed or materials provided. In California residential solar contexts, mechanic's liens are typically filed by subcontractors (installers) or material suppliers (panel/inverter distributors) when the prime contractor has been paid by the homeowner but has failed to pay them in turn.

Why it matters: A properly executed preliminary notice and contract structure protects the homeowner from double-payment exposure. When working with national-dealer solar installers, the homeowner should confirm that material and labor payments are flowing properly through the subcontractor chain. Mechanic's liens against the home's real property are a real risk when an installer financially fails mid-installation.

Related: UCC-1 Filing, Workmanship Warranty

A written modification to an existing solar contract specifying a change in scope, price, or schedule. Common examples: structural reinforcement discovered during installation, additional electrical work needed for a panel upgrade, or scope reduction due to roof condition issues.

Why it matters: Change orders should always be in writing and signed before work proceeds. Verbal commitments to "fix it later" or "we'll adjust the invoice" routinely become disputes. Any cost increase or scope change should generate a written change order; absence of one is itself a red flag during the installation period.

Related: Notice to Proceed

The process by which warranties transfer from the original homeowner to a subsequent owner when the home is sold. Manufacturer warranties (equipment and performance) typically transfer automatically with the property because they're tied to the equipment, not the original purchaser. Installer warranties (workmanship, production guarantee) typically transfer only with proper written notice to the installer within a defined window after sale.

Why it matters: When selling a home with solar, the buyer's home inspector and lender will ask for warranty documentation. Confirming warranty transferability — and executing any required notice within the prescribed window — is a routine but easy-to-miss step in a solar-equipped home sale.

Related: Equipment Warranty, Workmanship Warranty

California's previous net metering rule, in effect from 2016 to April 2023. Under NEM 2.0, residential solar systems received credit for exported electricity at approximately full retail rate (minus a small non-bypassable charge of roughly $0.02/kWh). Systems installed before April 13, 2023 are typically grandfathered into NEM 2.0 for 20 years from PTO.

Why it matters: NEM 2.0 grandfathering is a major asset for homeowners with existing solar systems — the export credit value can be 4–5× higher than NEM 3.0 for the same exported kWh. When selling a home with solar, NEM 2.0 status should be disclosed and documented; it adds meaningful value.

Related: NEM 3.0, NBT, Export Rate

California's current rule for residential solar grid interconnection and export compensation, effective April 14, 2023. Formally known as the Net Billing Tariff (NBT). Under NEM 3.0, residential systems are compensated for exported electricity at the Avoided Cost Calculator (ACC) rate — roughly $0.05–$0.10/kWh average, with significant time-of-day variation. This is approximately 75% lower than NEM 2.0 export rates.

Why it matters: NEM 3.0 fundamentally changed residential solar economics in California. Systems sized to maximize export under NEM 2.0 are not economically optimal under NEM 3.0. The shift makes battery storage important: storing daytime excess for evening use yields more value than exporting it.

Related: NEM 2.0, NBT, Avoided Cost Calculator, Battery

The formal regulatory name for California's NEM 3.0 rule. "NEM 3.0" is the colloquial name used in industry conversation; "NBT" is the name used in CPUC documents and utility tariff filings.

Why it matters: Same rule, different names depending on context. Worth knowing both so you can read utility filings, CPUC decisions, and installer proposals without confusion.

Related: NEM 3.0

The methodology used by California utilities to calculate export compensation rates under NEM 3.0. The ACC estimates the value of solar exports to the utility based on the cost of alternative resources (gas-fired peakers, capacity, distribution avoidance, etc.) at the specific time and location of the export. ACC rates vary hour-by-hour and season-by-season; they are highest during summer evening peak periods and lowest during midday spring/fall periods when solar export is most abundant.

Why it matters: The ACC is why NEM 3.0 export rates vary so much by time of day. Midday exports may compensate at $0.03–0.05/kWh; evening exports during summer can compensate at $0.30+/kWh. The economics of battery storage under NEM 3.0 are largely driven by ACC time-of-day patterns — batteries shift solar production from low-value midday export to high-value evening use.

Related: NEM 3.0, Export Rate, Battery

The per-kWh rate a homeowner is paid for solar electricity exported to the grid. Under NEM 2.0, the export rate was essentially full retail rate minus small charges. Under NEM 3.0, the export rate is the Avoided Cost Calculator (ACC) value, which varies by hour and season.

Why it matters: Export rate is what determines whether oversizing a solar array makes economic sense. Under NEM 2.0, oversizing was rewarded — extra production exported at full retail rate. Under NEM 3.0, oversizing is penalized — extra production exported at ACC rates may compensate at 1/5 the retail rate. Optimal NEM 3.0 system sizing pairs PV with battery storage to maximize self-consumption.

