BTU (British Thermal Unit)
A BTU is a unit of heat energy — specifically, the energy needed to raise the temperature of one pound of water by 1°F. It's the standard rating for the heating or cooling capacity of an appliance, not its energy consumption.
Where you'll see it: Air conditioner sizing (5,000–60,000 BTU for residential units), furnace output ratings, space heater capacity, and gas dryer heat output. A larger BTU rating means more heating/cooling power delivered per hour — but it doesn't tell you the electricity cost on its own. To get cost, BTU has to be combined with efficiency rating (SEER, AFUE, HSPF) and your local energy rate.
Quick conversion: 1 BTU = 0.293 watt-hours. 12,000 BTU = 1 "ton" of cooling capacity (a common central AC sizing unit). Use our AC Running Cost Calculator or Space Heater Cost Calculator to convert BTU + efficiency into an actual dollar cost.
SEER (Seasonal Energy Efficiency Ratio)
SEER measures how efficiently an air conditioner converts electricity into cooling over a typical season — calculated as total cooling output (BTU) divided by total energy input (watt-hours). Higher SEER means the unit delivers the same cooling for less electricity.
Where you'll see it: Central AC and heat pump nameplates. As of 2023, federal minimums are 14 SEER in northern states and 15 SEER in the South/Southwest. Units from before 2006 are often 8–10 SEER — using 40–75% more electricity than a modern 16 SEER unit for the same cooling output.
Why it matters for cost: Upgrading from 10 SEER to 20 SEER roughly cuts cooling electricity use in half. The IRA provides a 30% tax credit (up to $600) for qualifying high-SEER AC units. See the full breakdown in our AC Running Cost Calculator or compare directly in Central AC vs Window Unit.
kWh (Kilowatt-Hour)
A kilowatt-hour is the unit your electric utility bills you on. It represents the energy used by a 1,000-watt (1 kW) device running for one hour — or equivalently, a 100-watt device running for 10 hours. Your electric bill is simply: kWh used × your rate per kWh.
Where you'll see it: Every line of every appliance cost calculation on this site starts here. A 1,500W space heater running 1 hour uses 1.5 kWh; at the U.S. average rate of ~16¢/kWh, that's $0.24.
Typical U.S. rates: Idaho/Pacific Northwest ~9¢/kWh, national average ~16¢/kWh, California ~25¢/kWh, Hawaii ~40¢/kWh. Your exact rate is on your utility bill. Every calculator on this site — from Appliance Energy Cost to Home Energy Cost — starts from this unit.
R-Value
R-value measures a material's resistance to heat flow — essentially, how well it insulates. Higher R-value means better insulating performance and slower heat transfer through walls, attics, floors, and windows.
Where you'll see it: Insulation product labels (R-13 to R-49 for common batts and blown-in materials), and implicitly in window ratings (a single-pane window is about R-1; a good triple-pane window can reach R-5 to R-8).
Why it matters: Recommended attic insulation in most U.S. climates is R-38 to R-60; many older homes have only R-11 to R-19, losing significant heat through the roof in winter and gaining heat in summer. See our Insulation Savings Calculator and the Window Insulation vs Replacement comparison for cost-effective upgrade paths.
CO2e (Carbon Dioxide Equivalent)
CO2e is a standardized way to express the climate impact of different greenhouse gases on one scale. Methane, nitrous oxide, and other gases trap heat far more effectively than CO2 per molecule — CO2e converts their impact into "how much CO2 would cause the same warming."
Where you'll see it: Every carbon footprint calculator on this site — flight emissions, driving emissions, diet carbon, and home energy carbon — reports results in kg or tonnes of CO2e, not just CO2, because it captures the full climate impact including methane from sources like livestock and natural gas leaks.
Example: Methane has roughly 28–36x the warming potential of CO2 over 100 years. A diet with significant beef consumption has a much higher CO2e footprint than its direct CO2 alone would suggest, because of methane from cattle digestion. See our Diet Carbon Calculator and Carbon Footprint Calculator.
Therm
A therm is a unit of natural gas energy equal to 100,000 BTU. Gas utilities bill residential customers per therm used for heating, water heating, and cooking — similar to how electric utilities bill per kWh.
