How Do Solar Panels Work? The Basics of How Solar Powers Homes

You’re bound to have heard about this before. Solar energy is everywhere—in the news, on your neighbor’s roof and integrated in new technologies. With all the talk around renewable energy, chances are that you know or have heard of someone who’s installed solar panels at home to generate “clean energy.”
But how do solar panels work? Where does the electricity come from? And how do you actually manage to save money in this process? We break all this down so you know exactly what you’re talking about the next time your solar-savvy colleagues come around.
Is solar energy just a hype? By now, the answer is a clear “no.” Since 2008, there’s been a 39-fold growth in solar generation in the United States. With solar having experienced hockey-stick growth over the years, some things are for sure:
1. The adoption of solar panels can only grow. With the amount of R&D (research and development) put into the innovation of solar technology, homeowners have been experiencing a steady drop in pricing for the past decade. The technology isn’t just available for early adopters; it’s been proven and is available for the mass market.
2. Renewable energy is not just a fad. Air quality and the environment are suffering from all-time high levels of air pollution due to the generation of energy via fossil fuels.
3. Incentives are in place now (for certain regions), but they won’t be here forever. Already this year, the Trump administration has introduced a new solar tariff that can impact the price of solar panels in the new future.
Whether you’re contemplating installing solar panels on your property or looking to understand the conversation on renewable energy, you’re wondering: “how do solar panels work?” You’ve come to the right place.

What’s in a solar panel?

You’re likely to have encountered solar energy in action before, whether it’s in basic tools (like solar-powered calculators) or camping gear (such as solar lanterns or backpacks). Although these are useful applications, extrapolating this technology to power your home can reduce your carbon footprint. So, what is a solar panel actually made out of?
Before we get started, it’s important that we explain a few technical terms behind electricity:
AC (alternating current): an electrical charge that alternates direction. Because AC travels more effectively through longer distances, outlets in your home and office are AC.
DC (direct current): an electric charge that consistently flows in one direction. Most of your home electronics and batteries are powered with DC.
Photovoltaic (PV) effect: a phenomenon that occurs when light hits a certain material and electricity is generated.
A solar panel is made up of a number of solar cells, which each contain a layer of silicon. Silicon is a material that executes the PV effect, in that it can absorb sunlight and convert it into electricity.
On an atomic level, what happens is that the sunlight hitting the silicon triggers electrons to stir into motion. That motion creates a flow of electric current, which is DC. But wait, you remember reading above that homes operate on AC. How do we get from DC to AC?
Great question.

How do solar panels power my home?

Depending on how much space you have on your rooftop, your energy consumption needs and other factors, you’ll need a number of solar panels. A group of solar panels is called a solar array. Here, we will break down the different parts of a solar system and how it’s all connected to your home.
Besides the solar array, a full solar system requires what’s called balance-of-system (BOS) components. This includes the wiring, switches and other parts that ensure the safe transmission of electricity for usage (or storage). Found on every solar panel is a part called the solar inverter, which is responsible for converting the DC electricity generated by that solar panel into AC.  
This electricity can now flow to your home’s electrical panel, from where it is distributed to the power outlets, cooling/heating systems, lighting and other usages around your home.
To recap:
1. A solar array on your roof or ground-mounted onto a part of your property contains a number of solar panels, which are made up of individual solar cells.
2. These solar cells are the ones that absorb solar energy and convert it into DC electricity.
3. A solar inverter on each solar panel converts DC to AC.
4. The AC energy is transmitted to your home’s electrical panel.
5. Your home’s electrical panel distributes that energy to where it is needed.


Everyone’s energy needs are different (and you can get an idea of how much energy a given appliance needs with this calculator), so some people might generate more electricity than they need to consume. Where does that excess electricity go? Or what if there’s a rainy week—will you “run out” of electricity?
Now that you know exactly how do solar panels work, let’s take a look at what happens to surplus electricity.

What happens if I produce more solar energy than I can use?

As solar power generation relies on the availability of sunlight, it makes sense that most of the production of electricity happens during daytime. The amount of electricity that is generated by solar panels per day (known as peak sun hours) is also dependent on a number of other factors, such as:
  • The geographical location of the solar panels:

    Is the home closer to the southern U.S. states or higher up north in Canada? Homes closer to the equator often see more sunlight.
  • The time of year:

    Is it winter or is it summer? Seasons play a part in how much sunlight gets absorbed on a daily basis.
  • The time of day:

    Is it midday or is it late afternoon? Sunlight is the strongest around noon, which is when your solar panels will be able to generate more energy directly.
What’s clear from the above is that your solar panels aren’t generating the same level of electricity around the clock. For households where a “9 to 5” job or a full day of school is part of the daily routine, electricity isn’t in high demand until the sun goes down—so not during the hours of peak solar energy production. Where does all that energy get stored?
There are two popular destinations for where excess solar power goes: into some form of energy storage, or back into the grid.
In the first option, households can choose to install an external battery that collects solar power generated during the day and disperses it when the home needs more power than what the solar panels are still generating. If you’ve ever seen someone charging his or her mobile phone with a power bank or an external battery instead of finding an outlet—this is the same idea.
Homeowners who prefer to be completely energy-independent will go for the option of an external battery, especially if they have decided to live off the grid. This means that their energy needs are self-sustainable, as the supply and demand of electricity within that home is balanced.
For the second option, homes connected to the electrical grid will actually send excess electricity back into the grid—and receive energy from the grid when you need more than what your solar panels are generating (i.e. at night). In a way, the electrical grid actually becomes a giant, communal energy storage solution for all the solar-powered homes in the area.
And that takes us to our next concept: net metering, or how you might “earn” from generating and contributing solar power to the grid!