Related: NEM 3.0, Avoided Cost Calculator, Self-Consumption Rate

PG&E's standard time-of-use residential rate plan, with peak hours typically 4 PM–9 PM. Most solar customers default to E-TOU-C unless they choose another plan. Rates vary by season (higher in summer June–September) and by time (peak rates roughly 50–60% higher than off-peak).

Why it matters: Rate plan choice affects solar economics significantly. For solar customers without battery, plans with later peak windows tend to be worse (because solar production tapers off before peak begins); for solar customers with battery, the peak window is when stored solar is most valuable.

Related: Time of Use, E-1, EV2-A

PG&E's time-of-use rate plan designed for households with electric vehicles, featuring lower overnight rates (typically 12 AM–3 PM at off-peak rate) and steeper peak/off-peak differentials. Available to any residential customer, not just EV owners.

Why it matters: For solar + battery households, EV2-A often produces lower total bills than E-TOU-C — the steeper differential means stored solar delivers more value during peak hours, and the lower overnight rate reduces the cost of any grid consumption. Worth evaluating annually whether to switch.

Related: Time of Use, E-TOU-C

PG&E's legacy tiered (non-time-of-use) residential rate plan. Charges a single rate that steps up at usage tiers (Tier 1 baseline, Tier 2 above baseline). No time-of-day variation. Solar customers are generally not eligible for E-1 unless grandfathered.

Why it matters: E-1 is the historical residential rate plan and the reference point most homeowners had in mind before time-of-use plans became standard. Most current solar customers are on a TOU plan; references to "PG&E rates" in old materials often mean E-1 rates and may not reflect current usage costs.

Related: Time of Use, E-TOU-C

A rate structure where the per-kWh price varies by time of day, typically with higher peak rates (4–9 PM) and lower off-peak rates (overnight and midday). California has been transitioning all residential customers to TOU rates over multiple years.

Why it matters: TOU shifts the economic case for solar. Under flat rates, every kWh produced by solar offsets the same value of grid consumption. Under TOU, solar produced midday (low-value period) offsets less value than solar consumed (via battery) during evening peak. This is the single largest driver of why battery storage matters under NEM 3.0 + TOU rates.

Related: E-TOU-C, EV2-A, NEM 3.0

The annual reconciliation between energy a NEM customer has imported from the grid and energy they have exported. Each month, the utility tracks the net usage; at the end of the customer's 12-month NEM cycle (the "true-up date"), the cumulative net is settled — either the customer owes for net imports, or receives credit for net exports.

Why it matters: The true-up cycle is why solar customers see small monthly bills (covering only non-bypassable charges and any net imports) followed by a larger annual reconciliation in their true-up month. A homeowner who has oversized their system may discover at true-up that their excess production has been compensated at very low rates (under NEM 3.0); a homeowner who has undersized may see a substantial true-up bill. Understanding the true-up cycle is essential to interpreting solar bills.

Related: Export Rate, NEM 3.0

A solar system whose original installer is no longer servicing customers — typically due to bankruptcy, acquisition, or exit from the residential market. The system itself continues to operate; the installer-provided warranties and services do not.

Why it matters: Orphaning is increasingly common in 2026 as residential solar consolidates and several large installers have filed bankruptcy. Equipment warranties (from manufacturers) survive installer orphaning; workmanship warranties and production guarantees do not. The orphaned homeowner's first priorities are typically (a) confirming manufacturer warranty status, (b) identifying a replacement servicer for future workmanship-type issues, and (c) confirming loan and monitoring continuity.

Related: Change of Installer, Workmanship Warranty, Manufacturer Account Transfer

The formal process by which a manufacturer transfers the installer-of-record designation for an existing system from the original installer to a new licensed installer. Required for the new installer to access monitoring portals, service the system under manufacturer warranty, or order warranty replacement parts.

Why it matters: Following installer bankruptcy or exit, the change-of-installer process is what allows the homeowner to establish service continuity with a new licensed installer. Each manufacturer has its own process (Enphase, SolarEdge, Tesla, Generac all differ); the new installer typically initiates the process, with documentation from the homeowner. This is something a licensed installer must do — not something the homeowner can do directly, and not something TIV can do (TIV is not a licensed installer).

Related: Orphaned System, Manufacturer Account Transfer

The California state agency responsible for licensing, regulating, and disciplining contractors operating in California. All residential solar installers operating in California are required to hold an active CSLB license (typically C-10 or C-46) in good standing.

Why it matters: CSLB license status can be verified for any installer at cslb.ca.gov. The lookup reveals license type, expiration, complaint history, and bond status. An installer without an active CSLB license cannot legally perform solar installation work in California; this is the most basic due-diligence check on any installer.

