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 AC unit actually run on. Your home takes what it needs in real time. Whatever’s left over doesn’t vanish — it 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 simply draw power back from the grid or the battery. That’s the whole system. The rest is detail.

A solar panel is made of dozens of photovoltaic cells, and each cell is mostly silicon — the same element as sand. The silicon is treated so it has two layers with opposite electrical charge, forming an electric field where they meet. When a particle of sunlight (a photon) strikes the silicon, it knocks an electron loose from its atom. The built-in electric field pushes those freed electrons in one direction, and that steady one-way flow of electrons is direct current (DC) electricity (U.S. Department of Energy).

Two things worth being honest about. First, panels make electricity, not heat — solar panels (PV) are different from solar thermal water heaters. Second, a panel doesn’t use all the sunlight that lands on it. A typical modern residential panel converts roughly 19–22% of incoming sunlight into electricity; the very best premium panels reach about 23–24%, and lab-record cells go higher still (NREL). Higher efficiency mostly means more watts per square foot — useful on a small roof, but not “free” energy.

The electricity from the grid, and everything your home is wired for, is alternating current (AC) — it rapidly reverses direction many times a second. Solar panels produce DC, which flows steadily one way. An inverter bridges the gap by switching the DC input back and forth extremely fast, shaping it into smooth AC at the right voltage for your home and the grid (U.S. Department of Energy).

There are two common designs. A string inverter is one central box that all the panels feed into together. Microinverters are small units mounted under each panel, so every panel converts its own power — which helps when one panel is shaded or dirty, because it doesn’t drag the whole string down. Both work; the right choice depends on your roof, shading, and budget. We compare the two brands most Los Angeles homeowners weigh in Enphase vs. SolarEdge.

This is the key idea people miss: solar power is used on-site first. When your panels are producing and your fridge, AC, and EV charger are running, they pull from the solar directly. Nothing has to travel to the utility and back. Only the electricity your home isn’t using at that exact moment has anywhere else to go. On a sunny afternoon a home often produces more than it’s using; at 7 p.m. with the oven and TV on, it may use more than it’s making. The system balances that second by second, automatically.

Extra AC that your home doesn’t use flows back through your meter and onto the grid, and you earn a credit for it under net metering / net billing. How valuable that credit is depends entirely on your utility. If you have a new qualifying system in SCE, PG&E, or SDG&E territory, it generally enters NEM 3.0 (the Net Billing Tariff) — older systems may stay on legacy NEM rules — where exported power earns a time-varying credit that is usually well below the retail rate — an illustrative 5–8¢/kWh at common midday hours, though a few late-summer evening hours are worth much more. That low midday value is exactly why NEM 3.0 rewards using or storing your own power instead of exporting it. See the full breakdown in NEM 3.0 explained for California. (LADWP is a municipal utility with its own, more retail-like net metering — it is not on NEM 3.0.)

The alternative to exporting cheap and buying back expensive is a home battery. Instead of sending the afternoon surplus to the grid for a small credit, the battery stores it. Then in the evening — when both your usage and grid prices peak — your home runs off the battery instead of buying costly grid power. Under NEM 3.0, that stored-and-self-used energy is often worth far more than the export credit would have been, which is why batteries and NEM 3.0 go hand in hand.

After sunset your panels stop producing, so your home draws power from your battery (if you have one) and then from the grid. In effect, on a standard grid-tied system the utility acts like a giant backup “battery”: you bank credits by day and spend them by night. This is also why going solar usually doesn’t eliminate your electric bill entirely — you still have a grid connection, fixed utility charges, and any nighttime usage your credits or battery don’t cover. We walk through that in why you still have a bill after solar.

One safety note: a standard grid-tied system shuts off during a blackout, even in daylight, so it can’t send power into lines that utility crews may be repairing. Keeping the lights on during an outage requires a battery with backup capability, not just panels.

So when an installer says “7 kW system,” that’s its maximum power — how fast it can produce at peak. When your bill says you used “900 kWh last month,” that’s the total energy you consumed. Sizing a system is really the job of matching the kWh your panels produce over a year to the kWh your home uses. How many panels that takes depends on your roof and usage — we cover it in how many solar panels you need in California.

To sum up: solar panels quietly turn sunlight into DC electricity, an inverter turns that into the AC your home runs on, your appliances use it first, and the rest is exported for a credit or stored in a battery for the evening. They don’t heat your water, they don’t work in the dark, and on a normal grid-tied system they don’t keep your lights on during an outage without a battery. What they do is shift where your daytime power comes from — from the utility to your own roof — which, on the right plan, is where the savings come from.