What is the 120% rule for solar panels?

Not to be confused with the 20% rule for solar panels – which is a sizing guideline – the 120% rule is a National Electric Code regulation that dictates how much solar energy a building’s main electrical panel can safely handle.

This regulation is enforced in all 50 U.S. states and is critical to the safety of solar system and panel installations, ensuring that a home’s electrical panel can handle both grid and solar energy without being overloaded, which could lead to tripped circuit breakers, overheating, or even electrical fires. But that’s not the only potential risk with solar-powered systems, so read the fine print when signing a home solar panel contract.

Fortunately, the 120% rule provides a simple formula that uses the busbar rating and that of the electrical panel’s main breaker to determine its maximum solar capacity. Below, we explain what the 120% rule states and how to use its formula to calculate a building’s maximum solar capacity.

In the United States, the National Electrical Code (NEC), also known as NFPA 70, establishes guidelines and standards for safe electrical design and installation to prevent electrical hazards. The code is updated every three years, and although it is not federal law, violating its regulations can result in safety hazards, costly repairs, hefty fines, or possible legal action.

Solar energy systems are typically connected to residential homes via a load-side source connection, where the energy storage connects via a solar circuit breaker on the same side as the building’s loads and appliances, after the main circuit breaker is disconnected. The 120% rule determines how much solar energy can be safely fed into a home’s circuit breaker panel, because overloading can cause overheating or even an electrical fire.

The definition of the 120% rule can be found in NEC Section 705.12(B)(2)(a) — which describes guidelines for electrical panels handling solar energy — which states: “When two sources, one being a primary source and the other an alternate power source, are located at opposite ends of a busbar that contains loads, the following applies: the sum of 125% of the currents of the output circuit of the power source and the rating of the OCPD protecting the busbar shall not exceed 120 percent of the amperage rating of the busbar.

The 120% rule defines a strict formula that allows you to calculate the maximum solar capacity that an electrical panel – managing solar and grid electricity simultaneously – can safely handle. This mainly depends on the busbar rating of your panel. A busbar is the solid metal strip inside your panel that collects and distributes electrical energy to circuit breakers, its rating dictating the maximum current your panel’s internal connections can handle.

To determine the maximum solar capacity of your panel, multiply the busbar rating by 1.2 (120%). Next, subtract the main circuit breaker rating, which is the maximum current your home can draw from the electrical grid. You should then divide this number by 1.25 (125%) to account for the continuous charging needs of solar power.

So, for example, if you had a 200 amp busbar, you would multiply 200 by 1.2 to get 240 amps. If your main breaker rating was also 200 amps, you would subtract 200 (main breaker) from 240 (the busbar multiplied by 120%). This gives you 40 amps, which, divided by 1.25, gives you a maximum solar capacity of 32 amps (or 7.68 kW) without upgrades. This, in turn, dictates the size of solar breaker and inverter your system can use.