How Solar Energy Works: The Basics & More

There has been a lot of talk over the last few years regarding solar energy. But how does solar energy work & can it really save you money? Read on!

Get Your Free Solar Quote

What is your zip code?

Are you looking for a commercial or residential solar solution?

What is your average electric bill per month?




Getting solar energy into your home requires more than just solar panels.

Solar for Your Home

The most common type of residential solar is called solar PV. The PV stands for “photovoltaic,” and a solar PV system is a electrical system that consists of solar panels, an inverter, a meter, and a few other components (mounting, cabling, etc.). A solar PV system requires little to no maintenance for years, and if you’re in a place with the right amount of sunlight, you can end up saving money, while also going green.

In this article, we’ll introduce the main components of solar PV systems before diving deeper into technical details. We’ll share useful online tools and also answer some common solar PV questions, such as:

How Solar Works

Here’s a (very) basic overview of a solar PV system, its main components and how solar energy works.



Solar panels collect sunlight and convert it to DC electricity.



The DC electricity moves to an inverter that converts it to AC electricity.



The meter tracks how much electricity is generated.



*Note: Some solar electric systems will use batteries to store unused electricity. Look forward to a discussion of batteries in a future article.


The Main Ingredient: Solar Cells

The solar cell is the basic component of a solar panel. Sometimes called photovoltaic cells or PV cells they generate electricity as they absorb sunlight. Solar cells are made of semiconductor materials, the most common of which is crystalline silicon.

There are two types of crystalline silicon, but it’s likely you’ll more often encounter monocrystalline silicon: it has a square-ish structure, and its high silicon content makes it more effective (and more expensive) than other panel materials. The other type of crystalline silicon, polycrystalline, is cheaper but less effective, so it’s used when there’s plenty of space (e.g., on a solar farm)—typically not on residential installs.

A Sum of Its Parts: Cells, Modules, Panels

A solar module, or PV module, is made of connected solar cells. The total number of cells in a module will vary, as will the module’s effectiveness. Because a single solar module can only produce so much electricity, multiple modules are often interconnected to create a larger solar panel: the backbone of a solar PV system.

The Inverter: DC to AC

An inverter is essential to any solar PV system. Because the electricity generated by solar panels is direct current (DC), you need to convert it to alternating current (AC) in order to use it in your home.

There are different types of inverters for solar use (string, central, micro). If you’re hoping to install the solar PV system yourself, selecting the best inverter will require serious research and careful planning. If you work through a professional solar installer, on the other hand, the company should help take care of inverter selection for you.

Direct Current (DC)

DC is an electric charge that flows in one constant direction. Solar cells and batteries are DC.

Alternating Current (AC)

AC is an electric charge that periodically reverses direction. The outlets in your home are AC.

Back and Forth: The Meter

Any solar PV system that’s tied to the grid will use a bi-directional meter. When you use electricity from the grid, you’ll see your meter move forward. But when your solar PV system produces electricity, any excess will go back into the grid and your meter will move backward. This is called “net metering,” and the utility company will credit your bill for the excess electricity generated.

If you still have questions about how solar power works, read our Q&A section for more insight into solar PV.


While researching home solar, we came across some common questions, so we’ll answer those here.

Q: How Much Power Will My Panels Generate?

A: It depends on where you live.

The National Renewable Energy Laboratory (NREL) created a solar PV map showing the annual average “solar insolation” across the United States. The map should give you a general idea of the amount of solar insolation to expect, on average, throughout the year.

Solar Insolation (or Irradiance)

Solar insolation is a unit of measurement used in the solar energy industry. It measures solar radiation energy (sunlight) in an area over time. The most common unit is kilowatt-hours per square meter per day (kWh/m2/day), as seen in the map above.

There are more specific questions you’ll have to ask yourself about your location and home—e.g., is my next-door neighbor’s oak tree going to block all my sunlight? You’ll also have to take local weather conditions into consideration. Luckily, there are plenty of other resources to help you find your solar potential. See our Tools section for more info.

Q: How Much Will It Cost?

A: A residential solar PV system can cost anywhere from $25,000 to $35,000, on average. Because of the high cost, a power purchase agreement (PPA), loan, or lease are popular options for financing a solar PV system. Naturally, there are benefits and drawbacks with each option. We won’t cover them in detail here, but you can learn more in our article “Financing Options for Solar Power Explained.”

