How Solar Works — A Plain English Guide

The Basics — Sunlight to Electricity

Solar panels are made up of small units called photovoltaic cells. Most of those cells are built from silicon, a material that has a useful property: when sunlight hits it, the energy from photons knocks electrons loose. Those moving electrons are what we call electricity. The more sunlight a panel receives, the more electrons flow, and the more power your system produces.

The electricity that comes out of a solar panel is direct current, or DC. The appliances in your home — your refrigerator, lights, air conditioner — all run on alternating current, or AC. To bridge that gap, every solar system includes an inverter (or several smaller inverters mounted to each panel). The inverter takes the DC electricity from your roof and converts it into AC electricity your home can actually use.

From there, the electricity flows into your home’s electrical panel and powers whatever is running at that moment. If your panels produce more electricity than your home is using, the extra power either flows out to the grid or charges a battery if you have one. That is the entire system in plain English: sunlight in, usable electricity out.

Your Home Connected to the Grid

Almost all residential solar systems in California are what we call grid-tied. That means your home stays connected to the utility grid even after you install solar. During the day your panels produce electricity and your home uses it first. Anything extra flows back out to the grid. At night, when your panels are not producing, you draw electricity from the grid the way you always have.

Your utility meter is what tracks all of this. Modern meters measure electricity flowing in both directions: how much power you pull from the grid and how much you send back. Your bill is calculated based on that net flow combined with the rate structure your utility uses.

This is very different from going completely off-grid. An off-grid system has to cover 100% of your usage on its own, which means much larger battery banks, backup generators, and a lot more equipment and cost. The vast majority of California homeowners are best served by a grid-tied system.

Net Metering and NEM 3.0 in California

Net metering is the rule that decides how much you get credited for the extra electricity your panels send to the grid. For years, California used a system called NEM 2.0 that credited homeowners at close to retail rates — meaning a kilowatt-hour you sent out was worth roughly the same as a kilowatt-hour you bought.

That changed in April 2023. California now uses NEM 3.0, also called the Net Billing Tariff. Under NEM 3.0, export credits for excess solar are significantly lower — typically around 5 to 8 cents per kilowatt hour, instead of the 30+ cents you pay for grid electricity. That is a major shift in how solar economics work in this state.

Because the credits for exported power are so much lower, the smart strategy under NEM 3.0 is to use as much of your own solar as possible — often by adding a battery to store midday production for use in the evening. We cover this in more detail on the NEM 3.0 page.

The Four Ways to Pay For Solar

There is no single “best” way to pay for solar. Each option has trade-offs, and the right choice depends on your finances, your goals, and how long you plan to stay in your home.

• Cash purchase — You pay upfront and own the system outright. This delivers the highest long-term savings but requires significant capital.
• Solar loan — You own the system and pay it off monthly, similar to a home improvement loan. The system is yours from day one.
• Solar lease — The solar company owns the panels on your roof. You pay a fixed monthly lease payment to use the electricity they produce.
• Power Purchase Agreement (PPA) — You pay only for the electricity the panels produce, at a rate typically below utility prices. You do not own the system.

None of these is universally better than another. A reputable solar specialist should walk you through how each option would actually work for your home, including the long-term math.

What Solar Does Not Do

Honesty matters here. Solar does not eliminate your electric bill entirely in most cases — fixed utility charges typically remain even after you install solar. Production also varies by season, by your roof angle, and by any shade hitting your roof during the day.

Solar requires a roof that is in good condition with reasonable remaining life. It requires you to own your home. Most financing options also involve credit qualification. And not every home is a great solar candidate — that is completely normal and not something to be embarrassed about.

The right answer to “should I go solar?” depends on the specifics of your home and your bill. Anyone who promises you guaranteed savings without looking at your situation is selling, not informing.