Related: C-10 License, C-46 License

A California contractor license issued by the CSLB authorizing the holder to perform electrical work, including residential solar installation. Most residential solar installers in California operate under a C-10 license.

Why it matters: The C-10 license is the most common path for solar installation in California. An installer must hold either an active C-10 or an active C-46 to legally perform residential solar work. The license is the homeowner's primary legal recourse mechanism (through the CSLB complaint process) if work is performed defectively.

Related: CSLB, C-46 License

A California contractor license issued by the CSLB authorizing the holder to perform solar installation work — but specifically limited to solar (as distinct from the broader electrical scope of C-10). A C-46 holder generally cannot perform electrical work outside the solar installation context.

Why it matters: Some residential solar installers operate under C-46 rather than C-10. The choice has implications for the scope of work the installer can legally perform — a C-46 installer typically cannot perform a main panel upgrade or other electrical work outside the solar installation. For homeowners whose installation requires panel upgrades, a C-10 installer is usually preferable.

Related: CSLB, C-10 License

The process of transferring a system's monitoring account from the original installer's account to the homeowner's personal account. Required following installer orphaning to give the homeowner direct visibility into their own system's monitoring data.

For Enphase: contact Enphase customer service (888-879-3144) with site ID and proof of ownership. For SolarEdge: monitoring.solaredge.com customer support. For Tesla: handled through Tesla's customer portal.

Why it matters: Following installer orphaning, monitoring portal access often becomes inaccessible because the account is under the installer's credentials. Transferring to a homeowner account restores visibility — important for confirming production, identifying faults, and providing data to a future replacement installer.

Related: Orphaned System, Change of Installer

Two types of federal bankruptcy filings relevant to solar installer failures:

Chapter 7 is liquidation — the installer ceases operations entirely, assets are sold off, and the entity is dissolved. Workmanship warranties from a Chapter 7 installer are gone; there is no entity to honor them.

Chapter 11 is reorganization — the installer continues operating under court supervision while restructuring debt. Workmanship warranties from a Chapter 11 installer may continue, but enforcement is uncertain.

Why it matters: Both 2024 and 2025 saw multiple large residential solar installer bankruptcies. Confirming the type and status of an installer's bankruptcy proceedings, via the federal PACER court records system or news reporting, is the first step in assessing what (if any) installer-provided protections remain.

Related: Orphaned System, Workmanship Warranty

A contract where a solar company owns the system on a homeowner's roof and sells the homeowner the electricity it produces, typically over a 20–25 year term. The homeowner does not own the equipment; they pay a per-kWh rate for the power, often with an annual escalator.

Why it matters: PPAs are sold as "no money down solar" but are not free solar. Over a 20–25 year term with a 2–3% escalator, the total payments under a PPA frequently exceed the cost of an outright purchase of the same equipment. The savings claim depends on utility rates rising faster than the escalator.

Related: Escalator, Solar Lease, Cash Purchase

The technology that converts sunlight directly into electricity via semiconductor materials. "Solar PV" is the standard industry term for what most people mean by "solar panels" or "solar electric" systems. Distinct from solar thermal (which heats water using sunlight, not relevant to residential electric systems).

Why it matters: "PV" is the most common acronym in residential solar industry materials; worth recognizing.

Related: Module, DC

The utility's formal approval allowing a newly installed solar system to legally turn on and begin operating in parallel with the grid (including exporting power). PTO is granted after the installer has completed installation, the local building department has inspected and approved the work, and the utility has reviewed the interconnection paperwork.

Typical timeline: 2–8 weeks after installation, depending on the utility and the local building department's pace. PG&E PTO times have historically been the longest of California's IOUs.

Why it matters: A system cannot legally produce power for the home until PTO is granted, even if it's physically installed and functional. Homeowners are sometimes surprised by the gap between installation completion and PTO; this is normal. The PTO date is also the start of the NEM cycle (and the 20-year NEM 2.0 grandfathering clock for systems on legacy NEM 2.0).

Related: NEM 3.0, NEM 2.0

A unit of electrical power, equal to 1,000 watts. Used to describe the size or capacity of a solar system (e.g., "a 9.6 kW system"). Power is the rate at which energy is being produced or consumed at any moment.

Why it matters: Solar systems are described by their kW rating (e.g., 9.6 kW DC), which is the maximum power they can produce under standard test conditions. Distinct from kWh — a 9.6 kW system doesn't produce 9.6 kWh per hour; it produces less because real-world conditions don't match standard test conditions.

