How do solar panels and solar power work?

solar panels installed on a Fairfield house by RACV Solar


Posted June 01, 2022

Thinking of installing a rooftop solar system but have no idea where to start? You’re not alone. Here are the answers to your most frequently asked solar questions.

Did you know that Australia has the highest per-capita uptake of residential rooftop solar power in the world? Currently, there are over 3 million solar-powered Australian homes: that's more than 1 in 4 Australian houses. Those rooftop solar panels generated 7 per cent of Australia's total annual electricity in 2021, which is a substantial increase from 5.5 per cent in 2020.

Installing solar panels on your roof allows you to generate and use your own free renewable energy, meaning that both your wallet and the planet will thank you. And with both greenhouse gas emissions and energy bills rising, there’s never been a better time to learn about solar.

In this article:

Solar power explained

What is solar power?

In simple terms, solar power (also called solar energy) is energy from the sun which your solar system captures and converts into electricity using special semiconductor crystal cells. That electricity can power your residence and/or be stored in a solar battery for later use.

Why should I get solar power?

Solar power can save you money and reduce your carbon emissions. It is one of the cleanest and most sustainable forms of energy. Unlike fossil fuels, which are burnt to produce energy and release high levels of greenhouse gas emissions, solar power is a renewable energy resource. The more solar energy consumed, the less fossil fuels are used.

Using solar energy in your home or business significantly reduces energy bill costs because you can generate and use your own electricity when the sun is shining rather than buying electricity from an energy retailer.

Plus, if you have a solar battery, you can store the excess solar power generated during the day to use overnight, thus significantly reducing (or in some cases even eliminating) your need to buy electricity from your energy retailer. As an added bonus, some batteries offer blackout protection to keep your home functioning in the event of a power outage, using the energy you have stored in a solar battery.

Can solar energy power everything in my home?

In theory, a large solar system could produce enough energy to power your entire household consumption. If you want to run your house entirely on solar power, you'll need a large enough solar system to exceed your household usage, plus a solar battery to store excess solar power generated during the day for use when the sun goes down.

If you don’t have a solar battery, another option to maximise your use of solar power is getting a heat pump hot water system. By running a heat pump or hot water service during daylight hours, you can use your solar power to heat the water and store it for use whenever you're ready, effectively storing the solar energy as hot water. This can be a great way to maximise solar savings and reduce your household’s energy costs. At night, if you don't have solar power stored in a battery, your house simply draws power from the grid as it did before the solar system was installed. This happens automatically, as the solar system is wired in parallel with your main supply.

What happens to the solar energy I don’t use?

Excess solar power you’re not using when your panels are generating electricity can be stored in a battery for use later on if you have one. If not, it will flow automatically back into the electricity grid for other homes and businesses to use, and you’ll be paid a feed-in tariff from your energy retailer for that exported electricity. These feed-in tarrifs have reduced significantly as solar power has become cheaper.

Does solar power work at night or in bad weather?

Solar panels still work on rainy or cloudy days. There is just less solar power production on these days, as there are fewer particles of light available to create a high flow of electricity. Some solar panels perform better in low light conditions – ask your installer about this. While the power output is reduced, you are still saving money whenever power is still being generated by your solar system.

Solar panels won’t generate electricity at night because there’s no sunlight. But if you have solar power stored in a battery, you can use that electricity overnight. If you don’t have a battery, at night your house simply draws power from the traditional power grid.

Who can get solar panels?

All Victorian property owners can get solar panels, provided their residence has the ability for solar installation. You can also get a tailored quote to talk about the best sustainable energy options for your household or workplace.

RACV Solar technician installing a solar panel on an Ocean Grove house

RACV Solar can install a range of solar products for your household. Image: Matt Harvey


Solar panels, batteries and the grid – what are they?

Solar panels

Solar photovoltaic (PV) panels absorb energy from sunlight and convert it into direct current (DC) electricity. Your household's inverter converts that DC electricity into alternative current (AV) electricity, which can be used to power your home or sold back to the grid.

