Appendix: Key Terms

The following terms are defined in the context of community solar.  
Definitions adapted from Clearway Community Solar


Community Solar customers will receive the credit value generated by the assigned portion of the Community Solar farm in solar credits to help reduce their electricity bill. Depending on your home energy usage and the amount of solar production, the value of the solar credits could help offset your energy bill. The amount of your energy supply charges that are reduced, or offset, is your bill offset percentage.

The greenhouse gasses produced from natural sources (like the ocean) and human sources (like transportation). Fossil fuels are the leading cause of carbon emissions from human activities. One way the environmental impact can be understood is by the offsets of carbon emissions made by the solar energy produced from solar farms. For more information about this calculation visit the EPA Greenhouse Gas Equivalencies Calculator.

Community Aggregation allows local governments to group residents and businesses. This helps them negotiate lower electricity rates and choose greener energy options. Residents can opt in or stay with their existing provider.

Community Solar is a solar energy sharing program in which a solar farm (or solar garden) at an offsite location generates the shared electricity. The solar farm is supported by local residents and businesses that can subscribe to a portion of the solar farm. In turn, the community members receive solar credits for the solar energy generated by their subscription. The model allows for locals to benefit from solar energy and support clean energy generation without taking the steps to install and maintain rooftop panels on their home .

A financial measurement used to calculate an entity’s ability to create a sufficient monetary sum to pay its debt obligations. For example, a DSCR will measure how easily a corporation will be able to cover its annual debt obligations using its operating cash flow.

An energy supplier is the company that supplies your home’s power at a contracted kWh rate. The supplier is your local utility company, or, in deregulated regions, it could alternatively be a retail energy provider.

Section 48 of the Internal Revenue Code defines the federal ITC. The ITC allows commercial, industrial and utility owners of photovoltaic (PV) systems to take a one-time tax credit equivalent to 30% of qualified installed costs. There is also a federal residential renewable energy tax credit (Internal Revenue Code Section 25D) but the residential tax credit requires that the PV system be installed on a home the taxpayer owns and uses as a residence, thus it would rarely, if ever, be applicable to community solar projects.

The leading source of carbon emissions, fossil fuels are non-renewable energy sources like oil, coal, and natural gas. These fuels require mining or drilling for extraction and must be burned to produce electricity. Fossil fuels currently make up approximately 81% of U.S. energy demand.

Atmospheric gasses, like carbon dioxide, absorb and emit radiation, thus trapping heat in the atmosphere and warming the planet. The leading source of greenhouse gas emissions in the United States is electricity production.

Interconnection is the process of connecting a source of electric power generation, like a solar farm, to the power grid.

Inverters convert the DC power generated by a solar farm into AC power to supply energy into an electric grid that distributes the power to consumers.


An investor-owned utility (IOU) is a private company that generates, transmits, and distributes electricity to customers. IOUs are owned by shareholders who invest in the company in hopes of earning a profit. They are regulated by the government to ensure that they provide safe and reliable service at fair prices. IOUs are responsible for maintaining the power grid and investing in new infrastructure. They also play a role in developing and deploying renewable energy sources.

1,000 watts of electrical power.


The total energy of 1,000 watts over an hour. On an electric bill, the electricity cost is determined by the amount of energy used by a home. This is measured in kWh. The amount of energy used is then multiplied by your utility rate to determine your energy supply cost and delivery charges. The value of the solar energy produced by a Community Solar farm is determined by the amount of energy the farm produces in kWh, multiplied by the contracted rate of solar power.

A unit of power equal to 1,000 kilowatts, or 1 million watts. Large community solar farms typically measure the solar power generation in megawatts.

A unit equivalent to 1,000 kilowatt hours.

A municipal utility is a government-owned entity that provides essential services, often including electricity, water, and sanitation. Unlike investor- owned utilities focused on profit, municipal utilities prioritize serving the community with reliable and affordable services. They reinvest any profits back into the infrastructure and services they provide, ensuring long-term sustainability.

Net Energy Metering, or NEM, is a billing system where rooftop solar customers are billed for their home’s net energy use, after the output of the solar energy generated by their home is applied. If more solar energy is produced than energy consumed by the home, these credits may apply to the home’s meter. A total of 43 states plus D.C. have implemented net metering policies.