Related: kWh, Watt

A unit of electrical energy, equal to one kilowatt of power flowing for one hour. The standard unit utilities use for billing — when PG&E charges $0.45/kWh during peak, they're charging $0.45 for every kWh of electricity consumed.

Why it matters: kWh is the unit homeowners encounter on every utility bill. Annual home consumption is typically 8,000–14,000 kWh; a 9.6 kW solar system might produce 13,000–15,000 kWh per year in the Bay Area. The relationship between system size (kW) and annual production (kWh) depends on location, orientation, tilt, and shading.

Related: kW, Watt

The basic unit of electrical power. 1,000 watts equals 1 kilowatt. Individual solar modules are rated in watts (e.g., a "400-watt panel" produces 400 watts under standard test conditions).

Why it matters: Watts are the unit underlying $/W pricing. A 9.6 kW system has 9,600 watts; at $4.875/W, that's $46,800.

Related: kW, kWh, $/W

A type of electrical current that flows in a single direction. Solar panels produce DC electricity natively; the inverter converts it to AC for use in the home.

Why it matters: Solar system size is often described in "DC nameplate" (the panels' maximum DC output) — a 9.6 kW DC system. AC output is typically slightly lower because the inverter has efficiency losses and may clip at higher production. The DC-to-AC ratio is the relationship between the two.

Related: AC, Inverter, DC-to-AC Ratio

A type of electrical current that reverses direction periodically (60 times per second in U.S. residential electrical systems). All homes use AC electricity; all utility grid power is AC. Solar systems produce DC, which the inverter converts to AC.

Why it matters: The DC/AC distinction matters for understanding inverter sizing and for understanding battery coupling (AC-coupled vs DC-coupled batteries differ in where the AC conversion happens).

Related: DC, Inverter, AC vs DC Coupled Battery

An organization that governs a residential community and enforces covenants, conditions, and restrictions (CC&Rs). Many HOAs have rules governing solar installation appearance — module placement, mounting style, conduit visibility.

Why it matters: California's Solar Rights Act (Civil Code §714) limits HOAs' ability to prohibit solar installation, but HOAs can require reasonable aesthetic restrictions. Before installation, homeowners in HOA-governed communities should review the relevant CC&Rs and submit any required architectural review applications. Some installers offer HOA approval as a service; some leave it to the homeowner.

Related: AHJ

The government entity with authority to enforce building codes and permit requirements in a specific location — typically the city or county building department. The AHJ inspects the installation, issues permits, and approves the final installation before the utility will grant PTO.

Why it matters: AHJ requirements vary substantially across California cities and counties. Some AHJs have streamlined solar permitting (SolarAPP+); others have lengthy review processes and unique local requirements. The installer is responsible for navigating AHJ requirements; homeowners typically don't interact with the AHJ directly.

Related: PTO, NEC

The national standard for safe installation of electrical wiring and equipment in the United States, published by the National Fire Protection Association (NFPA 70). California adopts the NEC as the basis of the California Electrical Code (CEC), typically with state-specific amendments. All residential solar installations in California must comply with the current NEC version adopted by the state and any AHJ amendments.

Why it matters: Code compliance is the installer's responsibility, not the homeowner's. The relevant NEC articles for residential solar (most notably Article 690 covering solar PV systems and Article 706 covering energy storage) change every code cycle, and installers must stay current. Code-compliant installation is what AHJ inspection confirms before PTO.

Related: AHJ, CEC

California's version of the National Electrical Code, adopted as Title 24 Part 3 with California-specific amendments. The CEC is the actual code enforced by California AHJs. The CEC is updated on a 3-year cycle to align with NEC updates.

Note: The acronym "CEC" can also refer to the California Energy Commission, which is a different entity (and which regulates Title 24 Part 6, the energy efficiency code). Context usually clarifies which is meant.

Why it matters: California's electrical code is generally stricter than the underlying NEC, particularly for solar and storage installations. Installers operating in California must understand both the NEC and the California-specific amendments.

Related: NEC, AHJ

Two parameters describing a solar array's geometric orientation toward the sun:

• Tilt is the angle of the array relative to horizontal (a flat array has 0° tilt; a vertical wall mount has 90° tilt). Most California residential roofs have tilts between 15° and 30°.
• Azimuth is the compass direction the array faces. South-facing (180° azimuth) is optimal for total annual production in the Northern Hemisphere; west-facing (270°) produces more late-day energy, valuable under TOU rates.

Why it matters: Production estimates depend heavily on tilt and azimuth. A south-facing array at 25° tilt in San Jose might produce 1,580 kWh/kW/year; a west-facing array at the same tilt produces approximately 1,420 kWh/kW/year — roughly 10% less total, but more during evening peak hours. Under NEM 3.0 + TOU rates, the economic comparison between south and west orientation has shifted; west-facing arrays have become relatively more attractive than they were under NEM 2.0.

