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How do solar panels work?

Updated

General information, not a substitute for the advice of an attorney.

Short answer: A solar panel is a sealed package of photovoltaic (PV) cells. When sunlight hits a cell, its energy is absorbed and "creates electrical charges that move in response to an internal electrical field in the cell," which is an electric current (DOE Solar Energy Technologies Office). Cells make direct current; an inverter converts it to the alternating current the grid uses (EIA).

Cell, panel, array, inverter

  • A single PV cell is roughly 0.5 to 4 inches across and produces only about 1 to 2 watts; it is "the basic building block of a PV system" (EIA).
  • Cells are wired together in a weather-resistant panel (module); panels are grouped into arrays of anywhere from two to hundreds (EIA).
  • "Devices called inverters are used on PV panels or in PV arrays to convert the DC electricity to AC electricity" (EIA).
  • Commercial panel efficiency "averaged less than 10% in the mid-1980s," reached "around 15% by 2015, and is now approaching 25% for state-of-the art modules" (EIA).

How much of the time do they produce?

Panels "produce the most electricity when they are directly facing the sun," which is why fixed arrays in the Northern Hemisphere are usually angled south and why tracking systems exist, though EIA notes "these systems are expensive" (EIA). Output stops at night and drops when the sun is "blocked by clouds" (DOE).

The standard way to express this is capacity factor, the share of nameplate output actually delivered over a year. EIA's final figures for U.S. utility-scale generators put solar photovoltaic at 24.0% in 2025 and 23.2% in 2024, compared with wind at 33.8% and nuclear at 91.1% in 2025 (EIA Electric Power Annual, Table 4.08.B). NREL's resource classes show the spread by location: first-year capacity factor for a one-axis tracking plant ranges from 34.0% in the sunniest class to 21.4% in the least sunny (NREL ATB 2024).

Estimating a specific site

NREL's free PVWatts calculator estimates output for a grid-connected system anywhere, using the National Solar Radiation Database typical-year weather data (NREL PVWatts). You enter nameplate kW, module type, array type, tilt, azimuth, and a losses percentage, and it returns monthly and annual AC kWh, monthly solar radiation, and the capacity factor (PVWatts V8 documentation).

See rooftop solar and net metering by state, how long solar panels last, and how many acres a solar farm needs.

General information from the sources linked above, not legal, tax, or financial advice.

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