Each solar panel is made up of many individual solar cells, which in turn are made from thin wafers of silicon sandwiched together. Sunlight hitting these silicon cells provides the energy for electrons to move between the silicon layers and this flow of electrons is the electricity the panels produce.

In Australia, the best position for solar panels to face is north – but don’t stress if this isn't possible on your roof. It’s all about positioning solar panels where they’ll get the maximum daily sun exposure.

East- or west-facing solar panels can still be highly effective: particularly if you use more electricity in the morning and late afternoon, when the sun will hit those panels.

Good solar panels should have a product warranty of 12 years or longer, with an efficiency higher than 310W. RACV uses only premium products and currently installs SunPower, Trinia Solar, REC Solar and Hyundai Energy Solutions panels. Read our guide to solar panels for your home to help decide which PV panels are right for you.

Solar batteries

Solar batteries allow you to store excess electricity generated when the sun is shining, then to use this electricity after dark. They increase your household’s independence from the grid, ultimately saving you more money. A battery may also offer households back-up power in the event of an outage. Whether or not these benefits are worth the cost of battery installation is a case-by-case question for households.

The grid

The ‘grid’ refers to the network that transports power from generators (coal plants, solar and wind farms, hydro projects etc.) through the high-voltage transmission network (HV powerlines), then through the low-voltage distribution network (street power poles), and finally to consumers (homes and businesses).

While it is possible to go completely off-grid, it is not the best solution for most homes. During periods of cloudy or rainy days, you may find that you need to reconnect to the grid to sustain power to your home. Alternatively, you would need to invest in a very large solar-and-battery system that would be underused most of the time, producing significantly lower savings than what it would cost to install.


row of solar panels facing north on a Newport house

In Australia, the best direction for solar panels to face is north. Image: Matt Harvey


Solar power costs

How much does the average-sized solar system cost to install?

This depends on the size of your house, your energy consumption, and the quality of the system. When it comes to solar, you get what you pay for. Basic solar systems can range from as little as $2,000 after all the rebates to tens of thousands of dollars for high-specification systems.

High-spec systems will produce more power from the same number of panels and last much longer than cheaper ones, meaning you can save for years and years into the future. The average price for a good system after rebates will be around $5,000-$7,000.

How much will my electricity bills be with solar?

That depends on the solar system installed and how much energy you consume. Many household bills can be more than halved, with ‘negative bills’ in summer that can leave your account in credit and help offset winter bills as well.

For an estimation, you can plug your average daily energy use and the number of solar panels you want into the RACV solar calculator to estimate the cost of a solar system and your potential annual savings – both financial and carbon.

Am I eligible for solar rebates?

Some solar systems installed by accredited installers and using approved products are eligible for Victoria’s Solar Homes Program. The value of this incentive will depend on the size of the system, but can be up to $1,400 for a typical-sized residential system, with the ability to also take out an interest-free loan for the system. More information can be found with Solar Victoria. Additionally, the Solar for Business Program rebate can be up to $3,500 or 50 per cent of the total cost: whichever is the lesser.

From 1 April 2022, the Small-scale Renewable Energy Scheme has introduced new financial incentives for individuals and small businesses that install solar panels, solar water heaters, and other small-scale renewable energy systems.

You can also receive rebates for installing solar batteries. Currently the rebate pays up to $3,500, or $4,174 if you join a virtual power plant (VPP) pilot program.

To see what more homes and businesses are saving, check out some of RACV Solar's customers.

How long does it take to install solar in a standard home?

On most standard single-story homes, installation can be completed within one working day, weather permitting. For double-story homes, large systems (10kW+), or systems with storage, installation may take 2-3 days, and disruption to the household’s power supply will be minimal (less than 1-2 hours in most cases).

Where can I get solar? Can I install it myself?

Solar panels can only be legally installed by an electrician, and they must be certified for solar for you to be able to claim government incentives and rebates. When shopping around for solar, look to buy from a Clean Energy Council (CEC)-approved solar retailer.

Additionally, if your system is installed by a non-accredited installer, you will not be eligible for government rebates. RACV Solar is a CEC-Approved Retailer and is eligible for the rebate program. Our team of experts can design a system to suit your specific needs.


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