Working of a Solar Power System

How does a solar power system work? A solar power system consists of solar panels, inverters, batteries, wires, switches, relays, etc. These are all important components of a solar power system, but the most essential of them are solar panels. So how do the solar panels produce electricity?

The most basic element of a solar power system is a solar cell, and can produce a maximum of 0.5 to 0.6 volts. Not of much use, right? But many solar panels, when combined, can produce enough electricity to power your home. The working of a solar cell boils down to the working of a solar cell. But how do solar cells work?

It is simple. The sunlight falls on solar cells, and voila, electricity is produced. This is known as the photovoltaic effect. These photovoltaic cells are made from silicon, which has the power to absorb energy from photons—found in the sun’s rays. The photons knock electrons off the silicon atom, giving them the freedom to move around. Remember what does the movement of electrons implies? That electric current is produced. But this is direct current (DC), not much friendly to our household appliances.

Since most of our electrical and electronic devices use alternating current (AC), we have to convert the DC to AC. To do so, an inverter system is attached to these panels. This inverter system convert DC to AC. From the inverter, this electricity is fed to your utility meter and, from there, to the main switch. If this power is as per your demand, it is consumed at your home. If your solar power system generates more than you need, the excess energy fed to the grid. Your meter keeps track of how much you consume and how much you give to the grid. This arrangement is called net-metering. If your state has a net metering policy, you may be able to sell the surplus power your system generates to your utility.

There are different ways where you can manage to keep your solar power system connected to your grid—or not. There is an on-grid system that allows you to exploit the benefits of solar energy as well as grid electricity. Another arrangement is off-grid, meaning that you will be completely disconnected from your grid. To cater to your needs at night, you will have to rely on a battery storage system. Yet another option is the hybrid arrangement. Here, you will be connected to the grid as well as your battery system. Your solar power system and grid will meet the majority of your energy demands. In case of emergency, you can draw power from a battery system installed at your home. 

Components of a Solar Panels System

Solar Panels

Solar panels are also known as solar modules. A combination of many solar panels, such as 10 panels, forms an array. We can rightly call solar panels the heart of the solar power system. They are made of silicon, metal, and glass—silicon being its essence. You would have noticed squares on a solar panel. They are cells, each panel arranged in a configuration that contains 32, 36, 48, 60, or 72 cells. For commercial setups, panels consisting of 72 cells are usually preferred since they are cheaper to install on a larger scale and generate more electricity than those with fewer cells. Similarly, panels consisting of 60 cells are more preferred for residential units since they are lighter and easier to install. But other than the divisions based on the number of cells, panels vary based on how they are made. Usually, any solar panel that you may have seen will be any of the below three.

i. Monocrystalline Solar Panels

As the name suggests, each cell of the monocrystalline panel is made from a silicon wafer that is made of a single crystal of silicon. Since it is made from a single crystal, the electrons have enough room to move easily. That means higher efficiency. Of all the available PVs, mono has the highest efficiency, ranging from 17 to 22 percent. This is also the most expensive of all.

ii. Polycrystalline Solar Panels

Also known as multi-crystalline, they are not made from a single silicon crystal. Instead, many fragments of silicon crystals are melted to form wafers for the panels. They have lower efficiency, ranging from 15 to 17 percent. Since they are cheaper to manufacture, they have a lower price than monocrystalline panels.

iii. Thin-Film Solar Panels

Unlike the above two, thin-film solar panels are made from a variety of materials. Their process of construction is also different, where a photovoltaic substance is deposited on a solid surface, typically glass. These photovoltaic substances may be cadmium telluride (CdTe), amorphous silicon (a-Si), copper indium gallium selenide (CIGS), and dye-sensitized solar cells (DSC). They are lightweight and can even be made flexible. The sleek and shiny exterior makes them attractive. But their efficiency is the lowest of all, between 10 and 13 percent, and for the same reason, are cheaper than the above two.

