How Do Solar Panels Work?

The short answer is that solar panels convert sunlight (photons) into direct current (DC) electricity. The amount of solar electricity you can produce with your panels is determined by a number of factors that include the size of your system, latitude, elevation, orientation, cloud cover and shading. In this article, we will explain in depth how solar panels work. To make it easier, we have provided a table of contents so that you can jump to what ever section you want.

1. The long journey of a photon to your solar panel
2. Components of a residential solar power system
3. Top factors determining solar energy potential
4. Other considerations when going solar
5. Advantages of solar energy
6. The best way to go solar

1. The long journey of a photon to your solar panel

In order to understand how solar electricity is generated, it might help to go back a few steps and see how it all begins, in our own solar system’s star, the Sun.

At the core of our Sun, a star that is 4.6 billion years old, a thermonuclear reaction mashes up vast quantities of hydrogen and helium, releasing huge amounts of energy in the process. Photons that are created as a by-product of this violent galactic dance are now stuck between the expanding gases emanating from the core of the Sun and its immense gravitational force. It can take a photon a million years to navigate this tug-of-war and reach the surface of the Sun. Finally, a burst sends a column of energy into the vacuum of space, hurtling along at the speed of light towards our planet. It may have taken a million years to reach the surface, but once a photon sets itself free from the Sun, it takes it only eight minutes to reach our planet.

When it reaches the top of the Earth’s atmosphere, it is packing 1367 watts per square meter of energy, enough to cause serious biological damage. Fortunately, as the photons pass through various layers of the atmosphere some of this energy is absorbed. Further down, where water molecules come together to form clouds, another 20% of the energy is reflected back to space. The remaining rays of light make their way through the lower layers of the atmosphere, passing through dust particles and air pollution to reach your solar panels. 150 million kilometers and 1 million years later, the photon that started its journey at the core of the Sun finally reaches your panels and is then converted into electricity by a process called the photovoltaic effect.

The photovoltaic effect is simply the conversion of light into electric current. This term is derived from the Greek word for light (“photo”) and a historical reference to Alessandro Volta, inventor of the battery and the namesake of the electrical unit “volts”. This effect is only observed when light hits certain types of semiconductor materials, such as silicon. Thin semiconductor layers are placed on a solar panel to form an electric field, positive on one side and negative on the other. Within the solar panel, photons of light are absorbed and electrons from the atoms in the semiconductor material are released. By using electrical conductors attached to the positive and negative sides of the panel, an electrical circuit is formed and electricity is generated.

There you have it: human ingenuity at its best, converting photons from the Sun into power to charge your favorite appliances and electronic devices.

2. Components of a residential solar power system

There are a few key components for every solar installation: solar panels, inverter(s), racking system, cables, monitoring system and increasingly, battery storage system. Other important components that are sometimes overlooked are your existing electric panel and electricity meter because these may need to be updated if they are very old.

Solar Panels:

Solar panels are made up of a solar cells. The solar cell is a type of semiconductor that creates electricity from solar radiation using the photovoltaic (PV) effect. When solar cells are packaged together, a PV “module” is created, which is just another term for a small solar panel. Linking multiple modules produces a bigger solar panel. A typical solar installation includes many of these panels which are connected to form of a PV “array”.

A vision of the future: a solar home and an electric car

A vision of the future: a solar home and an electric car


Homeowners have a choice between installing one central inverter or multiple micro-inverters. Micro-inverters are typically more expensive but offer some distict advantages. To read more about this choice, we have a dedicated article on the subject.

Racking System:

Most homeowners choose to install solar panels on their roof. Homeowners with a lot of land, may opt for a ground-mounted system. The racking system used in rooftop systems is the metal framework that secures your panels to your roof.


Cables connect all your components all the way to your electric meter and/or your battery storage system.

Monitoring System:

While not strictly necessary, many installers offer this feature so that homeowners and the installers themselves can monitor your electricity production. This can be useful in determining if there is an issue that is negatively affecting your solar production. It's also fun to watch your electricity production go up on beautiful sunny days!

Battery Storage:

This is another optional component of solar systems. Not all homeowners will be prepared to pay for this additional equipment, which is still quite pricey, but some homeowners with batteries can save more money in the long run depending on the way their utility charges for electricity. For example, if a utility charges more for electricity consumed in the evenings at peak periods when your panels are not producing, a battery could allow you to draw your electricity from it instead of the grid. For more information on time of use versus tiered electricity pricing, you can read more here.

For most homeowners considering solar for their home, the best option is to find a trusted installer and get their recommendations for your particular situation.