Related: Production Estimate, PVWatts

A free production-estimation tool published by the National Renewable Energy Laboratory (NREL) that estimates annual solar production for a specific location, orientation, and system configuration. Current version: PVWatts v8.

Why it matters: PVWatts is the independent baseline used to validate installer production estimates. An installer's production estimate that is more than ~5% above PVWatts for the same site and orientation should be questioned — it may indicate optimistic assumptions about shading, soiling, or system losses. An estimate substantially below PVWatts may indicate site-specific shading or other constraints the installer is accounting for.

Related: Production Estimate, Tilt and Azimuth, Shading Analysis

An installer's prediction of how much electricity a proposed system will produce, typically expressed as kWh per year, sometimes broken down by month. Calculated using location-specific solar resource data, system configuration, and assumed losses (shading, soiling, wiring, inverter efficiency).

Why it matters: Production estimates drive the savings claims in proposals. An optimistic estimate produces an attractive-looking payback that doesn't materialize. Conservative estimates produce realistic payback. The Performance Review service compares actual production against the original estimate to identify whether a system is underperforming (component issue) or simply producing what the location supports (optimistic original estimate).

Related: PVWatts, Production Guarantee

An assessment of how much solar resource is lost to shading from trees, neighboring buildings, chimneys, and other obstructions, conducted at the proposed array location. Tools include Solar Pathfinder (manual), HelioScope (software), and various aerial-imagery-based services.

Why it matters: Even modest shading can disproportionately affect string inverter systems (where a single shaded panel can drag down the entire string). Microinverter and optimizer systems are more shade-tolerant. A proposal that doesn't address shading on a partially shaded site is incomplete; a proposal that claims "no shading" on a site with obvious obstructions is misleading.

Related: Microinverter, Optimizer

The reduction in solar production caused by dust, dirt, pollen, bird droppings, and other accumulation on module surfaces. In California, soiling losses are typically 3–5% annually, higher in dusty/agricultural areas and lower in coastal areas with regular rain.

Why it matters: Annual production estimates should account for soiling. Rain typically resets soiling losses; in California's dry season (May–October), soiling can accumulate over months. Most residential modules don't require active cleaning to maintain reasonable performance, but in particularly dusty conditions, an annual cleaning can recover several percentage points of production.

Related: Production Estimate, Module

The condition where solar panels can produce more DC power than the inverter is sized to convert to AC, resulting in lost production. Occurs when systems are intentionally oversized on the DC side relative to the AC inverter capacity (a high DC-to-AC ratio).

Why it matters: Some installers oversize DC capacity relative to inverter capacity to maximize total annual production at the cost of some clipping at peak production hours. This is a design choice with trade-offs — modest oversizing (DC/AC ratio 1.1–1.2) is common and economically sensible; aggressive oversizing (1.4+) sacrifices significant production to clipping. Proposals should disclose the DC/AC ratio.

Related: Inverter, DC-to-AC Ratio

The percentage of a solar system's production that is consumed by the home (rather than exported to the grid). A home without battery storage typically has a self-consumption rate of 30–50%; a home with appropriately sized battery storage can reach 80–95%.

Why it matters: Under NEM 3.0, self-consumption rate is the single most important metric for solar economics. Exported electricity earns the low ACC rate; self-consumed electricity offsets full retail rate. A 10 percentage point increase in self-consumption (e.g., from 50% to 60%) typically produces a 15–20% improvement in solar bill savings.

Related: Battery, NEM 3.0, Export Rate

The ratio of a solar system's DC nameplate capacity to its AC inverter capacity. A 9.6 kW DC system paired with an 8.0 kW AC inverter has a DC/AC ratio of 1.2. Standard residential systems typically run 1.1–1.25; aggressive designs run 1.3+.

Why it matters: A higher DC/AC ratio maximizes total annual production from a fixed inverter capacity but causes more clipping during peak production hours. The economically optimal ratio depends on the local solar resource, rate structure, and any export limits. For California residential systems under NEM 3.0 + battery, modest oversizing (1.15–1.25) is often optimal.

Related: Inverter, Inverter Clipping

Federal legislation signed in August 2022 that extended and expanded the residential solar Investment Tax Credit (§25D) at 30% through December 31, 2032, with planned phase-downs through 2034. The IRA also restructured the commercial ITC as the technology-neutral Section 48E, expanded eligibility to standalone storage, and created various manufacturing tax credits.

