Photovoltaic panels or solar panels, directly produce electricity from sunlight, when sunlight hits a panel it is converted into electricity.
This electricity is a Direct Current (DC) and needs to be transformed into an Alternating Current (AC). This is done by a device called an inverter.
When the inverter transforms the electricity into AC it is then feed into your home through your existing service panel, all excess power is then sent into your electricity grid.
Several factors influence the cost of solar for your home or business, including:
Your available, unshaded roof space. In the U.S., roofs facing south receive the most sunlight. The current energy usage in your home or business. Your current energy costs will affect how quickly you recoup your solar investment. Also, the more energy you use, the larger system you’ll need to fully offset your energy use. Many solar installers can also help you install energy efficiency improvements. The utility net metering policy in your area. Net energy metering affects the value of the energy your PV system feeds back into the electricity grid. The federal investment tax credit for solar and any other tax credits, rebates or other state & local incentives for solar energy. Considered broadly, everything from investments in solar research & development to streamlining local permitting can reduce the cost of solar energy to the end-user.
In addition to the federal ITC, many states, counties, municipalities and utilities offer rebates or other incentives for solar energy technologies. Your installer will be able to provide the most up-to-date information on solar incentives. The Database of State Incentives for Renewables & Efficiency (DSIRE) has a comprehensive list of solar incentives by state, as well as more information and maps showing solar policies across the U.S.