Where you'll see it: Gas furnace and gas dryer cost calculations. At a typical U.S. price of $1.00–1.30 per therm, gas heat costs significantly less per unit of energy than electricity — roughly 3–4x cheaper per BTU-equivalent in most markets.
Why it matters: This price gap is why electric space heaters rarely save money compared to gas central heat unless combined with a significant thermostat setback. See Heating Cost by Fuel Type and Central Heat vs Space Heater for the full comparison.
ENERGY STAR
ENERGY STAR is a certification program run by the U.S. EPA and Department of Energy. Products earning the label meet efficiency standards that typically use 10–50% less energy than standard equivalents, depending on the category.
Where you'll see it: Refrigerators, dishwashers, washing machines, dryers, water heaters, windows, and HVAC equipment. Many ENERGY STAR products also qualify for federal tax credits under the Inflation Reduction Act (IRA) — up to 30% for heat pumps, heat pump water heaters, and heat pump dryers, and up to $600/year for qualifying windows and AC units.
Why it matters: When comparing an older appliance to a new ENERGY STAR model, the certification is a reliable shortcut for "this will use meaningfully less energy" without needing to compare spec sheets line by line. See Refrigerator Energy Cost and Appliance Energy Cost Calculator.
COP (Coefficient of Performance)
COP measures heat pump efficiency as a ratio: units of heating or cooling delivered per unit of electricity consumed. A COP of 3 means the heat pump delivers 3 kWh of heat for every 1 kWh of electricity it uses — moving heat rather than generating it from scratch.
Where you'll see it: Heat pump specifications, heat pump water heaters, and heat pump dryers. Standard electric resistance heating (baseboards, space heaters) has a COP of exactly 1 — one unit of heat per unit of electricity. Modern heat pumps typically run COP 2.5–4 in moderate climates, meaning they're 2.5–4x more efficient than resistance heating for the same warmth.
Why it matters: This is the core reason heat pumps are the recommended electric heating upgrade over baseboards or space heaters — same fuel (electricity), far more heat delivered per dollar. See Heat Pump vs Furnace and Gas Dryer vs Heat Pump Dryer.
MPGe (Miles Per Gallon Equivalent)
MPGe converts an electric vehicle's energy consumption into a gasoline-equivalent fuel economy figure, using the EPA's conversion factor of 33.7 kWh = 1 gallon of gasoline energy-equivalent. It allows EVs and gas cars to be compared on the same "miles per unit of fuel" scale.
Where you'll see it: EV window stickers and fuel economy comparisons. A typical EV rated at 100 MPGe uses about 34 kWh to travel 100 miles — vastly more energy-efficient per mile than even the best hybrid, though the "fuel" (electricity) source and cost differ from gasoline.
Why it matters for cost, not just efficiency: MPGe alone doesn't tell you the dollar cost — that depends on your electricity rate. See our Car vs EV Carbon Calculator and Gas Car vs Hybrid Carbon comparison for full cost and emissions context.
HSPF (Heating Seasonal Performance Factor)
HSPF measures heat pump heating efficiency over a typical heating season — total heat output (BTU) divided by total electricity consumed (watt-hours). It's the heating-mode counterpart to SEER (which measures cooling). Higher HSPF means lower heating costs for the same heat pump.
Where you'll see it: Heat pump specification sheets, usually listed alongside SEER since most heat pumps provide both heating and cooling. Federal minimum as of 2023 is HSPF2 7.5 for most regions. Cold-climate heat pumps designed for sub-freezing performance are rated separately and can maintain efficiency down to -15°F or lower.
Why it matters: A heat pump with a higher HSPF costs less to run through a full winter than a lower-rated unit of the same capacity. Compare options in Heat Pump vs Furnace.
AFUE (Annual Fuel Utilization Efficiency)
AFUE is the percentage of fuel energy a furnace or boiler converts into usable heat over a year, accounting for start-up/shutdown losses and standby heat loss. An AFUE of 95% means 95 cents of every fuel dollar becomes heat in your home; the remaining 5% is lost, mostly as exhaust heat.
Where you'll see it: Gas and oil furnace ratings. Federal minimum is 80% AFUE for most non-weatherized furnaces (90%+ for the Northern climate zone). High-efficiency "condensing" furnaces reach 95–98.5% AFUE by recapturing heat that older units simply vent outside.