Inverter System

The inverter is a vital component of a solar PV system. Its role is to convert the DC electricity to AC electricity, making the power suitable for our household needs. Had inverters not been there, we would have to switch our whole household electricity system to DC-based. Given that there are many types of inverters available in the market, a brief overview of each would help us understand their differences.

i. String Inverters

Its name says it all. This inverter is attached to the solar arrays—the combination of several panels—directly. Each cell is directly connected to the inverter, from where it converts the DC coming from each string to AC and sends it down to the main switch. A string inverter is a cost-effective and short-term solution and can work best for a row of 5-10 solar panels. Therefore, you can save more by installing one string inverter instead of going for 5-10 micro-inverters. One of the disadvantages of a string inverter, however, is that the strings attached to it don’t work as individuals but more like a team. If one of the cells breaks down or comes under a shade, the performance of all is affected. Secondly, if you wish to increase the number of modules—panels—you will have to install a new inverter in the future. This will increase your upfront cost.

ii. Microinverters

Microinverters are attached to each solar panel. The conversion from DC to AC happens separately in all inverters, and from there, this current is fed into the main switch. Since they work individually, the performance of all is not affected in case one cell—or inverter—experiences a problem. They are used both in commercial and residential units. Another benefit is that if you want to expand your system in the future, you won’t need reinstallation of the existing panels and inverters. Just add cells and the same number of inverters, and congratulations, your system is updated.

iii. Hybrid Inverters

These inverters are combining technology that mixes inverters and batteries. In this arrangement, the inverter is connected to the batteries, solar panel system, and grid. It’s an all-in-one inverter responsible for many functions. Primarily, it converts DC to AC, but it also monitors the charge in batteries and controls this charge. Other than this, when the batteries are charged and there is excess power, it sends that back to the grid using the charge controller.

iv. Central Inverter

This works a lot like a string inverter. The notable difference between the two is that the string inverter converts DC to AC coming directly from each string. However, the strings are not directly attached to the inverter in the central inverter but are fed into a common combiner. The collected DC from that combiner then goes to the central inverter, where it’s converted to AC.


Another key component of the solar power system is batteries—provided that you are using an off-grid (hyperlink Off-grid) or a hybrid system (hyperlink hybrid system). The market is flooded with different types of batteries, each calling itself the best. Let’s see which one could work best for your system.

i. Lead-Acid Batteries

Lead-acid batteries are a tried-and-tested technology, serving the car industry and off-grid solar power systems for decades. As compared to its competitors, they are less expensive and work well for a home that wants to go off-grid cost-effectively. Their downside is, they have a shorter lifespan and lower depth of discharge— the amount of battery’s capacity that can be used.

ii. Lithium-ion Batteries

Unlike their lead-acid counterparts, lithium-ion batteries are more compact and lighter. They have a higher depth of discharge and a longer lifespan. More importantly, they don’t require refills and maintenance. If you want your batteries to work for a longer period, lithium is the best choice for you. However, they are expensive as compared to lead-acid batteries.

iii. Flow Batteries

While not popular like lead-acid and lithium-ion, flow batteries are making their presence felt everywhere. They are suitable for long-duration storage, with no limitation on their cycle. In fact, some developers opine that the flow battery’s technology has no cycling limitations and can be charged and discharged altogether without having a significant impact on its lifespan. They have the highest depth of discharge and can tolerate extreme temperatures. Their downside is, they are more expensive than both lead-acid and lithium-ion batteries.

Racking – How to Mount Solar Panels

After having procured the main components, the next step is installing the panels and associated equipment. You may have come across solar panels mounted on rooftops or the ground. Does the two make any difference? Let’s see!

i. Rooftop Mounting

In residential units, this is the most common mode of mounting solar panels. While mounting your solar panels, you should be careful about the direction, pitch angle, shape, and size of the roof. The main aim is to keep the panels in such a position to receive the most sunlight. Ideally, your home should have a large, sunny, south-facing roof with a 30-degree pitch and no shading. Should you have an ideal roof? Not really. Even if it is not, your solar company will install the panels in such a way that will work best for you.

ii. Placing PVs on the Ground

Only rooftop is not the favorite habitat of solar panels. Since rooftop-mounted panels serve a residential unit well, and also, there is little space in homes, we don’t often see ground-mounted panels in residential areas. Usually, for commercial usage, the PVs are installed on the ground as their energy needs require a bigger solar plant. These panels can be mounted in two ways. A standard ground mount is where panels are fixed on the ground in one place. Another way is mounting them on poles. One advantage of the latter is that it can incorporate a tracking system, which allows panels to follow the sun’s path—exactly like a sunflower.