⚠️ The IRA's residential solar provisions were largely reversed by the One Big Beautiful Bill Act (OBBBA), signed July 4, 2025. Specifically, §25D was terminated effective December 31, 2025 — eliminating the residential homeowner solar/storage credit eight years earlier than the IRA's original 2032 schedule. The §48E commercial credit timeline was also shortened for solar (now requiring construction-start by July 4, 2026 or placed-in-service by Dec 31, 2027), but §48E for standalone storage was preserved with a longer runway through 2032.

Why it matters. The IRA established the policy framework that drove residential solar adoption through 2025. References to "the IRA's 30% credit" in 2026 sales materials require careful parsing — the residential homeowner version of that credit is gone; the commercial/TPO version persists but reaches homeowners only through lease or PPA structures.

Related: ITC, Section 48E, OBBBA

Federal legislation signed by President Trump on July 4, 2025, that substantially restructured federal clean energy tax incentives. For residential solar, the OBBBA's key provisions:

• Section 25D (Residential Clean Energy Credit) terminated effective December 31, 2025 — eliminating the 30% federal tax credit that homeowners could claim on personal returns for cash- or loan-financed solar PV and battery storage systems.
• Section 48E (Commercial ITC) timeline shortened for solar PV — projects must begin construction by July 4, 2026 or be placed in service by December 31, 2027 to claim the 30% credit.
• Section 48E for standalone energy storage preserved with longer runway — 30% credit available through 2032 with phase-downs starting 2034.
• Foreign Entity of Concern (FEOC) restrictions imposed — limiting tax credit eligibility for projects using components sourced from prohibited foreign entities, particularly China. Threshold percentages tighten annually from 2026 through 2030.

Why it matters. OBBBA is the single most consequential piece of federal legislation affecting residential solar economics in the current decade. Any analysis, proposal, or article published before July 2025 that assumes the IRA's 2032 timeline is now incorrect. Any 2026 sales conversation that references "the 30% federal credit" without specifying §25D vs §48E is incomplete at best.

Related: IRA, ITC, Section 48E, TPO

The California state agency that regulates investor-owned utilities (IOUs) including PG&E, Southern California Edison, and San Diego Gas & Electric. CPUC sets utility rates, approves utility rate plans, oversees the NEM/NBT tariffs, and adjudicates utility-customer disputes.

Why it matters: CPUC decisions drive most of the regulatory context for California residential solar — rate plans, export compensation, interconnection rules, and so on. Major changes to the regulatory landscape (such as NEM 3.0) originate from CPUC proceedings. CPUC decisions are public and searchable at docs.cpuc.ca.gov.

Related: NEM 3.0, IOU

A privately owned, for-profit electric utility regulated by a state regulatory commission. California's three major IOUs are PG&E, Southern California Edison (SCE), and San Diego Gas & Electric (SDG&E), collectively serving about 75% of California electric customers. IOUs are regulated by the CPUC.

Why it matters: Most California residential solar customers are served by an IOU and subject to CPUC-regulated rates and tariffs (including NEM 3.0). Customers served by publicly owned utilities (POUs) like SMUD or LADWP are subject to different rules and tariffs set by their local utility, not by CPUC.

Related: POU, CPUC

A non-profit electric utility owned by a municipality, county, or public agency. California POUs include SMUD (Sacramento), LADWP (Los Angeles), Roseville Electric, Alameda Municipal Power, and others. POUs are not regulated by CPUC; they set their own rates and tariffs through their local governing bodies.

Why it matters: POU customers operate under different rules than IOU customers. NEM 3.0 (a CPUC decision) does not directly apply to POUs, though most POUs have adopted similar reforms. Solar economics in POU territory can differ substantially from IOU territory.

Related: IOU, CPUC

A planned utility power outage initiated during high wildfire risk conditions (typically high winds, low humidity, dry vegetation) to prevent transmission and distribution equipment from sparking wildfires. Implemented primarily by PG&E in Northern California, also by SCE and SDG&E.

Why it matters: PSPS events are a primary driver of residential battery storage adoption in California's high-fire-risk areas. Solar without battery doesn't provide backup during a PSPS event — the system shuts down for grid safety. Solar + battery (with appropriate islanding capability) can provide backup power during PSPS events, with duration depending on battery sizing and home consumption.

Related: Battery, Backup Capacity, SGIP

California's building energy efficiency code, last updated 2022 (next update cycle: 2025). Since 2020, Title 24 has required solar PV on most new residential construction; the 2022 update added battery storage requirements for many new construction and major-remodel projects.

Why it matters: For new construction or major remodels, Title 24 sets minimum solar and storage requirements. For existing homes, Title 24 generally doesn't apply unless the homeowner is undertaking major work that triggers code review. The standards are administered by the California Energy Commission (not to be confused with the California Electrical Code, also abbreviated CEC).

