How Does Solar Power Work? Step by Step

Sunlight is clean, free, and virtually infinite. It can also be a powerful way to run your home while reducing your costs. But how do home solar panels actually turn sunlight into the electricity you use every day? 

We break down the step-by-step process of how solar power works, so you can see exactly how it could power your home and your savings.

What is solar energy?

Solar energy is the solar radiation emitted from the sun. Earth receives enough of that renewable energy in about two minutes to supply the world's power needs for a week. We just don’t convert enough to usable electricity.

How does solar energy produce electricity? People have come up with several ways to capture solar energy, the most common being photovoltaic (PV) solar panels that convert the sun's rays into electricity. Solar panels aren’t making or creating the energy, they are just converting it from sunlight to electricity.

Here's how it works step by step.

Step 1: Solar panels capture solar energy

Solar panels convert solar energy from sunlight into electrical energy. The most common solar panels are made from one of three semiconductors: monocrystalline silicon, polycrystalline silicon, or thin-film solar cells.

When sunlight hits the thin layer of semiconductive material, it triggers the release of electrons from silicon atoms. The negatively-charged electrons are attracted to the positively-charged side of the cell. This photovoltaic effect results in free-flowing electrons within the solar panel. The moving electrons create an electric current which is harnessed by the wiring connected to the solar panels to produce electricity.

Solar power systems are carbon-free in their energy production. The lifetime emissions of solar panels, which includes emissions from the manufacturing of panels, is about 12 times less than lifetime emissions from a natural gas plant and about 20 times less than from a coal plant.

The more sunlight that reaches the solar panels, the more energy they generate, which means they generate more or less electricity depending on the season.

A solar installation company should walk you through and help you understand factors ranging from specifics about your property, such as shading and your family’s typical power usage, to your climate and geographical location.

Solar panels can be tilted to capture the most sunlight at the optimal angle for the best efficiency. Usually, that angle matches your latitude. In the lower 48, that spans from 24.5 degrees in Key West, Florida to 49.2 degrees in Angle Inlet, Minnesota.

Step 2: Solar inverters convert DC to AC

Solar panels produce electricity in the form of direct current (DC), but your home appliances use alternating current (AC) electricity.

This means the solar electricity from your panels needs to be converted from DC to AC to make it usable in your home. That’s the job of an inverter.

Without the inverter, your system would create electricity, but it wouldn’t be able to power anything, except maybe charging batteries.

The type of inverter you use depends upon the size and configuration of your home solar energy system. A simpler system typically uses a string inverter, a single box in a central location near your circuit breaker. Other systems use microinverters in which each panel has its own individual inverter. Other inverter options include power optimizers and hybrid inverters.

Credit: National Laboratory of the Rockies

Solar inverters also can provide you information about your system’s performance so you can check the system is functioning properly.

The Palmetto app offers an easy way to stay on top of how much electricity your solar panels are generating and how much electricity you're buying from the grid. Even better, when you take action to save energy, you can earn discounts on energy saving upgrades, like smart thermostats and EV chargers.

Step 3: Electrical panel distributes electricity

Your electrical panel distributes electricity throughout your home, whether that’s your dishwasher, refrigerator, or energy-efficient heat pump. The circuit breakers in the electrical panel can also cut the current to an electrical circuit in case a fault or surge occurs, to prevent an overload in electrical lines that can cause damage.

Lastly, electrical panels are also a key component of consumption monitoring. There are devices that can be attached to either the main panel or each individual circuit, allowing you to view more details about your specific energy consumption, which can help you optimize your energy usage over time. A smart electrical panel can act as the brain that optimizes how your home uses electricity and the eyes that keep tabs on electricity use, too.

Step 4: Electric meter records consumption and production

Your electric meter is the device your utility company uses to measure your electricity consumption. It’s how it knows what to bill you each month. 

When you go solar, it’s beneficial to consume electricity from your solar panels, which lowers the amount of electricity you consume from the grid, reducing your electric bill.

Most homes with solar have a smart meter installed, which records the exact consumption of electricity for your house. Smart meters send real-time usage data to your local utility company for billing, customer service, and research purposes. A smart meter eliminates the need for estimated bills by measuring exactly how much electricity is being used.

Smart meters and net metering

If your home has a smart meter, it allows you to take advantage of net metering if it’s available in your area. Net metering, or related policies often called net billing, earns you electric bill credits for the electricity you share with the grid.

Step 5: Batteries store excess energy

Installing solar battery storage can unlock greater long-term benefits of going solar. If your solar panels generate more solar energy than you can use, you can store that extra electricity in a solar battery. That way, you have solar electricity available to you when the sun goes down — instead of having to draw it from the electricity grid.

Many states and power companies now have incentives for residential customers who send excess power from their solar batteries to the overall electric grid. These programs, called virtual power plants, help spread out when renewable energy can be used on the grid. At times of surplus solar, wind, or other renewable energy production, the excess is stored. When it’s later added to the grid, those sharing their battery’s power with the grid are compensated. 

Solar battery storage is growing and is expected to continue growing exponentially. The National Renewable Energy Laboratory estimates energy storage will multiply by at least five times from 2020 to 2050.

Source: National Laboratory of the Rockies

Will solar energy work for your home?

Solar energy at home can deliver real benefits.

It is also the fastest growing and (by some counts) cheapest source of energy today. If you're interested in whether or not solar will work at your home, get a free solar savings estimate today, or download the Palmetto app to see how else you can save energy and money at home.

Frequently asked questions

What is solar power?

Solar power is a slightly imprecise term, but usually refers to any form of energy humans use that originates in sunlight. Solar power might refer to using the sun for electricity or heat, depending on the context.

How do solar panels work?

Solar panels convert solar radiation into electricity. Sunlight hits semiconductive material on a panel and creates a flow of electrons. This electric current moves through wiring on the panel, gets converted to alternating current by the inverter, and is used by your home, stored in a battery, or sent to the grid.

Are solar panels good for the environment?

Yes, solar energy is a completely renewable source of power. Solar systems produce no emissions via their energy production, and they can operate for decades with very good efficiency.

Can solar panels save money?

Yes, solar panels can save money. In many — but not all — cases, solar panels can save you as much as they cost in 6-10 years. This period of time is also known as a solar payback period.

Disclaimer: This content is for educational purposes only. Palmetto does not provide tax, legal, or accounting advice. Please consult your own tax, legal, and accounting advisors.