How Do Solar Panels Work? A Plain-English Guide

Sun → panels → inverter → your home → grid or battery. The panels turn sunlight into DC electricity. The inverter turns that DC into the AC your lights, fridge and air conditioner run on. Your home takes what it needs in real time. Whatever is left over flows out to the utility grid for a credit, or into a home battery for later. When the panels aren’t producing — at night, or on a dark storm day — you draw power back from the grid or the battery.

A solar panel is made of dozens of photovoltaic cells, mostly silicon. When sunlight is absorbed by a cell, the energy creates electrical charges that move in response to an internal electric field in the cell, causing electricity to flow — direct current (DC), flowing one way (U.S. Department of Energy).

Two things worth being clear about. First, panels make electricity, not heat; solar panels (PV) are different from solar thermal water heaters. Second, a panel converts only part of the sunlight that lands on it. Among 400–470 W modules added to the California Energy Commission’s approved list since 2024, the median efficiency is 21.8%, and the middle half of models fall between 21.1% and 22.6%; for 2019–2021 listings the median was 20.1% (CEC PV Module List). Research cells in the lab go much higher (national lab efficiency chart). Higher efficiency mostly means more watts per square foot — useful on a small roof, not free energy.

Grid electricity and your home’s wiring use alternating current (AC), which reverses direction many times a second. An inverter converts the panels’ DC into AC at the right voltage and frequency for your home and the grid (U.S. Department of Energy).

There are two common designs. A string inverter is one central box that the panels feed together, often with an optimizer under each panel; microinverters sit under each panel and convert its power on the roof. Both give panel-level control, and on the same roof they make almost the same energy — see Enphase vs SolarEdge.

Solar power is used on-site first. When the panels are producing and the fridge, air conditioner or EV charger is running, they draw on the solar directly; only what the house isn’t using at that moment goes anywhere else. SCE describes it the same way: your home uses your solar power first (SCE). On a sunny afternoon a home often makes more than it uses; at 7 p.m. with the oven on, it uses more than it makes. The system balances that second by second, automatically.

Power your home doesn’t use flows back through the meter onto the grid, and you earn a credit. On SCE, systems that applied from April 15, 2023 are on the Solar Billing Plan (NEM 3.0), where an export’s value depends on the hour: for a system starting in 2026, SCE’s published averages are about 6¢/kWh on a summer day and 21¢ on a summer evening — far below what you pay to buy power back. That is why NEM 3.0 rewards using or storing your own solar; see NEM 3.0 explained. On LADWP, which is not on NEM 3.0, exports are netted against your purchases kilowatt-hour for kilowatt-hour at retail over each billing period (LADWP) — details in LADWP net metering.

The alternative to exporting is a home battery: it stores the afternoon surplus and runs the house in the evening, when usage and SCE’s prices peak. Under NEM 3.0, energy you store and use yourself is usually worth far more than the export credit would have been.

After sunset your home draws from the battery, if you have one, and then from the grid. That is also why going solar rarely erases the electric bill: fixed charges and night-time power remain — see why you still have a bill after solar.

A safety note: a standard grid-tied system shuts off during a blackout, even in daylight, so it can’t send power into lines that crews may be repairing. Keeping the lights on takes a battery with backup equipment; a narrow exception is Enphase’s daytime-only Sunlight Backup on IQ8 systems. See do solar panels work in a power outage?

About 76% of the rated energy reaches your outlets — normal, and already in any honest production estimate. Orientation and tilt move the starting number: a flat roof collects less than a 20° south-facing one. One of our published LA projects, an 8.28 kW array flush on a flat roof, was estimated at 10,918 kWh for its first year — about 1,320 kWh per kW (see the project). How direction changes output is covered in which way solar panels should face.

A “7 kW system” is the panels’ rated power, not what comes out of the wall. In the PVWatts model with the usual 1.2 DC-to-AC ratio, a 7 kW array in the Valley tops out near 5.8 kW of AC in its best hours, which is the inverter’s limit. Sizing a system is really matching the kWh it makes in a year to the kWh your home uses — see how many solar panels you need in California.

Solar panels turn sunlight into DC electricity, an inverter turns it into the AC your home runs on, your appliances use it first, and the rest is exported for a credit or stored for the evening. They don’t heat your water, they don’t work in the dark, and a standard grid-tied system doesn’t keep the lights on in an outage without a battery. What they do is shift where your daytime power comes from — from the utility to your own roof. Cali Energy (CSLB #1032379) designs and installs solar across Los Angeles and the San Fernando Valley; see our Northridge projects.

Figures on this page come from the primary sources below and, where noted, from Cali Energy calculations using the stated assumptions. Rates, incentives, and program terms change; each was verified September 28, 2026.

1. U.S. Department of Energy — How Does Solar Work?
2. U.S. Department of Energy — Solar Integration: Inverters and Grid Services Basics
3. California Energy Commission — PV Module List (data as of September 21, 2026)
4. NLR (formerly NREL) — PVWatts Calculator
5. NLR — PVWatts Version 5 Manual (default loss categories)
6. NLR — Best Research-Cell Efficiency Chart
7. SCE — How the Solar Billing Plan works
8. LADWP — Service Rider NEM, Net Energy Metering