Despite being a leading clean energy technology, there is still a lot of mystery surrounding installing solar panels. How much does solar cost? Do you need a battery? How does solar power even work? We’ve broken down the basics of solar power to answer your questions and give you a better understanding of the increasingly popular energy source.

How does solar power work?

Solar power can run anything that electricity generated by fossil fuels can power, just without all the guilt and dirty emissions.

There are two key things to understand how solar power works:

1. How solar panels turn sunlight into electricity
2. How that electricity is then sent to our homes and businesses

How solar panels generate electricity

Solar power is produced through something called the photovoltaic effect. If you’ve ever looked at a solar panel, you’ve probably seen that they are made up of multiple small squares. Those squares are called solar cells, photovoltaic cells, or PV cells.

Almost all the solar panels you see are made of silicon solar cells. Each cell has a negative layer with extra electrons and a positive layer that has room for those electrons to travel to. When sunlight hits that negative layer, the electrons are knocked loose and begin to move to the positive layer. The flowing of electrons is solar electricity!

Learn more: How do solar panels work?

How solar power is used

We’ve established how solar power is produced through the photovoltaic effect, but how do our homes use solar electricity?

Solar panels produce something called Direct Current, or DC, electricity. Most homes can’t use DC electricity, so it needs to be converted into alternating current, or AC electricity. That’s where solar inverters come in - the DC electricity produced by the solar panels travels to the solar inverter where it is converted into AC electricity.

The AC electricity can then be used by your home appliances such as your refrigerator, lights, and TV!

Learn more: How we use solar energy in our homes and Solar inverter types and how they work

History of solar power

Solar power has been around for a lot longer than you think. The first-ever solar cell was invented in France back in 1839! Four decades later in 1883, the first solar panel was created with selenium wafers and was erected on a New York City rooftop with an energy conversion rate of only 1%.

After this, a few patents were created in the U.S. for solar cells and solar panels, with the solar panel patent belonging to Nikola Tesla. In 1905, Albert Einstein published a paper describing the theory behind the “photoelectric effect”, for which he won a Nobel Prize 17 years later.

Then, in 1954, the silicon solar cell that we use today was invented in the great state of New Jersey. This changed the game when it came to solar power, as silicon solar cells could convert electricity far more efficiently than the selenium solar cells used in the past.

Since then, the solar power industry has continued to evolve into what we know it as today. Now, the U.S. has over 2 million solar panel installations and is on track to double that number by 2023.

Learn more: The history of solar power

The cost of solar power systems

Most homeowners in the U.S. can expect to pay between $18,000 and $20,000 for a solar panel installation before any incentives are considered. This works out to between $2.75 and $3.35 per watt of solar installed, and is over 70% cheaper than what solar cost just 10 years ago!

Learn more: How much do solar panels cost in 2023?

Once you consider the federal solar tax credit, 30% of solar installation costs, the average total cost of a solar installation drops down to between $12,600 and $14,000 - not bad!

Many states and utilities throughout the U.S. offer additional solar rebates, too. You can use our solar panel savings calculator to get a better idea of how much solar incentives can save you in your area.

Despite being cheaper than ever, solar is still a pretty substantial investment. Luckily, there are several ways that homeowners can finance a solar panel system including solar loans, solar leases, and solar PPAs. Plus, you don't have to worry about substantial maintenance costs when it comes to solar - once your panels are installed, system maintenance is minimal.

Learn more: Buying vs. leasing solar panels and Solar panel maintenance: everything you need to know

Types of solar power systems

Solar power can be used in several different ways. There are solar thermal energy sources such as concentrated solar power systems, solar cooking systems, and solar hot water systems that capture heat from the sun for use.

What probably comes to mind when you think of solar power are solar panels, which are photovoltaic solar systems.

Most residential solar power systems are photovoltaic solar systems and fall into one of three categories:

• Grid-tied systems
• Solar-plus-storage systems (AKA hybrid systems)
• Off-grid systems

Let’s break them down.

Grid-tied solar power systems

Most solar panel systems you see today are grid-tied systems where the solar panel system is connected to the utility grid. Your home will use the solar power generated by your panels. If your panels produce more electricity than your home needs, the excess electricity will be sent to the grid.

