How Do Solar Panels Work? | A Beginner’s Guide

Feature image for "how do solar panels work?". This explains the step-by-step process of how PV systems gather light to create energy.

Solar panels, also known as photovoltaic (PV) systems, are an effective way to save yourself some money as well as have a positive impact on the environment. But, how do solar panels work, anyway?

Basically, they work by gathering solar power, running it through an inverter, and then using the generated current to power both home and commercial appliances.

In this article, I’ll walk you through each step on how solar panels produce electricity, the science behind it, how it can save you money, and whether or not they work without sunlight. If you’re all set, let’s get to it!

How do solar panels generate electricity? Step-by-step:

  1. Photons from the sun hit the solar cells of your solar panel.
  2. The solar cells generate DC (direct current) electricity from the photons and channels it to an inverter.
  3. The inverter transforms DC to the AC (alternating current) electricity typically used by appliances and sends it to your property’s breaker box.
  4. Your breaker box distributes the generated electricity to the appliances as necessary.
  5. Unused electricity can be stored within a battery or sent to the grid.

Get 3 Solar Quotes From Quality Local Installers.

The science behind how solar panels work: The photovoltaic effect

It all starts as soon as the sunlight particles (photons) hit your panels’ solar cells – the many squares or rectangles that make up each solar panel.

Solar cells absorb photons which, in turn, knocks electrons loose from their atoms. The semiconductor materials that make up these solar cells create an electric field that channels the electrons from the top to the bottom layer of your solar panels which creates DC electricity.

This entire process of transforming solar power to electricity is also called the photovoltaic effect.

An inverter then takes the DC electricity and converts that to the AC electricity that we all use.

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How solar panels can save you money

There are 2 ways you can save money with solar panels:

  1. Reducing your reliance on the grid, and
  2. Feed-in-tariffs (FiT)

The first way is comparable to having a vegetable garden. If you can grow your own food, you spend less money on groceries. Likewise, producing your own electricity will make you less reliant on the grid and power companies which, in turn, lowers your power bills.

Feed-in-tariffs, on the other hand, are payments for the excess energy that you feed back into the electricity grid.

All the electricity that flows to and from your property is measured through a utility meter. Using electricity from the grid moves this meter forward whereas feeding the excess electricity generated by your solar panels runs it back and lowers your electricity bill. This is otherwise known as net metering.

Recommended: How much money you can save with solar panels

That being said, how much money you save depends on many factors.

Among others, this includes the size of your system, how they’re oriented, and your own usage patterns.

In general, Australian homes can produce the most amount of solar energy if their solar panels are facing north. However, east-facing solar panels produce more electricity in the morning while west-facing panels generate more in the afternoon.

If you don’t plan on adding battery storage to your system, it’s best to consider what hours you usually use the most power and orient your solar panels accordingly.

These should help: What direction should solar panels face (Australia)?

As a rule of thumb, though, oversizing your system will save you more money in the long run.

Reducing your reliance on the grid saves you more money than FiTs because tariffs are not at all huge. Therefore, installing a solar panel system that’s at least big enough that you’re able to run all your major appliances through it will reduce your electricity bills the most.

Moreover, maximizing your savings with solar panels generally means using as much of your self-generated electricity as possible. This could mean orienting them in a way that maximizes their energy output during the times you need it most, or using a battery to store all of the energy.

Take note, however, that the upfront cost of installing solar PV systems become bigger as its size increases.

Now, when you’re ready to take the next step, we have a network of pre-vetted solar installers. We trust them with our own systems, so we know they’re skilled and honest people. We can get you 3 FREE quotes from them right away.

Get 3 Solar Quotes From Quality Local Installers.

Do solar panels produce electricity at night, when it’s cloudy, and in the snow?

As the PV effect relies on sunlight hitting your solar cells, how much electricity your system produces will be negatively affected at night, in the shade, and during winter.

It’s not all bad news, though.

  • As long as your solar panels are installed at an angle, snow should quickly slide down as it melts.
  • Australian homes are generally blessed with more than adequate sunlight, so cloudy days are temporary.
  • There are now solar panels that use temperature to continue producing electricity at night. If your system has a battery, you can also use the energy you stored during the daylight hours.

Recommended: How your solar system can work at night


How do solar panels transform solar energy into electricity?

Solar panels generate electricity through the photovoltaic effect. When sunlight hits your photovoltaic cells, electrons flow from the top to the bottom of your solar panels and create DC electricity. Then, an inverter converts it to AC electricity that your appliances can use.

How do solar panels work when power goes out?

Solar panels are not affected when the power goes out during the day because they continue to produce solar energy from the sun.

Can a house run on solar power alone?

Yes, your house can run solely on solar power and be entirely off-grid. Although, this would rely on whether or not your solar system is large enough to generate electricity for all your appliances and if you have a battery storage for night-time use.


To recap, solar panels work by transforming solar energy to useable AC electricity through the photovoltaic effect.

First, photons are absorbed by your photovoltaic cells which then knocks electrons loose. The movement of these electrons produce DC electricity that a solar inverter converts to the AC power that homes and businesses typically run on.

And there you have it! Since Australia is blessed with plenty of sunlight, solar panels make an excellent source of renewable energy. Should you be interested in installing a solar system for your home or business, give us a call!