Connecting Your Solar Power System to Grid

One of the notable concerns of our customer has been this: How to connect a solar power system to the grid and if there are different arrangements through which we can tailor our system to our own needs. This chapter explores different arrangements in which you can connect your solar power system to your grid.

1. Direct Grid-Tie System

In this arrangement, your solar power system is connected directly to the grid. You use the electricity you generate. But what about the night? Since your solar power system won’t work at night, you’ll have to use the electricity coming from the grid. Its benefits are manifold, notably the credit system. The excess power your system generates is fed into the grid. At the end of the month, if your system produces more power than you consume, you’ll be given credit for that. If your production and consumption matched, well, you won’t have any electricity bill. There is one downside to it, and that is, what to do during a blackout? Let’s explore more arrangements to address what we can do about that.

2. Off-Grid or Battery-Based Grid System

In this arrangement, your solar power system is not connected to your main grid but batteries. These batteries store the excess power your system generates for your night needs and other unexpected circumstances. But setting up this system requires more upfront cost than the on-grid system as there have to be additional batteries that can store power at least for two days. Even then, this arrangement still may not shield you from long power outages. Also, you will have to change batteries more often as you primarily depend on them. So what to do now? Let’s move to our next arrangement, and that is the Hybrid System.

3. Hybrid System

As the name suggests, a hybrid system is a combination of the above two. In this arrangement, your solar power system is directly connected to the grid as well as batteries. You use the power your system generates during the daytime, and at night, your system automatically switches to the electricity provided by the grid. But since there are batteries attached, you don’t need to worry during power outages as power stored in batteries will cater to your needs. At the end of the month, if your system generated more power than you consumed, you receive credit for that. Vice versa, you receive your bill—which surely is way less than your usual bill.

4. But Which System is Right for You?

With batteries or without batteries? It depends on your budget, needs, and preferences. Fill in this form (hyperlink form), and one of our energy advisors will guide you with better insights after analyzing your preferences, usage, needs, lifestyle, and budget. A general rule is if you live in an area with power outage issues or hurricane-prone areas, the battery system or hybrid system is for you. If you face two to three outage issues annually, then you can go for the direct grid-tie system.

Solar Financing Options

Solar energy system has a number of benefits. Fine. But how to finance it? What if you cannot manage the upfront cost but like to go solar? Are there any options for you? Surely, there are. Let’s discuss those options in detail.

1. Cash

This is simple. You do have the upfront cost; thus, you can manage to install the system right away. Contact a good installer company; they’ll offer the plans based on your needs. You select the one that suits you, they install it, you pay them, and it’s done. In this case, you receive the most benefits, such as all the tax credits and incentives offered by your state, the federal government, local bodies, and other organizations.

2. Solar Loans

You don’t have the upfront cost? It is okay. There are some financial institutions that offer soft loans to those who want to go solar. This loan can be obtained if you have a fair to good credit score. Some solar companies have partnered with financial institutions that can enable qualified citizens to install a solar power system at as low as a $0 down payment. Both cash and solar loan enable you to claim the Federal Income Tax Credit and other rebates. In a solar loan, the interests you pay on your loan may be tax-deductible. More savings? Yes. Even if you obtain the system on loan, you can still save 40 to 70 percent on your monthly bills over the lifespan of your system.

3. Lease

A lease is like renting a solar energy system. It’s another option you may consider if you want to avoid the upfront cost. If you lease a solar power system, you don’t own it—it is the property of the solar company or a third party who pays for it. You just have to pay a monthly agreed-upon fixed amount for the time of your agreement, usually 20-25 years. At the end of the term of your agreement, you may buy the system at its market price.