Related: CEC, NEC

A coordinated network of distributed energy resources — primarily residential and commercial batteries, but also smart thermostats, electric vehicle chargers, and water heaters — that an operator (typically a utility, a manufacturer like Tesla, or a third-party aggregator) can dispatch collectively to provide grid services. From the grid's perspective, a VPP behaves like a single large power plant.

Residential homeowner role. A homeowner with a compatible battery (Tesla Powerwall, Enphase IQ Battery, Generac PWRcell, etc.) enrolls their system in a specific VPP program. During grid-stress events (typically summer evenings between 4 PM and 9 PM), the VPP operator dispatches the battery — discharging stored energy back to the grid. The homeowner is compensated based on energy delivered or capacity contributed.

California VPP programs available in 2026: - DSGS (Demand Side Grid Support) — California Energy Commission-run program, currently the primary residential VPP pathway in California. Up to ~$350/year per Powerwall. - ELRP (Emergency Load Reduction Program) — CPUC-run program through PG&E, SCE, SDG&E. Tesla closed new enrollments April 2024; other battery brands may still enroll. - Utility/manufacturer programs — Tesla VPP (DSGS framework), Generac PWRcell California program (up to $1,000 upfront for newly installed systems), and others.

What homeowners are not always told. - Earnings are typically $300–$700 per year per battery under current California programs — material, but not the "passive income windfall" some sales pitches suggest. - Cycling impact on battery life is real but usually modest for current-generation LFP batteries (Tesla Powerwall 3, Enphase IQ Battery), which typically have warranty terms that explicitly cover VPP participation. Older or non-LFP batteries may have warranty exclusions for "commercial aggregation" — read the warranty before enrolling. - Backup power may be compromised during dispatch events, which often coincide with grid stress (the same conditions that lead to PSPS events). Adjust the "Event Backup Reserve" setting in the battery's app to preserve a floor. - Most programs are mutually exclusive — you cannot enroll in DSGS and ELRP simultaneously. Choosing between them depends on system, region, and rate plan. - VPP income is taxable. Most homeowners enrolled by their installer do not factor this in. - Installer/dealer enrollment incentives sometimes flow to the installer rather than the homeowner. Confirm where the "$1,000 upfront enrollment bonus" actually goes before signing anything.

The honest framing. VPP enrollment is a reasonable choice for many homeowners with battery storage — particularly those who value supporting the grid and who don't depend on the battery for daily peak-shifting under TOU rates. The pure financial case is usually modest. The pitch that VPPs make solar economics work without batteries to lean on, or that they generate substantial passive income, oversells the reality.

Related: DSGS, ELRP, Demand Response, Battery, PSPS

A California Energy Commission-administered program created under Assembly Bill 205 (2022) that pays homeowners with battery storage for dispatching their batteries to support the grid during stress events. Currently the primary residential VPP pathway in California, available to PG&E, SCE, and SDG&E customers.

How it works. Homeowners enroll their battery (Tesla Powerwall, Enphase IQ Battery, and other compatible systems) through a participating aggregator — most commonly Tesla via the Tesla app. During the May–October DSGS season, the aggregator dispatches the battery during evening peak hours. The homeowner is compensated based on monthly performance, typically receiving payment annually after season-end reconciliation.

Compensation. Tesla's DSGS program advertises up to $350 per Powerwall per year. Actual earnings depend on the number of dispatch events called, the homeowner's contribution per event, and whether the homeowner qualifies for the "no event baseline" treatment (systems installed after June 2023 require utility account number for full payout).

Eligibility constraints. Homeowners cannot be simultaneously enrolled in DSGS and a conflicting demand response program (such as ELRP). Tesla's VPP customers must unenroll from ELRP before joining DSGS. The interaction between DSGS, ELRP, and the household's underlying utility rate plan is non-trivial and worth understanding before enrollment.

Why it matters. DSGS is the most accessible residential VPP program for California homeowners in 2026 and the program most installers will reference when pitching "free money from your battery." The pitch is real but the earnings are modest; the program is well-structured for environmentally motivated homeowners with appropriate battery sizing.

Related: VPP, ELRP, Battery, Demand Response

A CPUC-administered program operated by PG&E, SCE, and SDG&E that compensates homeowners (and commercial customers) for reducing grid demand or exporting battery power during emergency grid-stress events. Distinct from DSGS in that ELRP events are triggered by actual grid emergencies (typically less frequent but with higher per-event compensation), while DSGS dispatches on a more regular monthly basis.

Compensation structure. ELRP pays $2.00 per kWh for power discharged during an event, which can yield significant per-event payouts but is unpredictable from a planning perspective.

