The sun emits solar energy in the form of photons (light particles) that the cells within a solar panel module absorb. This is called the photovoltaic effect. When a photon hits the solar panel, the energy is transferred from the photon to the electrons within the material of the solar panel (solar cells). These electrons become “excited” and start to flow which produces an electric current.

The solar cells that are within the solar panels produce direct current (DC) energy which is then converted into alternating current (AC) electricity via an inverter. This is because the electricity within the electric grid that powers everything tied into it operates on AC electricity. The inverter allows for the conversion from DC to AC electricity so it can be sent into the electric grid, as well as power appliances within your home (or commercial building in the case of commercial solar installations).

There are three steps involving how solar panels work:

  1.  Solar panels, made up of many solar cells, absorb the energy produced by the sun (in the form of photons) which the electrons within the solar cells begin to flow, producing an electric current (DC). 
  2. The energy the solar panels and their cells absorb are sent to an inverter that converts the DC electricity into AC electricity which the grid and all powered appliances operate on.
  3. This converted energy is used to supply current energy demands in the building the solar system is connected to and any excess energy is sent to the grid to be used by others, also known as net metering.

What is net metering?

Net metering is common throughout the U.S. and compensates solar customers for excess energy generated by their solar system so they can offset the cost of future electricity they use from the grid.

The value of this excess electricity generated is determined by your utility company and varies between each utility provider so different rates apply and depend on which utility company you’re using.

What makes a photovoltaic solar system work?

A simple PV system contains 2 components:

  • Solar modules or solar panels contain solar cells that convert sunlight into electricity.
  • Inverter: That electricity is sent to an inverter that converts the DC current into AC current.

The components of a PV solar system, besides the modules, are commonly referred to as Balance of System (BOS) components which include inverters, disconnects, racking and wiring.

This is just a basic overview of the parts of a solar installation and how they fit and work together.

What factors affect the efficiency of a solar system?

There are environmental factors that will affect the efficiency of a PV solar system which makes them not 100% efficient. These environmental factors such as temperature, shading, and soiling, as well as electrical losses within components, can affect the efficiency of the system.

Typical loss factors include:

  • Temperature: Solar panel efficiency is affected by temperature… High temperatures have a negative impact on the performance of a solar module.
  • Soiling: Any materials, such as dust or pollen, that gathers on the surface of solar panels can block sunlight from reaching their solar cells which will decrease the solar panels’ electricity they generate. This negatively impacts a solar system’s overall production.
  • Shading: Shading is the obstruction of irradiance due to trees, roof obstructions such as chimneys, other buildings, terrain, and other environmental factors. The effect can drastically vary in different locations. You may have no shading factors while your neighbor across the street has a 10% loss of production due to shading affecting their roof.
  • Wiring & connections: Every time there is a connection between components and wires, there is electrical resistance which always comes with a little loss in energy.
  • Solar module mismatch: When solar panels are manufactured, modules of the same type can have slightly different electrical characteristics which can lead to a slight loss of performance.
  • Inverter efficiency: Conversion of DC into AC current with an inverter is anywhere from 96-99% efficient depending on the inverter being used. However, they are always more efficient when the DC input power is high. If it is much lower than the inverters rated power, the efficiency will be significantly decreased.
  • Degradation over time: As a solar system ages, over time it will produce less energy. Typically this decrease in power is around .5% a year.