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Solar Inverter Guide: Types, Benefits, Costs, and How Solar Inverters Work

A home solar inverter converting DC energy into AC electricity to provide power.
PublishedApril 21, 2021
UpdatedMay 17, 2024
AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth MarketingEditorRyan Barnett HeadshotRyan BarnettSVP, Policy & New Market Development
In this article
How A Solar Inverter Works
DC vs AC Electricity
Benefits of a Solar Inverter
Comparing Different Types of Solar Inverters
Solar Inverter Efficiency
Solar Inverter Sizing
Local Solar Inverter Regulations
How Much Does A Solar Inverter Cost?
How Long Does A Solar Inverter Last?
What Inverter Is Right for My Home?

If solar panels are the brawn of your solar energy system, the inverter is its brain, and they work together to ensure you get the maximum amount of electricity. Most people are familiar with solar panels because they’re the most visible part of a solar power system, but the solar inverter is an equally important component to consider, as it allows electricity from the sun’s rays to be converted into useful electricity for your household.

In this guide, we’ll look at what a solar inverter does, how solar inverters work, why you need solar inverters, and how much a solar inverter costs.

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How A Solar Inverter Works

Solar panels generate Direct Current (DC) electricity, but your home runs off of Alternating Current (AC) electricity, so you have a problem: Your household needs some help to use the energy from the sun. That's where a solar inverter steps in.

So what is an inverter? A solar panel inverter’s primary purpose is to transform the DC electricity from solar panels into usable AC electricity for your home. Because of this, you can also think of the solar inverter as a solar converter.

Since most appliances use AC power, your solar power system has to convert this DC energy to useful electricity before it can be used to power those appliances. The brain behind this conversion is your inverter, which allows your solar power system to provide energy to your electronic devices.

For a more thorough explanation of this process, check out How Does Solar Energy Work?

Also, when a solar-powered home is connected to the grid, the inverter for home energy acts as the middleman between your home and the electric grid. This is called a grid-tie inverter. A grid-tie inverter allows your home to have uninterrupted power, no matter how much energy your solar panels are generating.

In a situation where your solar power system is producing more electricity than your home is consuming, the photovoltaic inverter can feed that extra power back into the grid. Or you might be in a situation where your panels are producing some power, but not enough to run your entire home, so the inverter mixes the solar power with grid power.

At night, when solar panels aren’t producing electricity, your home may need 100% of its energy from the grid, or the inverter might be able to mix some grid power with some energy stored in solar batteries.

Either way, it’s the grid-tie inverter’s responsibility to make sure your home has all the power it needs in any of these scenarios, and you don’t notice a change as it switches between them.

DC vs AC Electricity

The best way to answer, “What does an inverter do?” is to understand the difference between DC and AC electricity.

Direct Current (DC) electricity involves the flow of electric charge only in a single direction. On the contrary, Alternating Current (AC) electricity is where the current's flow changes direction (or alternates direction).

In the US, the electric grid uses 60 hertz AC, which means the electricity switches direction 60 times per second.

When the sun’s rays hit your photovoltaic (PV) panels, they trigger the movement of electrons in the solar cells. This movement is in one direction, which leads to the generation of DC electricity. The circuits inside your solar panels collect this current and feed it to the solar PV inverter, which turns the DC electric current into AC electricity.

Benefits of a Solar Inverter

While your solar PV inverter allows you to get usable current from the sun’s rays, that's not all it’s capable of. A solar panel inverter can help maximize your energy production, monitor your system’s output, communicate with the utility grid, and detect faults that might otherwise damage your solar power system.

Maximizing Energy Production

Solar inverters track your solar array’s voltage to maximize the power that the solar panels operate at, so you can generate the most and cleanest electricity possible.

Grid-tied home solar inverters also output a more pure sine wave (a measure of how smoothly the direction of current changes) compared to low-cost inverters that generate a modified sine wave, which ensures the smooth and efficient functioning of your sensitive appliances.

Monitoring System Output

It's exciting to see your solar power system generate thousands of watts on a sunny day, so naturally, most homeowners want a way to monitor the performance of their investment.

Most solar panel inverters come with some way of viewing how much energy they are currently producing, and some even allow you to track your solar system’s performance through a mobile app or website.

If things aren’t working as they should, some home inverters check the performance of your solar power system automatically and alert you if it detects an issue with any component. You can also use the home inverter’s performance tracking to periodically check how your system's components are working yourself, and make sure it’s generating the correct amount of electricity.

Communicating With the Utility Grid

In case of a temporary power outage, solar inverters ensure electricity is not transmitted from your panels to the external power lines. That way, any line worker who may be checking or repairing the grid will be protected from injury.