Current status. Tesla closed new enrollments in its ELRP partnership in April 2024 — new Tesla Powerwall customers are routed to DSGS instead. Other battery manufacturers (Enphase, Generac, Sonnen) may still offer ELRP enrollment for compatible systems through their utility partnerships.

Why it matters. ELRP is the older, more episodic California VPP framework. Most new battery installations in 2026 enroll in DSGS rather than ELRP, but homeowners with existing ELRP enrollment (typically pre-April 2024 Tesla installations) may continue to receive ELRP compensation. The two programs cannot be combined.

Related: VPP, DSGS, Demand Response

The general category of programs in which utility customers reduce or shift their electricity consumption (or export from on-site storage) in response to grid signals — typically during periods of high demand or grid stress. Demand response programs predate VPPs by decades; VPPs are a modern, software-coordinated subset of demand response that aggregate distributed batteries and other devices into dispatchable resources.

Common residential demand response forms in California: - Battery dispatch programs (DSGS, ELRP, utility-specific programs) — the homeowner's battery contributes energy to the grid on demand. - Smart thermostat programs (PG&E SmartAC, SCE Summer Discount Plan) — the utility briefly adjusts the homeowner's AC during peak events. - EV charging programs (utility EV pilot programs) — the homeowner's vehicle charging schedule shifts to off-peak periods. - Time-of-Use pricing itself — arguably the most widely deployed form of price-based demand response.

Why it matters. Demand response is the broader policy and program context that VPPs fit within. A homeowner being pitched a "VPP enrollment" is being pitched a specific demand response program. The same considerations apply: how much compensation, what control is given up, what device-cycling exposure, what mutual-exclusivity constraints with other programs.

Related: VPP, DSGS, ELRP, Time of Use

---

# Changelog

Summary: Substantial revisions following research-verified review of post-OBBBA federal incentive structure, SGIP funding status, and California VPP programs. The v1.0 ITC and SGIP entries were directionally correct but materially incomplete; v1.1 corrects both and adds the surrounding policy and program context.

Revised entries (3): - ITC (Investment Tax Credit) — §25D, Residential — Rewritten to clearly distinguish §25D (terminated Dec 31, 2025 for cash/loan purchases) from §48E (continues for third-party-owned systems through 2027 for solar, 2032 for standalone storage). Adds the critical sales-conversation warning: "the 30% federal credit still applies" can be technically true under §48E but functionally misleading for cash/loan buyers. - SGIP (Self-Generation Incentive Program) — Rewritten to reflect that all three ratepayer-funded budgets (General Market, Equity, Equity Resiliency) closed Dec 31, 2025. Notes that RSSE remains the only open pathway, and only for income-qualified households on a waitlist basis. - IRA (Inflation Reduction Act) — Updated to reflect OBBBA's reversal of the IRA's 2032 residential timeline.

New entries (8): - Section 48E (Clean Electricity Investment Tax Credit) — The technology-neutral commercial ITC that continues to apply to TPO solar and standalone storage; the legal mechanism by which 30% federal credit flows into residential solar in 2026 via lease and PPA structures. - TPO (Third-Party Ownership) — The ownership structure (lease, PPA, prepaid) that enables §48E credit flow to residential systems in 2026. - RSSE (Residential Solar and Storage Equity) — The AB 209-funded California program that continues to offer substantial rebates for income-qualified households. - OBBBA (One Big Beautiful Bill Act) — The July 2025 federal legislation that terminated §25D and reshaped the federal clean energy incentive structure. - VPP (Virtual Power Plant) — The aggregated battery dispatch programs (and what installers are not telling homeowners about them). - DSGS (Demand Side Grid Support) — California's primary residential VPP framework. - ELRP (Emergency Load Reduction Program) — The older episodic VPP program, partially closed to new enrollments. - Demand Response — The broader category that VPPs fit within.

New category (1): - 9. Grid Programs & Demand Response — Houses VPP, DSGS, ELRP, Demand Response.

Total terms: 87 (up from 74 in v1.0)

Article candidates flagged for The Installer's Lens column: - "Section 48E and the 30% Tax Credit Still Exists — But Not for You" (high priority) - "VPPs in California: The Earnings Are Real. The Pitch Is Misleading." (high priority) - "SGIP Is Closed. Here's What's Actually Available for California Batteries in 2026." (high priority) - "OBBBA: What the One Big Beautiful Bill Did to Residential Solar" (medium priority) - "The Quiet Math of Battery Cycling: VPPs and Your Warranty" (medium priority)

• Initial canonical glossary established with 74 terms across 8 categories
• All entries reviewed and authored 23 May 2026
• Next review scheduled: comprehensive review every 6 months; targeted updates as policy/rate/market conditions warrant