Credits that are generated for the solar energy produced by a customer’s assigned portion of a solar farm each month. These credits can help reduce your energy costs over time. Net Metering Credits is another term for solar credits, virtual net metering credits, or enhanced bill credits. For most regions, the Net Metering Credits are applied directly to a customer’s utility bill.

The complete system that converts sunlight to electricity on a solar farm, from the solar arrays to the remaining necessary components like an inverter.

The system that connects electricity to homes and businesses. The United States has three interconnected grids to ensure stability and meet demand: The Eastern Interconnection, Western Interconnection, and the Electric Reliability Council of Texas (ERCOT) which covers most of Texas. Each of these three interconnections are made up of many regional grid operators that balance supply and demand of electricity and ensure the reliability of power in the region. The solar energy generated by a community solar farm is delivered directly to the power grid, allowing for energy distribution.

An agreement between a customer and a solar system operator where the solar system operator owns, maintains, and operates a solar system, and where a customer purchases the solar energy produced each month at a set price per kWh.

Energy produced from naturally regenerating sources including solar, wind, water, and geothermal power. Renewable energy sources do not require burning of fossil fuels that release harmful greenhouse gas emissions for usable electricity, and are therefore considered clean energy sources.

A renewable energy facility produces two distinct products. The first is electricity. The second is the package of environmental benefits resulting from not generating the same electricity– and emissions –from a conventional gas or coal-fired power plant. These environmental benefits can be packaged into a REC and sold separately from the electrical power. A REC represents the collective environmental benefits, such as avoiding mercury, CO2 and other environmentally harmful pollutants, as a result of generating one megawatt-hour (MWh) of renewable energy. In most cases, RECs are sold on a per MWh basis. However, some project organizers choose to sell all future rights to RECs up front, on a per installed watt basis, effectively capturing an installation rebate and forgoing any future revenue from REC sales.

Placement of solar panels on the rooftop of a home or business for energy to generate solar power for that individual home or business. Rooftop solar requires adequate roof space and access to heavy sunlight, permitting and installation, and maintenance of the solar system by the home or business owner.

A rural electric cooperative is a nonprofit utility owned by its members, the residents it serves. These cooperatives bring electricity to rural areas where it isn’t profitable for investor-owned utilities to operate. They reinvest profits back into the community and prioritize affordability and reliability for their members.

A group of solar panels connected together. A solar array is one component of a photovoltaic system, consisting of the combination of several solar panels. Many solar arrays ultimately create a solar farm.

A security is an investment instrument issued by a corporation, government, or other organization that offers evidence of debt or equity. Any transaction that involves an investment of money in an enterprise, with an expectation of profits to be earned through the efforts of someone other than the investor, is a transaction involving a security. Community solar organizers must take care to comply with both state and federal securities regulations, and preferably, to steer clear of inadvertently offering a security.

A group of solar panels connected together. A solar array is one component of a photovoltaic system, consisting of the combination of several solar panels. Many solar arrays ultimately create a solar farm.

Also called a photovoltaic cell, a solar cell is a component of a solar panel that converts sunlight into electricity via the photovoltaic effect (PV Effect).

Credits that are generated for the solar energy produced by a customer’s assigned portion of a solar farm each month. These credits can help reduce a customer’s energy costs over time. Solar credits are another term for Net Metering Credits, Virtual Net Metering Credits, or Enhanced Bill Credits.

A collection of solar panels in an ideally suited location that produce large quantities of solar energy that is sent to the utility’s power grid for distribution.

Community Solar customers are subscribed to a portion of a Community Solar farm. Customers pay the associated subscription fee each month once the farm is active. Customers may receive billing information on-bill from their local utility or receive a separate bill from their subscription manager for their monthly solar energy charges.


A power company that supplies electricity to a set of customers in regulated and deregulated markets. Utility companies price power supply at a kWh rate. Utility rates historically fluctuate and are unpredictable.

The bill crediting system used by Community Solar that enables crediting for solar energy generated from an offsite farm, rather than from an individual’s home. Massachusetts, Minnesota, Illinois, and New York are among the top Community Solar states that offer virtual net metering.