How Solar Panels Work: Solar Panel Basics

As the cost of solar panels has gone down, consumer interest in using solar panels as an alternative form of energy has gone up. When you first begin to investigate solar panel cost, however, there’s a lot of information to wade through.

We’re going to take an in-depth look at how solar panels work, solar panel efficiency, and solar panel price.

Before we dig into the details, let’s talk about the basics. Even though solar panels are cropping up on top of more houses and buildings, not everyone is familiar with what a solar panel actually does.

A solar panel is a device that is usually positioned on top of a building to absorb sunlight and convert it into electricity. Most people know that solar panels can be used for supplying electricity to homes and businesses, but they can also be used for telecommunications equipment, as a power source for irrigation in agriculture, and even in infrastructure.

Solar Panel Cost

Solar Panel Basics

Though solar power dates back to the 1800s, it wasn’t until the early 1970s that the cost was reduced from around $100 per watt to approximately $20 per watt, according to As of 2015, the approximate cost was down to $0.57 per watt, making overall solar panel cost more affordable for the average consumer.

See Also: What Is Solar Energy? | How Does Solar Energy Work?

How Solar Panels Work: Basic Solar Panel Facts

Though the actual science behind the solar panel can get a little complicated, it can be explained as taking light from the sun and converting it into electricity. This is done by allowing photons to knock electrons free from atoms, which in turn generates electricity, according to

Solar panels are made up of silicon cells that are joined together to form solar modules. Modules are then linked together to form a solar panel.

However, knowing the science behind this alternative source of energy is different than knowing the logistics of how solar panels work in real life. When you begin thinking about converting your home or business, it’s important to know how solar panels work with your type of building, solar panel cost, and solar panel efficiency.

The following factors are important as you consider converting to solar energy:

  • What your goals for going solar are
  • How big an area you need to cover
  • If your home or building is situated to receive enough sunlight

While almost everyone can benefit from going solar, how solar panels work for each building might be different depending on how the building is situated to receive sunlight and the overall climate of the area. A building in a northern region such as Alaska, which receives less sunlight throughout the year, will not receive the same benefit from solar panels as a home in a sunny region.

Also, your goals for converting to solar power are important. Do you want to:

  • Reduce your carbon footprint
  • Save money over time
  • Live off-grid

Your answers to these questions will affect how solar panels work for you. For example, if you want to live completely off-grid, but your home is in a northern climate and situated under a lot of foliage, you might need to rethink your strategy.

Don’t Miss: Solar Energy Facts & Solar Energy Information

All-in-One Change Management Tools

Top Rated Toolkit for Change Managers.

Get Your Change Management Tool Today...

How Solar Panels Work: Solar Panel Efficiency

According to, solar panel efficiency is good enough to decrease the carbon footprint of a household equivalent to planting 88 trees. That’s an average of 35,180 pounds of carbon dioxide per year.

When you’re looking into going solar, you have to make sure the benefits outweigh the cost of solar panels. Solar panel efficiency is a major factor for most consumers.

Technically, solar panel efficiency is how well the solar panel converts sunlight into electricity and is expressed as a percentage or ratio. The average solar panel efficiency rating is between 14%–18%, which means that 14%–18% of the light that hits the panel is able to be changed into electricity.

There are several factors that affect solar panel efficiency such as:

  • Weather
  • Location
  • Shade
  • Roof
  • Quality of equipment

As previously mentioned, solar panel efficiency can be affected by the weather but in some fairly interesting ways. Cloudy and rainy weather can cause solar panel efficiency to be reduced by 40%–90%, but a thin layer of fog has much less impact.

Though sunny climates are desirable for solar panel efficiency, high temperatures actually create an adverse effect on solar panels through prolonged heat exposure. However, this is generally an issue only on the hottest days.

Solar Panel Cost

How do Solar Panels Work?

The latitude of your home or business also has an effect on solar panel efficiency. The amount of sunlight hitting your home will not be the same throughout the year, meaning your solar panels will produce more electricity during the summer.

The way your building is positioned in relationship to the sun as well as how much roof space you have and the pitch of the roof all affect solar panel efficiency. A professional consultation and installation can mitigate some of these concerns as they can explain how solar panels work for your situation.