If you have a full solar battery bank, or your household doesn't require all of the solar electricity being generated, the inverter can also feed the surplus electricity into the grid to help you generate net energy credits.

Fault Detection

Aging and degradation of your electrical wiring and solar equipment can have the potential for hazardous electrical faults, like ground faults or arcs, if not properly maintained. If such an event occurs, the solar power inverter will quickly detect the issue and shut down, thereby protecting the rest of the system, and alerting you about a service need before any additional damage occurs.

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Comparing Different Types of Solar Inverters

The solar power inverters your solar company will use depends on the complexity of your roof, the extent and frequency of shade on your roof, the purpose of your solar power usage, your residential area's utility guidelines, the manufacturers they have contracted with, and other factors.

The four main types of solar power inverters are string inverters, microinverters, power optimizers, and hybrid inverters, and each has advantages and disadvantages.

String Inverter

Also called a 'central' inverter, a string inverter is suitable for more simplistic solar power system designs. An array (group) of solar panels is connected into a 'string,' and you can connect several strings to one central inverter. The electrical energy flows from the panels into the central inverter, which then converts the DC electricity into AC electricity before making it available to power your home.

A string inverter is the easiest to maintain since it's usually located in the basement, garage, or other easy-to-access location. It's also the cheapest, as you only need one inverter to accommodate several strings of panels across several roof planes. Lastly, a string inverter is usually more durable, since it’s a simpler setup that performs a more basic function.

The downside of a string inverter is that underperformance in one panel can affect the other panels in that string. Since a string inverter can’t optimize for the performance of each panel, it's not a good match for roofs that have regular shading. Additionally, a string inverter doesn't work well in complex system designs where panels aren’t easily matched together into strings.

A string inverter is usually the best option if you want a lower-cost solution, and your property's roof is a basic layout and receives consistent sunrays.


Unlike string inverters (which are central) microinverters are distributed, and a small inverter is installed next to each solar panel. Instead of power flowing from all panels to a single inverter before being converted, this system transforms DC to AC electricity right at the panel.

Microinverters are a good choice for homes where the solar array's design is complicated or the roof has consistent shading. They maximize each panel's performance at the site to mitigate the effects of shading, and you can monitor your system's output at every panel.

Another benefit of microinverters is that they can make it easier to expand your system size in the future, since each new panel comes with its own inverter. With a string inverter, the inverter is usually sized for the number of panels that will be installed initially, so it’s not designed to handle additional electricity generation.

The downside of microinverters is that they’re more expensive than string inverters. Additionally, because they are located on the roof, maintenance can be more challenging if they need to be serviced.

Microinverters are best for maximum energy output on a complicated roof, where panels face various directions, or areas that have issues with shade.

Power Optimizers

Power optimizers are a compromise between string inverters and microinverters. Like a string inverter, the energy from your panels goes to a central inverter. However, power optimizers are located next to individual panels, just like microinverters.

Power optimizers work by optimizing the electricity voltage (thereby conditioning the DC electricity) before sending power to the string inverter. By maximizing each panel's output, they can mitigate the effects of shading on any individual panel.

If your home has a complicated roof (think roofs with chimneys, gables, and other obstructions) then power optimizers can help optimize your system for those challenges as well.

The main downside to power optimizers is the increased cost over a basic string inverter, although they do typically cost less than microinverters. And like microinverters, power optimizers can make maintenance more complicated.

Power optimizers are the best option if your roof is more complicated, and you're looking for improved performance without having to invest in microinverters.

Hybrid Inverter

Hybrid inverters are the newest addition to the world of solar energy inverters. The hybrid inverter is a combination of a PV inverter and battery inverter, and you can get it in a straight string and optimized string configuation.

The main advantage of a hybrid inverter is that it can convert electricity in both directions, so it can convert DC electricity from solar panels to AC for the home, and it can also convert AC electricity from the grid to DC power to do things like charge a solar battery or an electric vehicle.

Homeowners looking at energy backup options are embracing this technology since you can install it just like a traditional inverter, and then you don't incur a lot of additional cost when it comes time to add a battery to your system.

Once you have that battery, you can pull energy from the grid to charge it up, so you can store energy when it’s more affordable, and then use it when rates are higher and solar power isn’t providing 100% of your energy demands.

With the increasing use of Electric Vehicles (EV), some hybrid inverters also come with the added benefit of being able to help charge EVs. Since you can connect an EV charger directly to the hybrid inverter, you don’t have to pay more money for main panel upgrades.

Again, the main downside here is cost, and hybrid inverters are also similar to string inverters, so they don’t adapt as well to more complicated roof designs or shading.

Hybrid inverters are a good option for people who are considering energy storage options or have plans to add an electric vehicle that they want to charge with the sun.