Why it matters: Upgrading from an 80% AFUE furnace to a 96% AFUE furnace cuts gas usage by roughly 17% for the same heat output. See Heating Cost by Fuel Type for the full cost comparison across furnace types.
Watt vs Kilowatt
A watt is the base unit of electrical power — the rate at which a device uses energy at any given instant. A kilowatt (kW) equals 1,000 watts. Wattage tells you the rate of energy use; multiplying by time in hours gives you kWh, the actual energy consumed and what you're billed for.
Where you'll see it: Every appliance's nameplate or spec sheet — a hair dryer might be 1,500W, a refrigerator 150W (but running intermittently), a central AC 3,000–5,000W (3–5 kW). Formula: kWh = Watts ÷ 1,000 × Hours used.
Why it matters: This is the base formula behind every calculator on this site. See Appliance Energy Cost Calculator to apply it to any device in your home.
Time-of-Use (TOU) Rate
A time-of-use rate structure charges different prices for electricity depending on when you use it. Peak hours (typically afternoon through evening, when overall grid demand is highest) cost more per kWh; off-peak hours (typically overnight and early morning) cost less — sometimes 30–50% less.
Where you'll see it: Increasingly common in states with high renewable penetration (California, much of the Northeast) as utilities try to shift demand away from peak hours. Not all utilities offer TOU pricing — check your bill or utility website.
Why it matters: Shifting high-energy activities (laundry, dishwashing, EV charging, dryer use) to off-peak hours can meaningfully cut costs with no change in usage amount. See Dryer Cost Guide for an example of the savings.
Demand Charge: A related but distinct concept used mainly for commercial customers (and occasionally residential customers with solar), a demand charge bills based on your single highest peak of power draw (kW) during a billing period, rather than total energy used (kWh) — meaning one brief spike from running several large appliances at once can raise your bill even if total usage stays the same.
Demand Response (DR)
Demand response is a utility program that pays homeowners or businesses to reduce or shift electricity use during periods of peak grid demand — typically the hottest summer afternoons — rather than the utility building more power plant capacity to cover a handful of peak hours a year.
Where you'll see it: Most major U.S. utilities (SCE, PG&E, Con Edison, National Grid, and others) offer some form of residential demand response, usually built around cycling your central AC compressor or adjusting a smart thermostat during a capped number of "event" days each summer.
Why it matters: It's one of the few energy programs that pays you directly with no purchase required. See our demand response programs guide and savings estimator for realistic payout ranges.
BYOT (Bring Your Own Thermostat)
BYOT is a type of demand response program that works through a customer's existing Wi-Fi-connected smart thermostat rather than a utility-installed switch on the outdoor AC unit. The utility (or its software partner) can adjust your setpoint by small, precise increments during peak events instead of cutting compressor power entirely.
Where you'll see it: Increasingly common as smart thermostats (Nest, ecobee, Honeywell) become standard equipment — many utilities now offer a BYOT enrollment option alongside, or instead of, older direct load control hardware.
Why it matters: BYOT programs often pay a modest bonus over basic AC-cycling since the utility gets finer control, and many households already own a qualifying thermostat. See our smart thermostat comparison to check compatibility.
Embodied Carbon
Embodied carbon is the total CO2 emitted during a product's manufacturing, material extraction, transport, and installation — distinct from "operational carbon," which is the emissions produced while using the product (e.g., electricity for a device, fuel for a car).
Where it matters: Solar panels, EVs, and heat pumps all have meaningful embodied carbon from manufacturing — but for products used over many years, the operational carbon savings versus a less-efficient alternative typically outweigh the embodied carbon within 1–3 years of use. For solar panels specifically, embodied carbon is usually offset within 1–4 years of clean electricity generation, out of a 25–30 year lifespan.
Why it matters for decision-making: "It takes more energy to make than it saves" is rarely true for modern efficient products, but embodied carbon is a legitimate factor in the full lifecycle picture. See our Solar CO2 Offset Calculator for a payback-based view.
Carbon Offset
A carbon offset is a reduction or removal of CO2 elsewhere that compensates for emissions you can't yet eliminate directly. One offset typically equals one metric ton of CO2 avoided or removed — through projects like verified reforestation, renewable energy generation, or methane capture at landfills.
Where you'll see it: Solar panels offset carbon by displacing grid electricity; tree planting offsets carbon by absorbing it from the atmosphere as trees grow. Quality varies enormously — look for third-party verification (Gold Standard, Verra VCS, or American Carbon Registry) before trusting an offset claim.
