How Solar Panels Generate Electricity

Solar energy is one of the most promising and rapidly growing sources of clean, renewable power. With advancements in solar panel technology, it’s becoming increasingly accessible for the average person to utilize the sun’s energy to power their homes and businesses. But how do solar panels actually generate electricity? This article aims to provide a clear, concise, and easy-to-understand explanation of the inner workings of solar panels and the process by which they convert sunlight into usable energy.

The Solar Panel: Anatomy and Functionality

Solar panels, also known as photovoltaic (PV) panels, consist of several components that work together to convert sunlight into electricity. The primary components include:

a. Solar Cells: are responsible for converting sunlight into electricity. They are made of semiconductor materials, typically silicon, that have unique properties allowing them to generate an electrical charge when exposed to sunlight.

b. Metal Frame: The metal frame provides structural support for the solar panel, protecting it from weather-related damage and ensuring its longevity.

c. Glass Cover: The glass cover protects the solar cells from the elements while allowing sunlight to pass through. It is designed to be highly transparent and durable.

d. Anti-reflective Coating: This coating helps to minimize the amount of sunlight that is reflected off the surface of the solar panel, ensuring that the maximum amount of sunlight is absorbed by the solar cells.

The Science Behind Solar Panels: The Photovoltaic Effect

The process by which solar panels generate electricity is known as the photovoltaic effect. When sunlight strikes the surface of a solar cell, the energy from the photons (particles of light) is absorbed by the semiconductor material. This energy transfer causes electrons in the semiconductor to become excited and break free from their atoms, creating a flow of electrical current.

The photovoltaic effect can be broken down into the following steps:

a. Absorption: Photons of sunlight are absorbed by the semiconductor material, transferring their energy to the electrons.

b. Excitation: The absorbed energy causes the electrons to become excited, breaking free from their atoms and creating a flow of electric current.

c. Collection: The electrical current is collected by metal contacts on the top and bottom of the solar cell, which is then channeled into an external electrical circuit.

Solar Panel Efficiency and Optimization

Solar panel efficiency refers to the amount of sunlight that a solar panel can convert into electricity. Currently, most commercially available panels have an efficiency rate of around 15-20%, with some high-end models reaching up to 22-25%. Unfortunately this means that a significant portion of the sunlight that strikes a solar panel is not converted into electricity.

There are several factors that can impact the efficiency of a solar panel:

a. Temperature: panels become less efficient as they heat up. This is why it’s important to ensure proper ventilation and cooling for solar panels, especially in hotter climates.

b. Angle and Orientation: The angle and orientation of a panel can greatly impact its efficiency. Panels should be angled and oriented to receive the maximum amount of sunlight throughout the day. Some modern systems dynamically adjust their angle to the Sun’s orientation and maximize the sunlight and energy they are able to capture.

c. Dust and Debris: Dust, dirt, and other debris can accumulate on the surface of solar panels, reducing their efficiency by blocking sunlight. Regular cleaning and maintenance can help to mitigate this issue.

Converting DC to AC: The Role of Inverters

Solar panels generate direct current (DC) electricity. However, most homes and businesses utilize alternating current (AC) electricity. To bridge this gap, solar energy systems rely on a device called an inverter. The inverter converts the DC electricity generated by the panels into AC electricity, which can then be used to power appliances, electronics, and other devices in your home or business.

Understanding Solar Energy Production: The Importance of Sunlight

Solar energy production is highly dependent on the amount of sunlight a solar panel receives, known as solar irradiance. Factors such as geographic location, time of day, and season can greatly impact the amount of sunlight available to your panels. Understanding the solar irradiance in your area is essential for accurately estimating the potential energy production of a solar energy system.

Solar Panel System Components: A Brief Overview

In addition to solar panels and inverters, a complete solar energy system includes several other components that work together to generate, store, and distribute electricity. These components include:

a. Mounting Hardware: Solar panels need to be securely mounted, either on a rooftop or a ground-based structure. Mounting hardware ensures that the panels are properly positioned and protected from damage.

b. Solar Charge Controller: A solar charge controller manages the flow of electricity between the solar panels and the energy storage system (such as a battery). It helps to prevent overcharging and ensures that the batteries are charged efficiently.

c. Energy Storage System: Batteries or other energy storage systems are used to store excess electricity generated by the solar panels. This stored energy can be used during periods of low sunlight or during power outages.

d. Monitoring and Metering: Monitoring and metering devices track the performance of your solar energy system, allowing you to monitor energy production, consumption, and overall system health.


Understanding how solar panels generate electricity is key to appreciating the incredible potential of solar energy as a clean, renewable power source. By educating yourself on the inner workings of solar panels and the various components that make up a solar energy system, you can make informed decisions about investing in solar power for your home or business. By harnessing the power of the sun, you’re not only saving money but also contributing to a greener, more sustainable future.

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So, how can you go about investing in qualified solar projects? It’s relatively simple: Valur has partnered with nationally recognized accounting and investment firms to facilitate these investments and you can check them out here.  We will help you identify the opportunity and choose between different types, visualize the potential benefits, and calculate how much you need to invest to capture the right sized tax benefits. From there, we and our partners will help you seamlessly finalize your investment and keep track of the relevant data for ongoing tax purposes. 

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