Solar Inverter Efficiency

During the inverter's DC to AC electricity conversion, some energy gets lost in the form of heat. Higher quality solar power inverters are more efficient, so they convert more electricity and don’t have high losses during this conversion process.

Conversion efficiency varies by brand, but most quality inverters are around 97% to 99% efficient, so the energy loss is relatively minor. That said, shading and other factors can have an impact on energy system efficiency, and your photovoltaic inverter plays a role in minimizing those losses.

Solar Inverter Sizing

Inverter manufacturers usually specify the input energy that their products can handle, plus their maximum power output. For instance, a string inverter whose maximum input energy is 4,000 watts can handle up to 4,000 watts of energy from solar panels.

In the real world, you'll rarely achieve your inverter's nameplate power rating (achieved at Standard Test Conditions, or STC). In fact, your typical daily activities might end up as much as 20% below the name plate power rating.

To keep costs down, solar power inverters are often selected that have a maximum input power that is lower than your solar panel’s maximum output. This results in some clipping at maximum power production, where the system isn’t designed to handle the maximum amount of power that the panels can produce, since you’ll rarely see that power level on most days.

Inverter Clipping

One crucial step when designing a solar power system is to make sure the photovoltaic inverter size is matched with the solar array size for optimum power conversion. You may be surprised to learn that it’s usually not an exact match, and just because you have 5kW of solar panels doesn’t mean you’ll pair them with a 5kW inverter.

Typically it’s more cost-effective to pick an inverter that is designed to handle less electricity than the maximum amount of power that the solar panels can generate. When the panels are generating extra electricity that the inverter can’t handle, it’s called clipping, since that extra electricity is lost to the system.

If you think of electricity production as a wave, where it ramps up during the day as the sun gets higher in the sky and provides more direct sunlight, inverter clipping just means the very top of the wave gets cut off.

That said, it makes sense to “throw away” this extra electricity because a solar panel array rarely produces its maximum output. It’s better to design the system to handle the normal amount of power that’s to be expected, even if it means losing a little bit of capacity on extremely productive days. If you design a system that can handle the maximum amount of power generation, most of that production capacity goes unutilized on typical days.

Local Solar Inverter Regulations

A good solar installer will know if your locality has specific rules governing the utilization of solar energy, and any rules and interconnection regulations concerning net metering. For instance, qualifying for net metering in many states requires your solar system to adhere to a stipulated maximum size or maximum amount of energy production as a percentage of your typical consumption.

The system’s size limit typically depends on your inverter's (not your panel’s) maximum energy production, since that determines the total amount of power your installation can feed back to the grid.

How Much Does A Solar Inverter Cost?

Narrowing down the price of a solar PV inverter to a single number is tricky because every system design is different. Photovoltaic inverter requirements depend on the overall system design, and the size can be scaled up or down depending on your home’s energy demands.

In addition, installers typically buy in bulk and have direct relationships with suppliers, so their costs may be different than what you’d pay to buy direct.

String inverter prices typically range between $1,000 and $2,000 or more, which includes cost factors like the system's size, the type of solar agreement, the seller, and any features specific to your locality.

Power optimizer prices typically range between $50 and $200 or more, but keep in mind that you’ll need to purchase one power optimizer per panel, and you also need an inverter to connect them into.

Microinverters are more expensive than string inverters, and can cost $1,000 or more above what a comparable string inverter would cost for the same size system. Keep in mind that string inverter sizing can be adjusted with a lower incremental cost, so a string inverter that’s twice as big isn’t necessarily twice as expensive. In contrast, microinverters need to be installed on every panel, so double the number of panels will likely cause your inverter cost to double as well.

How Long Does A Solar Inverter Last?

String inverters typically have an expected lifespan of 10 to 15 years, though if it’s mounted in a cool and well-ventilated location and maintained properly, it can last up to two decades.

Microinverters and power optimizers entered the industry more recently, so there’s less data around their expected lifespan. That said, most manufacturers are confident that their products can outlast the 20- to 25-year warranties that come with the products.

What Inverter Is Right for My Home?

If you're looking to invest in a solar power system for your home and trying to decide what inverter option is right for you, an easy way to get started is with our free Solar Savings Estimator.

You'll get an estimate of the money you would save with home solar, and it factors in typical installation requirements for your region, like the type of inverter that is normally recommended.

You'll also get connected with a solar expert who can review the different solar options that make sense for your home, including inverter options, and help you select the one that's right for your family’s needs.

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About the AuthorCory O'Brien HeadshotCory O'BrienSenior Director - Growth Marketing

Cory brings over 8 years of solar expertise to Palmetto, and enjoys sharing that knowledge with others looking to improve their carbon footprint. A dog lover residing in Asheville, NC with his wife, Cory graduated from UCSB. If you run into him, ask him about the company he founded to rate and review beer!

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