Rule of thumb: It takes roughly 45–50 mature trees to offset 1 metric ton of CO2 per year. Use our Tree Planting Offset Calculator or Solar CO2 Offset Calculator to calculate your own offset numbers, or read how many trees it actually takes to offset a footprint.
Aquifer
An aquifer is an underground layer of permeable rock, sand, or gravel that holds and transmits groundwater. Rain and surface water gradually recharge aquifers over time, and residential wells are drilled down to reach one, pumping water up to supply the home.
Where you'll see it: Well depth requirements, and therefore drilling cost, depend heavily on how deep the local aquifer sits — shallow aquifers mean cheaper wells, while some regions require drilling several hundred feet through hard rock to reach reliable water.
Why it matters: See our well water vs city water cost breakeven calculator to compare the economics of drilling a well against a municipal water bill.
Water Softener
A water softener is a treatment system that removes calcium and magnesium ("hardness" minerals) from water using an ion-exchange process, swapping them for sodium or potassium ions. Hard water causes scale buildup in pipes, water heaters, and appliances, reducing their efficiency and lifespan over time.
Where you'll see it: Commonly needed for well water, since groundwater hardness varies by region and isn't treated before reaching your tap the way municipal water often is. Installed cost typically runs $1,500–$3,000, plus ongoing salt refills.
Why it matters: Factoring in a possible water softener is part of a realistic well water cost estimate — see our well water vs city water comparison for the full cost picture.
Budget Billing
Budget billing is a utility payment plan that averages your annual electricity cost into a flat monthly payment for 11 months, then reconciles the difference between what you paid and what you actually used in a single 12th-month "true-up" bill or credit. It doesn't change your total annual cost — only when you pay it.
Where you'll see it: Offered by most major U.S. utilities, though many are renaming and restructuring these programs into "levelized billing" (more frequent reconciliation) rather than the traditional once-a-year settlement, partly driven by 2026 state affordability legislation like Indiana's HEA 1002.
Why it matters: It smooths cash flow but can produce a large single true-up bill if your usage runs hotter or colder than the trailing average it was based on. See our is budget billing worth it guide and budget billing estimator before enrolling.
Delivery Charge
The delivery charge covers everything required to move electricity from the generator to your outlet — poles, wires, substations, the meter, and the crews who restore outages. It is billed by your local utility, which owns that infrastructure as a regulated monopoly. Texas bills call it the TDU charge; elsewhere you may see distribution, transmission, or simply delivery.
Where you'll see it: A separate section on most U.S. bills, listing a per-kWh rate plus fixed and surcharge lines. In fully regulated states it may be bundled with supply into one rate.
Why it matters: No supplier switch changes it — the same wires deliver your power regardless of who generates it. On many Northeast and California bills delivery now exceeds the supply charge, because grid spending is recovered here. It is mostly billed per kWh, so conservation does reduce it. Our supply vs delivery comparison shows what portion of a bill is actually shoppable.
Supply Charge
The supply charge — also called the generation or energy charge — is the cost of producing the electricity itself: fuel, plant operation, and the generator's margin. It is the only portion of your bill you can shop for, and only in deregulated states, where competing suppliers (called ESCOs in New York or REPs in Texas) sell the energy while your utility still delivers it.
Where you'll see it: Listed as supply, generation or energy charge, sometimes under a third-party supplier's name rather than your utility's.
Why it matters: Supplier offers are usually advertised against your whole bill, which overstates the benefit — a rate two cents cheaper only discounts the supply half. Compare offers against your current supply rate alone, and check for monthly fees and teaser rates that expire. In regulated states supply is typically a pass-through carrying no utility profit.
Capacity Charge
A capacity charge pays generators to guarantee they can deliver power during peak demand, whether or not that power is ultimately used. Regional grid operators set the price through periodic auctions, and the cost is passed to customers.
Where you'll see it: Usually folded inside your supply charge rather than shown as its own line, which is why bills can rise without any visible rate change.
Why it matters: Recent auction prices have climbed sharply as generating plants retire, new generation is slow to connect, and demand grows. In some territories capacity costs alone added roughly ten dollars a month to a typical residential bill — an increase your utility never had to file a rate case to collect.
