Solar Energy 101

anatoliy_gleb/iStock/Getty images

Solar energy is quickly becoming a more popular, reliable, and affordable power source for homes and businesses. Home solar panels can help you lower your environmental footprint and save substantially on electricity bills. We’re here to help you understand the basics of residential solar panels. Whether you’re interested in how solar energy works, are curious about the cost of solar panels, or need guidance finding a solar installation company, SaveOnEnergy is your one-stop source.

Get your free solar savings estimate

You can lower your energy costs by investing in solar panels. Enter some basic information below and we’ll provide an instant, free estimate of solar cost and savings for your home.

How solar panels work

We’ve all seen solar panels on rooftops or the massive solar “farms” that stretch across states such as Texas or California. But how do solar panels actually generate electricity?

• Solar panels collect sunlight and turn it into direct current (DC) energy
• The solar inverter converts DC electricity into alternating current (AC) energy
• AC electricity powers your home or business
• Extra solar energy flows into the grid, and you pull from the grid when your panels produce less electricity

Solar panels are made from silicon and conductive metals. When combined, these materials form an electric field and allow the panels to act as semiconductors, with negative and positive layers creating an electrical circuit. 

When the sun’s energy falls onto solar panels, it knocks electrons loose and allows them to move through the electrical circuit. This generates DC electricity. From there, the solar panel’s inverter converts the DC electricity into AC electricity, which is the type of energy that can power a building.

Solar panels for home

As more states set green energy goals, many residents are considering how solar can meet their electricity needs. According to the Energy Information Administration (EIA), residential solar generation in  2022 was 48% higher than it was in 2020 and 24% higher than in 2021

According to the Solar Energy Industries Association (SEIA), there are more than 3.8 million solar energy systems installed nationwide through the end of 2022. What’s more, the solar industry has provided jobs for 255,000 American workers. Currently, solar power generates enough electricity to power nearly 23 million homes.

Best solar products for your home

Finding the best solar panels, inverters, batteries, and other components can require a lot of research. Your solar installer will likely help you decide which brands and manufacturers are best for your solar system. SaveOnEnergy’s best solar guides can provide you with a starting point if you’re beginning your research.

Solar panels for RVs and campers

The solar industry has also adapted to go on the road. There are a variety of solar panels that also work for RVs and campers. RV solar panels work the same as residential solar systems, although they are typically smaller, more flexible, and have a lower generating capacity. 

Solar systems for RVs and campers are normally much less expensive compared to residential solar systems. On average, RV solar panels cost as little as $75, with more expensive models costing up to $1,000. 

Learn more about solar panels for RVs and campers.

Cost of solar panels

According to the Lawrence Berkeley National Laboratory, the average cost of a solar panel system in 2023 is $3.67 per watt, or $31,558 total. That’s a large investment, but you can pay for solar panels in a few different ways. The most common financing options for solar panels are:

With every big investment, you want to have as quick of a return as possible. If you purchase your solar panels, there are ways that you can shorten the time it takes to earn a return on the investment. Keep in mind that these benefits are only available to consumers who buy their solar systems, including loans, rather than leasing or signing a PPA.

• Incentives: A variety of solar incentives, rebates, and credits can help offset the initial cost of purchasing solar panels. The federal solar tax incentive offers a credit valued at 30% of the cost of your solar system. You can claim this credit when you file your annual tax return. A number of states also offer state and local solar incentives.
• Net metering: Net metering programs allow customers who generate their electricity from solar power to sell the amount they don’t use to the grid that serves their homes. Most states have net metering programs available in one form or another.
• Home value: Purchasing a solar system for your home will raise your home’s resale value. According to the Department of Energy, your home’s value could increase by an average of $15,000 with installed solar panels.

Choosing a solar installer

All solar installers aren’t created equal. Before signing a contract, there are a few questions you should ask to guarantee you’re dealing with a credible and trustworthy solar installation company.

• Which manufacturers does the installer source its products from?
• What system size does the installer recommend for your home?
• Is the installer licensed and insured in your state? Don’t just take the installer’s word for it — ask for the license number.
• How many years of experience does the installer have?
• Are there any customer reviews or ratings available for installers you’re considering?
• What solar panel warranty terms does the installer offer? Does the installer guarantee manufacturer warranties?
• How much, if any, of the work will be performed by subcontractors?
• What kind of financing options does the installer offer?

We recommend getting quotes from multiple installers to compare your options — three to five is a fair amount to compare. If you’re beginning your research, visit our guide to the best solar companies or enter your information on this page for details about installers in your area.

Where is solar energy growing the most?

Solar energy offers several benefits to energy consumers. By investing in solar, you can decrease your dependence on the electrical grid, retain a steady power supply during times of high demand, and likely lower your energy costs over time.

So, where is the solar industry growing the most? Using data from the EIA, SaveOnEnergy regularly compares the top states for solar energy production over time.

Residential solar energy grew in all 50 states between 2021 and 2022 — but some states experienced more growth than others. The following table shows the top 10 states generating residential solar energy in 2022 (all figures shown in thousand megawatt-hours).