In most states, you’ll receive some sort of compensation for sending electricity to the utility through net metering, but exactly how much you’ll get depends on your utility company. Because your home is still connected to the grid, you can use power from your utility when your solar panels aren’t producing enough electricity to cover your energy needs.

Learn more: What is net metering?

Not only are grid-tied systems the most common type of residential solar power system, but they’re also the cheapest because they don’t have additional storage equipment costs. So, if you’re on a budget, your utility offers a good net metering program, or if the grid is reliable in your area, then a grid-tied solar system is probably your best option.

Solar-plus-storage systems

Solar-plus-storage systems, sometimes referred to as hybrid systems, are solar panel systems that are connected to both the grid and an on-site solar storage system, typically a solar battery. During the day, your solar panels power your home just like they do with a grid-tied system.

When you produce more solar power than your home needs, that energy is sent to your battery instead of back to the grid. You can then use that stored energy when your panels aren’t producing enough electricity to meet your energy needs, reducing the amount of electricity you take from your utility.

Do I need a solar battery?

Pairing solar panels with solar batteries is becoming increasingly popular, but that doesn’t necessarily mean you need to get one. In fact, most homeowners in the U.S. don’t need to worry about installing a solar battery with their solar power system. Solar batteries are more of a luxury than a necessity at this point, mainly because they can add upwards of $10,000 to your solar installation costs, without saving you that much more money.

Learn more: Are solar batteries worth the cost?

However, there are some cases in which solar batteries might come in handy. For instance, if you live somewhere where the utility grid is unreliable and the power goes out frequently, like California, having a solar battery backup might be a good idea. Solar batteries can also be worthwhile if your utility or state offers big incentives for installing energy storage.

Off-grid solar power systems

Off-grid solar power systems are exactly what they sound like - solar power systems that are not connected to the electrical grid at all. If you have easy access to the grid in your area, going off-grid just doesn’t make a whole lot of sense.

For one thing, off-grid solar power systems are expensive. You need more solar panels and a large amount of battery storage to be able to cover all of your energy consumption, which doesn't come cheap. Plus, you might have to make some serious lifestyle changes to make sure you’re not using too much electricity.

Solar power is a renewable energy source

Not only do you cut down on your electric bill when you go solar, but you also reduce your carbon footprint. Solar panels don’t release any of the nasty carbon emissions or other air pollutants that fossil fuels do when they generate electricity.

The average residential solar power system in the U.S. can prevent almost 16,000 pounds of carbon dioxide from being released into the atmosphere. You would need to plant 8.8 acres of forest to offset that amount of carbon, but a rooftop solar energy system puts a stop to those emissions entirely.

Learn more: Solar energy vs. fossil fuels

We’re not going to lie to you: some emissions are involved in manufacturing solar modules and other solar technology, just like every other manufactured product on the planet. The emissions associated with manufacturing solar panels are almost negligible when it’s compared to how much is released generating electricity with fossil fuels.

But the actual solar electricity itself is clean energy. There are absolutely no emissions released when a solar panel produces electricity. Fossil fuel plants, on the other hand, continue to burn and release greenhouse gasses with each kilowatt-hour of electricity they produce.

The future of solar power is bright

The solar industry is stronger than it’s ever been before. Solar energy technologies continue to improve and solar prices keep falling, making solar more accessible than ever to U.S. homeowners.

We don’t foresee these trends changing course any time soon.

For one thing, the Biden Administration has put quite an emphasis on climate change resilience and clean infrastructure including a carbon-free grid by 2035. In order to meet these goals, it’s possible more solar incentives may start popping up. The federal tax credit has already been extended for 10 years thanks to the Inflation Reduction Act – perhaps there’s more to come!

There is one major dark spot lurking in the shadows of the solar industry to keep in mind - utilities across the country have been pushing to eliminate net metering, which is one of the main reasons why solar is such a worthwhile investment. If you want to ensure you get the highest solar savings possible, you’ll want to go solar sooner rather than later.

Our free solar panel calculator makes it incredibly easy for you to get familiar with solar power before you make your final decision. We tell you what kind of savings you can get with a PV system, what incentives are in your area, and you can customize the estimate directly to your needs. Then, we can pair you with the best solar companies in your area, so you can compare quotes and get the best quality solar project.