4. Power Purchase Agreement

Power Purchase Agreement (PPA) is almost like a solar lease. The key difference here is that the homeowner rents the solar power system and its components and pays for it in the former. In the latter, the third party installs the solar power system and sells you the electricity you use. It may be fixed or variable, as the agreement may be. The latter two options allow you to save 10 to 30 percent per month on your electricity bills. And all this without incurring the upfront cost. However, since it is the solar company or a third party that owns the system, they are eligible for the tax credits and other incentives, not you.

Solar Incentives and Rebates Programs

Here is a brief breakdown of the incentives and rebates programs the federal or state governments provide to the Americans. The goal here is that more people should turn to renewable energy sources.

1. Net Metering Policy

What is net metering? When you install a solar energy system, you may either prefer to connect it to the grid (hyperlink how to connect your system to the grid) or go off-grid. If it is off-grid, fair enough. The excess power your system generates goes to batteries. But what if your system is grid-tied? It is here that net metering comes in handy. It is a billing arrangement that allows the homeowners to sell the surplus power their system generates to their utility. Your utility gives you 1kWh power for 1kWh your system produce. Laws in most states require utilities to offer the net metering facility to those homeowners who wish to turn to renewable energy. After installing a solar panels system, a two-way meter is installed at your site. It keeps track of the electricity you draw or send to the grid. When you draw, the meter runs forward; when you send, the meter runs backward. At the end of the month, if your consumption and generation match, you won’t have to pay any bill. If however, your system generated more, you’ll be given credit for that power.

2. Federal Income Tax Credit

A tax credit is a reduction in the amount of tax you otherwise would pay to the government. It is dollar-for-dollar—if you have $500 in tax credit, you will pay $500 less tax.

Offered by the Federal government to those who wish to convert to solar energy, The Federal Income Tax Credit works the same way. You are eligible for this incentive if:

  1. You are a lawful resident of the United States.
  2. You are a registered taxpayer.
  3. You are a homeowner.
  4. You install the new solar PV system—either on cash or loan.

It covers the cost of your system hardware—photovoltaic cells, batteries, inverters, wires, etc., as well as the installation cost. It was set to be expired in 2015, but the government chose to extend it till 2022, with variations. If you have ever considered going solar, 2020 is the best year. Why? Because if you install a solar power system before December 31, 2020, you are eligible for a 26% tax credit. Keep in mind that this was 30% last year, and it’ll be 22% next year. It’ll fall to 10% in 2022, but there will be no more incentives for residential units after that! So why wait? Here, your upfront cost diminishes even more, given that 26% of that is returned to you in the form of a tax credit. Click here for a detailed guide to the Federal Solar Tax

3. State and Local Incentives

Other than the above, there is another group of incentives offered by the state and local governments. While space doesn’t allow us to go state-specific here, generally, the following are the incentives offered by different state and local stakeholders.

i. Rebates

This is a cash rebate that you receive after installing your solar panel system. It can come from your state or local government, utility, municipality, or other organizations that want to encourage more people to adapt to renewable energy. This further reduces your upfront cost.

ii. Tax Credits

This is an additional tax break you may avail of by going solar. Residents of the said states can claim this credit after installing a solar power system in their homes.

iii. Solar Renewable Energy Certificates (SRECs)

Laws in some states require utility companies to generate a definite percentage of power from solar energy. Now, if you live in any of those states and have a solar power system installed, you can obtain these certificates after selling the surplus energy to your utility company.

iv. Tax Exemptions

In addition to the above, some states and local governments provide property tax exemptions for the added value of your home after installing solar. As we discussed earlier, going solar increases the value of your home. But this increase will not be counted while assessing your tax liabilities. Besides, there is a sales tax exemption program in many states—which means you don’t have to pay tax on installing a solar PV system.

These incentives greatly reduce the cost of your system and can save hundreds (or even thousands) of dollars. Keep in mind that they vary from state to state. Click here (Hyperlink State-Wise Incentives) for state-specific incentives.