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How Do Solar Energy Systems Work?

Are you interested in installing a solar energy system in your home? Are you unsure of what’s involved?

Discover the main differences between the three separate types of solar energy systems:

  • On-grid –  a solar system tied to the electricity grid
  • Off-grid –  a stand-alone power system (SAPS)
  • Hybrid –  a solar system with battery storage, connected to the electricity grid

They all work in the same basic way. The solar panels in the system, which are photovoltaic cells, convert the energy collected from the sun (sunlight) into a DC electric charge (current). This conversion process is called the photovoltaic (PV) effect.

The electricity generated is typically stored in a battery for later use. Alternatively, a solar converter can be used to convert the DC electricity into AC electricity, which can then be directly used in the home to power lighting, appliances, and other devices.

In some solar energy systems, any excess electricity generated can be sold back to the main electricity grid operator, which allows homeowners to further reduce the cost of electricity consumed.

What Are the Main Components of a Solar Energy System?

There are common components that all three types of solar energy systems use. These include:

Solar Panels

  • A typical solar panel consists of numerous photovoltaic (PV) cells, which are made of silicon. These PV cells create electricity from sunlight. Each solar panel has multiple PV cells that are linked together, and each panel is linked to the other panels in the system.
  • Electricity is generated from the sunlight (light energy) collected by the panels. Normally, a group of solar panels is mounted together to form what is known as a solar array.
  • How much solar energy a solar array can gather is influenced by directional orientation, angle of panel tilt, the efficiency of each solar panel, and their size.
  • Other factors can affect overall performance over time, such as ambient temperature, amount of shade, dirt, and debris, and age of the panels.
  • Although solar panels operate best when there is direct sunlight, they can still generate electricity even when the weather is cloudy or overcast. The amount of energy generated will vary depending on the amount and density of any cloud cover. Cloud density directly affects how much sunlight filters through to be collected by the solar panels.
  • Solar irradiation, the light energy emitted by the sun, can vary throughout the day. This amount of light energy is usually measured in Peak Sun Hours (PSH), which is an average figure for the day. The PSH value varies according to location and season. Sunnier locations will have a higher PSH than places that have mainly cloudy weather and little sun. Hot, sunny summers will produce a higher PSH value than in wintertime when it’s generally less bright and, in some areas, daylight hours are shorter.

Solar Inverter

The electricity generated by solar panels is DC (Direct Current) electricity. The purpose of a solar inverter is to convert the DC electricity into AC (Alternating Current) electricity. Then it can be used directly in homes and other locations just like the electricity supplied from the main power grid.

There are two common types of solar inverter systems: a string inverter or a micro-inverter system. How are they different?

  • A string inverter system consists of a series of interconnected solar panels, which feed into a single inverter. The inverter then converts the DC electricity from the solar panels into AC electricity and supplies the electricity to the main circuit board in your home. Some string inverter systems use additional power optimisers on each solar panel. The power optimiser monitors and controls the solar panel to ensure it operates at maximum efficiency at all times.
  • A micro-inverter system consists of a solar array in which each solar panel has its own micro solar inverter. Each solar panel generates DC electricity which is converted to AC electricity by each solar panel, collected, and then fed to the main circuit board.

Electrical Switchboard

The electrical switchboard in your home is where you find the circuit breakers, and electricity meter to measure consumption.

In an on-grid solar system, the solar inverter sends the AC electricity to the main switchboard. The switchboard then supplies the electricity to the home, just like the electricity which comes from the main power grid.

If the solar energy system generates more electricity than can be used at any given time, there are two options for dealing with it:

  • The electricity can be sent to the main power grid, via a special electricity meter.
  • The excess electricity can be stored in a battery for use later (hybrid system). Sometimes, hybrid systems also include a special backup distribution panel, capable of supplying power to critical circuits in the case of a power outage or grid blackout.

Now let’s look at each system in more detail.

On-Grid System

An on-grid solar system is what you usually see in domestic installations. An on-grid system uses a solar inverter, doesn’t use battery storage, and is connected to the main electricity distribution grid.

