How Does Solar Work?

Converting light from the sun into electricity is the simplest way of explaining how solar power works. However, the process involved is more complex. It is important homeowners understand exactly how solar works, prior to installing solar panels on their roof.

In order to understand the process, we must first understand everything that is involved in any solar system. Homeowners must develop an understanding of solar panels, inverters, switchboards and meters, the grid and rebates.

Solar Panels

Solar panels are devices that convert light into electricity. The strongest light source available to the solar panel is the sun. Solar panels are typically installed on a homeowners’ roof, facing either North, East or West (never South). It is a common misconception that solar panels must face North. However, with solar technology continuously evolving there is now next to no difference in panel performance if a panel faces East, as compared to North (for example).

Solar Panels may be referred to with other terms, such as photovaltaic cell, solar cell or solar collector.

The price you pay for your solar panels will vary from one company to the next. Like anything, you get what you pay for. Although solar panels are decreasing in price, there are many cheaper options throughout the marketplace that are unreliable and ultimately quite dangerous. Prior to making a purchase, homeowners should conduct their own research to understand roughly how much a particular system should cost. After all, a solar system is a 20+ year investment for your home.

Solar Inverter

The major responsibility of a solar inverter is to convert the variable direct current (DC) output of a photovoltaic (PV) solar panel into alternating 240V current (AC). The resulting AC electricity is then capable of operating household appliances.

Solar Inverters involve various types:

a) String Inverters – standard in most homes

b) Micro Inverters – work well with partial shading

c) Hybrid Inverters – a unit that connects solar panels with a solar battery

d) Battery Inverters – connect a battery to an existing solar system

e) Power Optimisers – also used in shaded homes

Generally, solar inverters should be installed on a shaded wall, near a switchboard.

Switchboard and Electricity Meter

A grid connected solar power system requires a compatible switchboard and electricity meter.


The switchboard is where the circuit breakers or fuses are located. Generally, recently built homes will have a compatible switchboard, where two spaces are available for the solar circuit breaker to be installed. If not, an upgrade or adjustment may be required (at a cost).

Smart Meters

A two-way meter (commonly known as a Smart Meter) is required to ensure the meter is capable of reading consumption and determining the amount of exportation to the grid. Upgrading to a smart meter will come at an additional cost to your solar system.


A solar system may produce more power than what the home consumes, resulting in surplus power being fed back into the power grid. Electricity companies will meter the electricity fed into the grid (by your solar system) and provide you a credit on your electricity bill. The amount you are paid is determined by the ‘feed-in tariff’, which will differ depending on the electricity retailer you are with.

Alternatively, when the solar panels are not producing power (at night), the home is powered by the grid, resulting in typical electricity rates being charged.

Solar Rebates and Incentives

Federal and state government rebates or schemes allow homeowners to install solar (and/or solar batteries), after receiving a deduction from the total cost of the system. Simply, this means that eligible homeowners receive the system at a lower cost.

Solar rebates will vary depending on what state of Australian you live in.

Now that we understand the factors involved with all solar systems, we can easily interpret the process.

The Solar Process

1. Solar Panels produce electricity.

2. DC Electricity produced by panels is directed to the inverter and converted to AC electricity that can be used in the home.

3. The inverter ensures the home uses the systems production first and will only gather extra electricity from the grid when there is not enough supply.

4. Smart Meter monitors and reports incoming and outgoing electricity.

5. Electricity bills factor in both electricity amounts purchased from the grid and credits obtained from electricity exported into the grid.

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