There are two other important factors that may affect your cost: federal and state tax credits.



Residential Renewable Energy Tax Credit

There’s a personal tax credit available to you for “30% of qualified expenditures for a [solar PV] system,” but the system must be installed by December 31, 2019. See for more details.


There are too many state tax credits to list here, but, a website funded by the US Department of Energy, is an incredible tool that lists tax policies and incentives state by state. The website is easy to use, and we highly recommend you check it out.


Q: How Much Will I Save?

A: It depends on your energy consumption and the energy output of the solar PV system you install, but there are plenty of tools available online to help you calculate your potential savings. We’ve included such a tool in this article: the Grid-Tie Estimator in the Tools section.

Q: What Type of Panels Should I Get?

A: Most home solar panels are made of monocrystalline silicon (more efficient, more expensive) and are around 3.25 feet by 5.5 feet in size. However, some solar providers have proprietary mounting systems and solar panels, so the size and type of panels you get may differ slightly from the average.

Once you figure out how much power you want to generate, a residential solar provider should be able to tell you which panels will work best for your situation. You can also play around with the PVWatts Calculator—listed in our Tools section—to see estimated outputs for different module types.

Q: How Much Should I Get?

A: Well, how much electricity do you use each month, and how much do you pay for it? For example, if you want to have 25% of your electricity consumption covered by solar, finding the answer is simply a matter of calculation. We’ve provided a link to an easy-to-use sizing calculator—see the Grid-Tie Estimator in the Tools section.

For a point of reference, the average electricity consumption for a US residence is around 900 kWh per month.1 The price of electricity varies by state, but the US average is just under $0.13 per kWh.2

Q: How Long Will an Array Last?

A: Modern solar panels typically last twenty to thirty years before there’s a noticeable increase in output loss. Most residential solar providers offer a 20- to 25-year warranty, but many such warranties only guarantee a certain power output (e.g., a guarantee of 80% output for twenty years). Carefully read through the fine print to make sure you understand the warranty and what it covers.

Be sure to research the solar panels a solar provider offers. Solar panels can be anywhere from 5% to 20% efficient, and they lose efficiency over time–some faster than others. An average monocrystalline silicon solar module will lose efficiency at a rate of about 0.36% a year, which is low in comparison to other types.3

Q: Where Can I Purchase an Array?

A: The chart below shows some of the largest residential solar providers across the United States. The largest residential solar provider, SolarCity, is available in only twenty-one states, but most solar providers have tools on their websites to let you see if service is available in your area.

There are also websites that list multiple residential solar providers and installers near you when you provide a ZIP code, but provider information isn’t always verified. We recommend checking more than one source—or getting a personalized quote—to verify information whenever possible.


PVWatts Calculator

The PVWatts Calculator tool comes from the National Renewable Energy Laboratory (NREL), and it can help you “easily develop estimates of the performance of potential PV installations.” It has some advanced features, so it helps to do a little research on what you want out of your solar PV system beforehand.

Once you have all the needed information, you can run a simulation that will give you detailed results (see image below).

You can even draw your solar PV system on your roof using Google Maps.

Grid-Tie Estimator (Residential System Sizer)

We’re currently working on our own solar sizing calculator, but in the meantime we have one to recommend: the Grid-Tie Estimator, which comes from Affordable Solar Wholesale Distribution. Yes, Affordable Solar is a solar wholesaler, but we found this tool to be quick and simple to use. You also don’t need to submit any personal details to use it.

As you can tell from the screenshot above, you’ll need the following information from your electric bill to get an accurate result:

  • Average kWh used per month

  • Average monthly dollar amount

As for the percentage of usage you want to cover, that’s up to you. The tool also provides a map to help you determine your average solar insolation.

Google’s Project Sunroof

Project Sunroof uses the Google Maps database to help you see if a solar PV system is suitable for your home. This tool doesn’t have nationwide coverage yet, but Google has at least partial data for forty-two states.


The Time for Solar

We think it’s a good time to invest in residential solar. The cost of a solar PV system has decreased significantly over the past few years, making it more affordable and accessible. And with solar technology continuing to advance, residential solar PV systems will become more efficient, making them even more feasible for homeowners.

Ready to start saving with solar? Check out some of our top solar brands or get a free quote!

1., “How Much Electricity Does an American Home Use?
2., “Electric Power Monthly
3. NREL, “Photovoltaic Degradation Rates—An Analytical Review