3. Top factors determining solar energy potential

It is very important to understand that the performance of solar panels is location specific. The same 200-watt panel will produce very different amounts of energy if we install it in Seattle, WA or in Phoenix, AZ. But the real question is: what causes this difference and how can we set realistic expectations about our solar energy potential? The top factors determining solar energy potential are: latitude; cloud cover and aerosols; elevation; and shading and obstructions.

One of the most confusing things about solar energy is the mysterious link between the installed power and the actual energy output. To put it another way, if you put a 200-watt solar panel on your roof how many watt-hours of electricity would you produce in a day or throughout the whole year? We address the question of how much electricity will my solar panels produce here. To better understand this topic, you should also read up on capacity factor.

In a nutshell, there are five main factors that will determine how much solar electricity you can produce with your solar panels. They are:


Due to the spherical shape of the Earth, solar rays are more intense around the equatorial regions. As we move further north or south, the energy density decreases because the solar rays are distributed over a larger area. When it comes to solar energy, being close to the equator is a definite advantage.

Cloud Cover and Aerosols:

Clouds and aerosols have a big impact on the amount of solar radiation reaching the surface of the Earth. On average, clouds and aerosols absorb or scatter almost half of the incoming solar radiation. Therefore, two sites at the same latitude may have significantly different solar radiation levels depending on the cloud cover and aerosols in the atmosphere. Aerosols are small particles in the atmosphere. By absorbing or diffracting solar radiation, they filter and decrease the amount of solar radiation reaching the surface of the Earth. Pollution and sand storms will also decrease the amount of solar radiation. While aerosols negatively affect the performance of photovoltaic systems, their impact is worse with concentrating solar applications and solar thermal systems because they use direct radiation as opposed to diffuse radiation.


Elevation affects incoming solar radiation in two ways. The distance the solar rays have to travel through the atmosphere is less at higher altitudes. Therefore, there is less atmospheric absorption, and consequently, more solar radiation as the elevation increases. Moreover, the higher the elevation, the thinner the atmosphere, further decreasing absorption and scattering. The effect of shade on solar panels

The effect of shade on solar panels

Shading and Obstructions:

The level of solar radiation reaching the solar panels is also affected by the immediate surroundings of a solar installation. Shadows caused by buildings, trees and even landscape features such as hills, can reduce the usable solar radiation. Even a small obstruction, like a leaf or some snow, can have a significant impact on the performance of your solar panels. The location of the shading on the panels is relevant, as it determines the amount of power loss. Solar modules connected in series will be more greatly affected than those connected in parallel, even if the physical area of shading is small.

4. Other considerations when going solar

Here are some other considerations to keep in mind as you research solar panels for your home:

Solar installers can help you choose the right equipment

Solar installers can help you choose the right equipment

5. Advantages of solar energy

If you are considering solar energy for your home, you will be happy to know that there are many advantages (and a few disadvantages), whether you are motivated by saving money or helping the environment. In addition to helping fight climate change, one of the most relevant benefits of solar is the cost certainty that comes with locking in your electricity rate for a very long time (25-30 years on average), as utility bills have been rising almost everywhere over the past decade. In locations where the cost of electricity from the utility is greater than the cost of solar electricity (known as grid parity), homeowners will save money by going solar. Furthermore, solar installations increase the value of a home.

We took an indepth look at whether it is worth it to invest in solar panels. You can read that article here.

Embracing solar power is much easier than you think

Embracing solar power is much easier than you think

6. The best way to go solar

Installing solar panels for your home is a big decision that takes careful planning and research. Done properly, it is an investment that keeps giving, for 25-30 years on average. So what steps should you take?

1. Use Home Solar Discover to assess your solar potential. By understanding how solar energy varies from place to place, you can assess whether your system will lead to payoffs in the long run. 2. Consider your options. How much capacity do you need? If you have a big home (and a big roof) you may be looking for a larger than average residential system, whereas if you have a small home and you consume a relatively small amount of electricity, you may only need a low capacity system. Read up on the technical considerations listed above and use the Home Solar Solar Panel Calculator to play around with solar home specifications and see the effects. 3. Learn what financial incentives are available to you. If you live in the U.S., the greatest savings comes with the federal investment tax credit of 30%. But there could be additional solar tax credits, rebates and incentives available in your state or province. 4. Use the Home Solar Buy or Lease Calculator to help you determine the best way to finance your solar system and maximize your return on investment. 5. Find highly-rated installers in your area and check out their reviews.

Latest Update: December 2018

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Written by Simone
Simone Garneau is the co-founder of Home Solar, an online consumer education website for residential solar energy. The goal of Home Solar is to help homeowners go solar and save money. In addition to 200+ articles about solar energy, Home Solar offers homeowners other great resources: a Solar Report for solar energy, Discover, to preview solar energy for your home, and Learn for fun and interactive solar tools.