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The sun generates an estimated 3.846 x 10 to the 28th watts. Only a tiny fraction of that energy strikes the surface of the Earth, but it is still enough energy to supply the needs of the entire world's population some 7,800 times over. Most of this energy goes to keep water liquid and grow plants, but a small (and growing) amount is tapped to produce electricity or generate heat. The production of electricity or heat from solar radiation is what is usually meant by "solar energy" or "solar power".

Solar energy works in one of two ways, either by collecting and concentrating the sun's radiation to produce heat (solar thermal energy), or by using the photoelectric effect to produce electricity from sunlight. As the cost of photovoltaic cells and panels has dropped, they have increasingly come to be preferred over solar thermal methods for producing electricity, but solar thermal techniques remain viable for other applications such as heat generation in manufacturing.
 

Solar Energy - A Simple Explanation

To produce electricity from sunlight, the most common process (and the one most adaptable to rooftop solar or domestic solar power) uses photovoltaic cells (also called "solar cells") collected into "solar panels" and the photoelectric effect.

Solar cells are made of purified crystalline silicon with electrical leads at the ends. A silicon atom has electrons surrounding the nucleus in "shells" which have different energy states and may be visualized as being at different distances from the nucleus. When sunlight strikes the silicon wafer that makes up the solar cell, some of its photons are absorbed by the material and their energy transferred to the electrons of the silicon atoms.

An electron in an outer (or higher-energy) "shell" that absorbs a photon sometimes gains enough energy that it escapes from the atom altogether, and flows away as current. The electrical leads attached to the solar cell create a circuit through which this power flows.
 

Solar Energy: How A Home Solar System Works

In addition to the solar cells, solar energy systems for home use include at least one and often two other important components. One of these is a device to regulate and moderate the power flow so as to generate a constant output, while converting the direct current from the solar cells into alternating current. Throughout the world, alternating current (which is output by generators) is used for home electricity use, so this transformation is necessary, and of course a consistent voltage is needed for optimum use and appliance safety.

Continued below....

How Solar Energy Works

The other component, which is necessary for a stand-alone home solar system, is a battery for power storage. The peak times for energy use in the home are not necessarily the same as the peak times of sunshine; in fact, more energy is typically used at night. The battery system stores electricity generated during the day and keeps it for night use.

Many rooftop solar systems are "on the grid," however, which means that the home is connected to the commercial grid and the solar system generates power which is sold to the utility when not being used at the source. An on-the-grid system has less need of batteries because the electric utility itself stores the excess energy; the home buys power from the utility as needed.
 

How Solar Energy Works: The Economics

The only costs associated with a solar power system, whether rooftop solar or commercial scale, are the initial construction costs plus maintenance. The "fuel" for solar power is free. Prices for solar cells and other components are dropping as improved techniques are refined, and as the market for solar energy grows and economies of scale enter the picture. If you build your own home solar system, the cost can be as low as $200.

A solar panel has a long lifespan, but will eventually have to be replaced. Most companies warrant energy output from solar cells at 90% of capacity for ten years and 80% for another ten years. The life expectancy of a solar cell extends beyond the warranty and runs 30 to 40 years.