Related: Solar Energy Pros and Cons | Review 

How Solar Panels Work: Benefits of Going Solar

Solar panel efficiency is only one benefit of converting your home or business to solar power. However, due to solar panel price, some consumers need to see a few more advantages to help them decide.

There are many benefits that offset solar panel cost. Consider the fact that solar power is:

  • Renewable
  • Unlimited
  • Clean

The benefits of solar panels aren’t exclusive to environmental concerns. For consumers that maintain solar panel cost is the most important factor, there are monetary benefits as well, such as:

  • Protection against rising energy costs
  • Increasing the property value of your home or business
  • Tax incentives

There are rebates and tax incentives available to help offset solar panel cost. Just as important is the increase to the value of your home or business.

Because having solar panels translates into lower energy bills, they will naturally make your building a better investment. One study from the National Renewable Energy Laboratory says that homes that have solar panels sell faster and for up to 17% more money.

After deciding that converting to solar is a good option, the next question for most consumers is how much do solar panels cost? The answer is: it depends.

Popular Article: How to Make a Solar Cell | Guide

How Solar Panels Work: Solar Panel Cost

Even though solar panel cost has fallen dramatically over time, it’s still the biggest inhibiting factor for most people.

According to Scientific American, the installed price of solar declined between 5% and 12% in 2015, despite the fact that costs had already been steadily going down. They predict solar panel cost will decline enough in the coming years to make solar energy competitive with conventional forms of electricity.

Solar panel cost has been reduced in part through government tax credits, rebates, and other incentives in order to support renewable energy. The average cost of going solar, after the federal discount, is $12,500, according to Some estimates, however, show the average cost of solar panels plus installation at $15,000 to $18,000.

Breaking down the total cost of solar panels for individual cases can be tricky because there are many variables that can affect solar panel price. Variables that influence solar panel cost are:

  • Electrical demands of the home or business
  • Size of the building
  • Type of solar panel installed
  • Cost of installation
  • Subsidies and rebates available in your location

Naturally a multi-purpose office building is going to require more electrical power than a modest three-bedroom home. Both the electrical demands and the size will affect solar panel cost.

There are three types of solar panels on the market: monocrystalline cells solar, polycrystalline cells solar, and thin film solar. Each type of solar panel has its own costs and benefits. In addition to the solar panels themselves, there is also mounting hardware that carries an additional cost.

How much do solar panels cost is a question without an easy answer. The easiest way to get a ballpark figure for solar panel cost is to enter your information into a solar-estimate calculator.

The other way to get the solar panel cost for your area is to work with a local professional. They can take into account your current utility bills, the way your home or office building is situated and how large it is, rebates and incentives available in your area, and what they charge to install.

There are multiple ways to pay for solar panel cost. According to, consumers can now lease, buy, or finance their solar panels. However, the tax breaks and the increasing property value won’t be realized with a lease.

Remember, when you are considering solar panel cost, also take time to consider the overall energy savings over time. says that you can save $10,000 to $70,000 over a 25-year period, depending on where you live.

Read More: DIY Solar Panels | Guide

Free Wealth & Finance Software - Get Yours Now ►

How Solar Panels Work: Conclusion

How solar panels work is a combination of why you want to install solar panels, where you live, how your home or office building is situated, and what you’re willing to invest.

If you make the decision to go solar, you will need to find a local professional. As with hiring any other professional, look for someone who has a:

  • Good reputation and can offer references
  • Strong warranty
  • Good history with the Better Business Bureau

You want to find a professional who will not only answer how much do solar panels cost, but can explain the ins and outs of how solar panels work for your situation. Ask to see previous examples of their work to ensure quality and also a pleasing aesthetic.

Performing your due diligence will pay off as you invest in solar panels and put you on the cutting edge of alternative energy usage.

Image Sources:


AdvisoryHQ (AHQ) Disclaimer:

Reasonable efforts have been made by AdvisoryHQ to present accurate information, however all info is presented without warranty. Review AdvisoryHQ’s Terms for details. Also review each firm’s site for the most updated data, rates and info.

Note: Firms and products, including the one(s) reviewed above, may be AdvisoryHQ's affiliates. Click to view AdvisoryHQ's advertiser disclosures.