  • If the system generates extra electricity which can’t be used at the time, it is fed back to the main grid.
  • The homeowner usually receives either feed-in-tariff (FiT) payment or credit for the electricity exported to the grid.
  • When there is a power outage or grid blackout, an on-grid system will cease to operate. This is a safety measure because if the solar inverter continues to generate electricity and feed it into the grid, which is damaged and under repair, it risks the lives of those working on repairing the grid.
  • One solution is to convert an on-grid system to include a battery storage facility, effectively making it a hybrid system. The system would still work during a power outage, although possibly with limited capacity.

What happens to the electricity generated by solar panels when it reaches the switchboard?

  • The electricity is fed through a meter. This measures whether you are consuming electricity or exporting electricity to the grid.
  • When you export electricity to the grid, other people can use it; your neighbours, for example, or others in the community.
  • If your solar energy system is not working or your electricity consumption is greater than the electricity supplied by the system, you consume electricity supplied from the main grid, as normal.

Off-Grid System

With an off-grid system, there is no direct connection to the main power grid. An off-grid solar energy system needs to be designed to be independent and provide enough battery storage capacity to still provide electricity to the home even when there is no direct sunlight.

Seasonal variations in PSH must be taken into account to design a system which has adequate capacity.

Off-grid solar energy systems have traditionally been significantly more expensive than other types of solar energy systems. The technology required by the inverter and battery is far more advanced than for other systems, as it has to sustain the system independently of the main power grid.

Thankfully, recent developments in solar technology have helped bring costs down, and it’s no longer only homes in remote locations that are installing such systems, but also homes in urban settings.

Off-grid systems fall into two categories: AC-coupled and DC-coupled systems, which refer to how the battery is charged. Both systems use slightly different hardware and offer benefits in specific scenarios.

If you need to include or add storage capacity to your existing or new solar energy system, you should consult an expert regarding the exact requirements, and which technology to use.

What About the Power Grid?

  • In an off-grid system, there is no direct connection to the main power grid. Any extra unconsumed electricity generated by the system is stored in the battery.
  • When the battery reaches its maximum storage capacity, it will stop charging.
  • If your solar energy system is not operating or if for some reason it is not capable of supplying enough electricity for your needs at home, then electricity will be drawn from the battery.

Another critical component in an off-grid solar energy system is a backup generator. A generator is needed for when the weather is extremely cloudy, and the solar system is unable to generate sufficient electricity to meet your needs and charge the battery.

A generator is useful in case the battery becomes fully discharged, and you should choose a generator with a capacity sufficient to meet your needs for electricity in the home (lights, appliances, etc.) and also charge the battery at the same time.

Hybrid System

A hybrid solar energy system combines the benefits of a connection to the main power grid and a battery storage feature. The cost of battery storage technology has decreased in recent years. And more people are now adding battery storage as a feature in their on-grid solar energy system, converting it into a hybrid system.

With battery storage available, homeowners can generate solar energy during the day and store any excess energy using the battery, to be used later.

Once the electricity stored in the battery is consumed, there is still the main power grid as a backup.

Another great benefit offered by a hybrid solar energy system is the opportunity to charge the battery using off-peak electricity (during the night) from the power grid when necessary, which is much cheaper.

Most modern hybrid solar energy systems have a built-in isolation feature, which disconnects the system from the power grid in the event of a power outage or blackout.

The system will continue to provide electricity to essential circuits in the home, either using the light energy collected by the system or until the battery is completely discharged.

A hybrid system gives maximum flexibility for homeowners.

How Does a Hybrid System Work?

The design of a hybrid solar energy system can vary, but in its simplest form, it includes the following:

Battery Bank

  • This stores any excess electricity generated by the solar energy system, until the battery is fully charged. The electricity stored in the battery can be consumed whenever needed.
  • Most homeowners prioritise battery use during the evening, which are the peak hours for consumption, to avoid using more expensive electricity from the main power grid.


  • If your solar energy system is generating more electricity than you consume, and the battery storage is full, then any excess electricity generated can be sent to the main power grid via the meter.
  • The meter will register the amount of electricity exported, for which you will typically receive a credit or FiT payment, as mentioned before.

Power Grid

  • If your solar energy system is not operating and you have already consumed all the stored electricity in the battery, you can still consume electricity from the main power grid, which will be metered. You will pay according to the tariffs set by the provider.