True-Up
A true-up is the reconciliation payment or credit applied under a budget billing or levelized billing plan when your actual electricity usage cost differs from what you paid during the smoothing period. If you used more than you paid for, you owe the shortfall; if you used less, you get a credit.
Where you'll see it: Traditional budget billing settles the full year's difference in one 12th-month bill; levelized billing reconciles smaller amounts more often, commonly twice a year, producing gentler individual adjustments.
Why it matters: A large true-up can arrive unexpectedly if a season runs significantly hotter or colder than the usage history your plan was based on, or if your utility's rates rise mid-year. Any outstanding deferred balance also becomes due immediately if you leave the plan early. See our budget billing estimator for an estimated true-up range based on your own bills.
Net Metering
Net metering is a utility billing arrangement in which electricity your solar system exports to the grid is credited against electricity you draw from it. Under full retail net metering, one exported kilowatt-hour cancels out one imported kilowatt-hour — the grid effectively acts as a free, unlimited battery.
Where you'll see it: On a solar bid's savings projection, and on your utility's residential rate sheet under headings like "net metering," "net energy metering," or "NEM."
Why it matters: The export credit rate is often the single largest variable in whether rooftop solar pays off, and it varies by state and utility. Many states grandfather existing customers onto the policy in force at interconnection, commonly for 20 years, so the date a system goes live carries real financial value. Use our net metering calculator to see what your exports are worth.
Net Billing (NEM 3.0)
Net billing is the successor policy to full retail net metering in a growing number of states. Instead of crediting exports at the retail rate, the utility credits them at a lower avoided-cost or wholesale rate — commonly around 4 to 8 cents per kilowatt-hour — while you continue buying grid power at full retail.
Where you'll see it: California's NEM 3.0, effective April 2023, is the best-known example and cut export credits roughly 75%. Arizona's excess generation credit works similarly. Rate sheets may call it "net billing," "excess generation credit," or "avoided cost."
Why it matters: Net billing does not reduce the value of solar power you consume yourself — that still offsets electricity at full retail. It only devalues surplus exports, which changes optimal system sizing and makes battery storage financially rather than just practically attractive. See net metering vs net billing for the full comparison.
Balcony Solar (Plug-In Solar)
Balcony solar refers to small photovoltaic systems, typically 400–1,200 watts, that mount on a railing, patio or fence and plug into an ordinary household outlet instead of being wired into the electrical panel. Germany, where they are called Balkonkraftwerk, has over a million registered systems.
Where you'll see it: Marketed to renters and apartment residents. Legal in eight U.S. states as of August 2026 (Utah, Maine, Virginia, Colorado, Maryland, Connecticut, Vermont, New Hampshire), with roughly 22 more states having introduced legislation.
Why it matters: These systems use zero-export controls, so any production above what your home draws at that instant is discarded rather than credited — which makes your always-on load, not panel size, the main driver of savings. Our balcony solar payback calculator models that waste explicitly.
Zero Export
Zero export means a solar system is prevented from sending any electricity onto the grid. The inverter throttles output down to match whatever the home is consuming at that moment, so surplus generation is never produced rather than being exported and credited.
Where you'll see it: It is the defining technical condition of plug-in balcony solar, and the reason those systems are exempt from standard interconnection agreements in states that have legalized them. Usually paired with anti-islanding, which stops production within about a second if the grid drops or the plug is pulled.
Why it matters: Zero export is what separates balcony solar economics from rooftop economics. With net metering the grid acts as a free battery for surplus; with zero export, surplus is simply lost, so a household with a low baseline draw can waste a third or more of everything the panels make.
Community Solar
Community solar lets you subscribe to a share of a shared solar farm instead of installing panels on your own roof. Your utility posts bill credits for your share of the farm's output, and the subscription company invoices you for those credits at a discount — so you receive two separate bills each month.
Where you'll see it: Marketed to renters, apartment residents, and homeowners with shaded or unsuitable roofs. Available in roughly two dozen states plus DC, since it requires state legislation permitting third-party credit billing.
Why it matters: The two-bill structure is widely misunderstood — your saving is the gap between the credits posted and what you paid for them, not the drop in your utility bill. Typical discounts run 5–20% on covered usage, and fixed charges stay on your bill regardless. Our community solar calculator works through both bills.