What is Net Metering?

In an optimal, always-sunny world, the idea of living off of solar energy makes sense. However, when you start adding some variables in, such as weather and levels of energy consumption, you might wonder: is solar energy still reliable? When the weather forecast calls for some clouds, net metering is what will keep your lights on—read on.
First off, it’s good to understand how much energy a typical homeowner in the U.S. actually consumes. The U.S. Energy Information Association (EIA) released that the average amount of electricity an American home uses is about 10,766 kWh of power a year (in 2016). Homes traditionally pull (and pay for) all of that energy from the grid, but with solar panels installed, this means that you can essentially generate electricity for free to cover a part of or even all of your energy needs.
How does the EIA know how much energy is used per household, on average? It’s because every home connected to the electrical grid has a utility meter installed. This is what your energy provider uses to monitor the amount of energy you consume—and if you have solar panels installed, then they’ll also know the amount of energy you generate.
In the United States and Canada, most states and provinces have a system called net metering in place. If you choose to stay connected to the grid (the second option mentioned above), then you have the flexibility of contributing extra power to the electrical grid, and then fetching needed power from there at any given time.
When it comes to net metering, the idea is simple: your meter measures both how much energy you are drawing from the grid, and also how much energy your household is contributing to it. Each time you contribute electricity from your solar panels to the grid, you get “credits” for doing so; each time you lack self-generated electricity and need to draw from the grid, it’s debited from your account.
The net meter tracks this system of credits and debits to the grid. When you receive your utility bill each month, you’re only billed the net amount of energy you’ve used—or you get credited back a certain amount, if you’ve managed to contribute more than what you’ve drawn from the grid!
It’s similar to the idea of the points card system commonly found at movie theatres, grocery stores or with credit card providers. There, every purchase you make allows you to earn points that can later be redeemed for prizes or discounts; with your energy utility, every kilowatt-hour of excess solar energy you send to the grid earns you credits that you can later redeem with your energy utility. The more excess solar power you generate and contribute to the grid, the more those credits stack up. These are then used when you need to draw energy from the grid at night or on cloudy days—so there’s no fear of “running out” of electricity.
To put this into context, think about how much solar energy the sun provides over the course of the year. In the summer, longer days and clear weather often leads to your solar panels generating much more electricity than you consume. Based on the crediting system introduced above, this means that you will end up acquiring credits with your energy utility. With most net metering policies, these credits can rollover and accumulate from month to month, up to a period of twelve months or even with no expiration date. Every state can have a slightly different policy: for example, Indiana’s policy dictates that credits can rollover indefinitely, while Hawaii resets credits to zero after every annual billing cycle.
Come winter months, where the days are short and the weather is poor, your solar panels are likely to generate much less electricity on a daily basis. This is where your stockpile of credits come in: to “buy” you electricity from the grid that you don’t have to pay for. Coming back to the points card analogy, it’s like you’ve saved up enough points for cashback rewards—but in this case, it’s in the form of electricity.
Net metering ensures that the electricity being generated while you’re out and about is still put to good use. Let’s say that you work a 9 to 5 office job, so you’re away from the house during the daytime hours where your solar panels are the most productive. At the same time, your neighbor (that doesn’t have solar panels) has the day off and plans to vacuum his house. Simply put, your rooftop solar panels end up contributing to the general electrical grid, which then feeds electricity to destinations (like your neighbor’s house) to power their energy needs.
Sounds like a great system in place, right? But that’s not all—by understanding and installing rooftop solar, you’re also contributing to a bigger picture. According to the EIA, the energy mix (the combination of various energy sources that make up the electrical grid) in the United States was only 12.7% renewable energy. 87.3% came from burning a form of fossil fuels.
It’s been proven that the hidden costs of burning fossil fuels to generate energy are high, and this method is not the most sustainable, either. By choosing to power your home’s energy needs with solar, you’re directly contributing to a higher proportion of clean energy in the grid, which helps reduce the need for your area to be dependent on substances like coal, natural gas and oil.
There’s no question about it: when it comes to powering your home and the grid with cleaner energy, solar creates a win-win situation.
Interested in finding out whether or not your area has net metering available? Most do, but it’s best to check. Take a look here to find out if your state has net metering policies in place, how the crediting system works there, and how the regulations may differ from those of other states. (Canadians, take a look here.)

Will I run out of electricity on rainy days?

If you’ve read through the rest of the sections of this article, hopefully you’ll understand by now that the answer is…
No!” Thanks to the grid connection that you already have, or for choosing to have sufficient energy storage, you’re covered and won’t be in a “black out” in the middle of winter. Solar systems are designed to offset 100% of your year-round energy needs—so when considerating the installation of a PV system, it’s crucial that you think about your energy needs across twelve months, not just during the summer when your solar panels will clearly produce more energy than you need.
By installing a solar system that is large enough to generate the same amount of energy you consume, you can offset your entire carbon footprint and not have to rely on the electrical grid at all. Even if the amount of electricity generated a day fluctuates based on the time of day and season, chances are that you live in a state with net metering policies, which will work with your solar system to ensure that you are powered all year round.
The sun already provides the Earth with enough solar energy to power the world for a full year. That’s a lot of clean energy out there—and the best part is, it’s essentially bottomless. Today, the technology for solar panels and balance of system parts have already reached the point where we can comfortably harvest this generous, natural resource into energy that leaves no trace.
Now you’re ready to go the next time your neighbors or colleagues bring up solar energy or ask, “how do solar panels work?”—the only thing left is to try it for yourself.
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