How Does a Solar Power System Work?

When light strikes a solar panel, energy is imparted to the atoms in the panel. Learn more about how a solar power system works, and discover if it's right for your needs.

My first experience with solar power was in elementary school. We were given solar-powered calculators during math. I would spend half the time covering the cell with my finger, watching the numbers slowly fade away. I didn’t really care about the why; I was more amazed that the light in the classroom could power the calculator at all.
Over the past year, I’ve worked on several projects where the owner asked about having solar panels as part of the design. This includes both new construction and remodels. In my research, and in speaking with installers, I’ve learned a lot about solar panel installations. Is solar right for you? I’ll share what I’ve learned through my research and analysis.

How Your System Works

When light strikes a solar panel, energy is imparted to the atoms in the panel. The electrons and protons are separated, creating a voltage. After the separation, the electrons flow through the circuit to rejoin the protons at the other end. This process continues for as long as energy is being put into the system. For a more in depth look at the physics of solar panels, see the How Stuff Works article How Solar Cells Work.

Image: Physics of Photovoltaics
The panels are direct current (DC), meaning current only flows in the one direction. All building power systems are alternating current (AC), meaning current changes directions. In the United States, current changes flow 60 times a second, or 60 Hz. To allow the energy created by the panels to be used by your building, an inverter is required. The inverter takes the DC power and converts it to AC power. From there, electricity can go where it is needed.
In the system, the inverter will be connected to the building’s electrical panel in an open breaker location. This is connected no differently than circuits for outlets or lights. The only difference with this breaker is that electricity flows into the panel instead of out from it. If your panels are producing more power than your building needs, you can put electricity back onto the grid for it to be used by other utility customers. In a general case, your meter will run backwards, earning credit to your utility bill.

Image: Grid-tie Solar Array System
Solar panels are not right for everyone. Ideally, the panels will have an unobstructed south exposure. South facing will get the highest efficiency from the panels because they will get the most sun light (assuming you are in the northern hemisphere). Optimizing the angle of the panels will also effect the output of the panels. In some designs, hiding the panels on the building is more important than the optimal energy production. Panels oriented in other less optimized angles will still work and can produce enough energy for your needs. These factors need to be taken into account during the design of the system.
Most building owners plan to use their array as an emergency power back up, sometimes with the idea of replacing a generator with solar panels. Unfortunately, the National Electric Code does not allow for solar panels to operate while normal power is down unless a separate storage system is present1. The purpose is to keep utility workers safe when working to restore normal power. The solar panels could energize a line that workers incorrectly assume is without power, resulting in major injuries or death.
A solution to keeping panels operational is to have on-site battery storage. This gives the energy produced a place to be stored, as well as an initial reserve of power to keep your systems operational. Like everything in the technology sector, prices are coming down and the number of installations is increasing. Over time, battery-backed solar panel systems will be common place.
On the mind of most owners considering solar panels is, “What’s my return on investment?” Will you see the system pay for itself, or is the payback not worth the upfront investment? There are several factors to consider – annual electricity usage, system production, utility buyback plan, and initial costs.
Luckily, there are tools available for owners to do initial feasibility studies before engaging with a design professional. PVWatts is an excellent resource for a rough approximation of what an owner could reasonably expect from their system. The site is run by the National Renewable Energy Laboratory and uses historic FFA weather data. It takes the address of the building and finds the nearest FFA-regulated airport for weather data and average sunshine for that area. From there, users enter the size of the solar array, orientation to south, and the tilt of the panels. With this information, PVWatts provides the annual energy produced by the system and the savings based on the electric rate for either residential or commercial power.

How Your System Performs

Now that we know how a system works, let’s examine how it will perform in the real world.
DC Principal and Mechanical Engineer Terry Wagner installed an array at his home last spring. He talked about his system and the projected return in a previous blog titled Solar Panels Add Returns to Your Wallet. Since last spring’s installation, Terry has been tracking his home usage and system production. Using the past three years of usage as the baseline, you can see in the graph below how his system has performed over the last year. As you would suspect, the system performs better in the summer than in winter. In one year, he averaged a production of 1,529 kWh and a usage of 1,620 kWh. With the buyback rate, Terry was able to cut his annual electric bill by 76%.*

Above: First Year of Solar Production vs. Three Year Average Electrical Usage

Above: Actual Energy Production vs. PVWatts Prediction

Your System’s Pay Back

The PVWatts prediction is very close to the actual system production of Terry’s system, and gives me confidence in the PVWatts values. Using those values, we can predict future energy production for a system return on investment.
Let’s assume you installed a 15 kW system with a total cost of $50,000.** In the first year of operation, you will receive a 30% tax credit2,3; that’s $15,000 back to you, initially. With the reduction in the annual energy bill, and factoring in depreciation, your business could expect a return on investment after 9-10 years. The panels themselves have a guaranteed life of 25 years, which means 15 or 16 years of continued energy production, which equals extra money to invest in your business.

Above: System Payback Analysis

Solar isn’t Right for Everyone

Maybe the best sun on your site is blocked by trees or buildings. Maybe the orientation of your building means a drastic reduction to the efficiency of the system. It could be that the ROI for your system is too long for you to be comfortable with installing a system.
However, if installing a solar array is something that interests you, PVWatts is a great first step to see if it makes sense for you. This program provides a reliable assessment for you and the design team on both feasibility and size of the system. If you decide to pursue a system, your design team can provide a comprehensive approach to ensure it is integrated into the overall design of your project. If solar is something you would like to consider as an option for the future, we can make accommodations in the initial design. It will be cost saving and make the future install easier to have conduit, boxes, panel space, and structural allowances done during the initial construction process.
If solar energy interests you, I suggest reading The Grid: The Fraying Wires Between Americans and Our Energy Future, by Gretchen Bakke Ph.D.


* Terry Wagner’s utility company does not credit the account for extra energy produced. Therefore, if he over produces in a month, his bill is $0; any additional overages do not apply to future months. Many large utilities will allow credits to accrue on future months.
** This dollar amount was chosen for easy mathematical analysis. Consult with your design team on a budget dollar amount for your system.

1. NEC Article 690
2. What Are Tax Credits?
3. Solar tax credit - everything you need to know about the federal ITC for 2019

Phillip Oprie EIT
Associate, Electrical Engineer