Solar panels convert sunlight into electricity using photovoltaic cells.
Steps
- Sunlight hits photovoltaic cells.
- Photons free electrons in silicon, making direct current (DC).
- An inverter turns DC into AC.
- Power flows to your home or grid.
Efficiency
Residential panels are 17% to 23% efficient.
Lifespan
25 to 30 years.
Cost
About $2.50 to $3.50 per watt. A 30% federal tax credit applies.
Net metering
Many utilities credit excess power.
Conversion steps and numbers
Photovoltaic cells made of silicon absorb photons, which free electrons across a p-n junction, generating direct current (DC). An inverter converts DC into alternating current (AC) for homes. Typical residential panels have efficiencies of about 18 to 23 percent, with premium models up to about 24 percent, and commercial lab cells exceeding 26 percent.
- A typical residential system is 6 to 8 kW, producing about 8,000 to 11,000 kWh annually depending on location.
- Panels usually carry 25-year performance warranties and lose around 0.5 percent output per year.
- The US federal residential clean energy credit was 30 percent through 2025 under the Inflation Reduction Act, and later legislation in 2025 ended that credit for systems placed in service after December 31, 2025.
Cost and metering
Average installed costs in the US were roughly 2.5 to 3.5 USD per watt before incentives, according to NREL and market reports. Net metering credits exported electricity, but rules differ by state, with some moving to lower export rates. Payback commonly runs 6 to 12 years. Shading, roof angle and local rates affect returns.
Conversion steps and numbers
Solar panels contain photovoltaic cells made mostly of silicon. Photons knock electrons loose, creating direct current, and an inverter converts it to alternating current. Typical panels are 17 to 23 percent efficient. A 400 W panel produces about 1.5 to 2 kWh per day depending on sun.
Cost and metering
Residential solar costs about 2.5 to 3.5 USD per watt before incentives. The federal Investment Tax Credit is 30 percent through 2032 under current law, though rules are subject to change.
Efficiency and output
Monocrystalline silicon panels reach 20 to 23 percent efficiency in commercial products, and lab cells over 26 percent. Output drops about 0.3 to 0.5 percent per degree Celsius above 25 C. Average US residential systems are 7 kW, producing around 10,000 kWh a year. A typical home uses 10,500 kWh.
Grid connection and costs
An inverter changes DC to AC at 97 to 98 percent efficiency. Net metering or net billing credits exports. Costs fell about 90 percent since 2010, to about 2.8 USD per watt installed in 2023, according to NREL. Federal tax credit of 30 percent applies to systems installed before the end of 2032 under the Inflation Reduction Act, subject to later legislation.
Based on data from NREL and the US Department of Energy
