Solar Power and Photovoltaics:  

How Do They Work?

Photovoltaic (PV) Panels are made up of solar cells that receive energy from the sun via radiated light, and then converts that energy into electrical current as the "rays" hit the solar cells.  The solar cells convert the radiation/energy coming from the sun into direct-current (DC) electrical energy as it passes through layers of semi-conductor material.  The sun's rays excite loose electrons in the semi-conductor material, which in turn forms an electrical current, which is available to the power system as DC electricity and then converted to AC electricity on demand. 

As the light dissipates in the evening, the electrons are no longer excited and they return to a resting state, hence - no light from the sun means no electricity being created.  Therefore, at night your system needs to have access to a power supply.

The more solar panels in your system, the more electricity you create and the more electrical demand you can accomodate.  A small system can be used to power standalone items such as agricultural wells where power sources are not readily available.  Residential systems can range in size depending on the electrical demand of the residents and their home.  Commercial systems tend to be much larger, meeting the larger demand of heavy equipment (e.g. manufacturing).

On-grid Applications:
For most residential and commercial applications, the DC power is converted to AC (Alternating Current) for immediate use in the residence or business.  Therefore, at night your system needs to have access to a power supply through your local power company (e.g. PG&E or SMUD).  Excess electricity not being used during the day is utilized by your power company in exchange for your use of their power during the down time of your solar power system.  Once per year, your power company calculates how much power you used, and how much power they drew from your system.  If there is a deficit on your side, then you pay the power company the net balance.  If it goes the other way (Power Co. received more than you used), then you owe them nothing - BUT they don't have to pay you anything for it.

This may seem unreasonable at first, however, you are benefiting from their power delivery, which requires maintenance, poles, wire, labor etc. to maintain.  So you need to look at this as paying for the convenience and use of their power grid through your donation of power to the grid.  The alternative is to go off-grid, which has higher costs due to batteries and their maintenance.  So when comparing the costs, and understanding the cost to the power company to be accessible, it seems a reasonable trade off.

Off-grid Applications:
Off-grid applications store power in battery systems as DC power. Then, it is converted to AC as the power is pulled from the battery system to the source of the power demand (residence, business, well, pool, etc.).  The battery system must be large enough to meet demand overnight plus low light days.

Off-grid systems are used wherever it is too cost prohibitive to bring power to the site from a power utility system.  These systems are also used by people who want to be free of any association with power utility companies, thereby becoming completely self-dependent for their energy needs.  There is nothing wrong with this - it only means that your system will be a little more expensive due to the battery component, and it will require a little more maintenance by you to keep the battery system in top working condition.

Wikipedia has an excellent series of information related to Solar Power and Photovoltaics.  As there really is no need to re-invent the wheel, we highly recommend that you take a look at that site for more information:

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