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How does solar power work?

Solar power is produced by converting light from the sun into energy. The electricity generated from a solar system can be used to power your home or business, stored in a battery, or fed back into the grid.

Solar panels

To generate solar power, you need four key components:

Solar panels

They convert the sun’s energy to electricity (called direct current or DC).


This converts DC electricity to AC (alternating current). This is the type of power your home or business uses.


This is where the power is sent so it can be used by your electrical equipment.


If you’re not using all the power being produced, the overflow will be transferred back into the grid to be used by other households or businesses. Likewise, when you need more power than you’re producing (like at night) you’ll draw electricity from the grid.

Why do some systems have a battery?

Batteries let you store energy, so you can continue using solar power at night, instead of paying for it. They can also keep your lights on during a blackout and let you buy grid power at off-peak times or sell stored power back to the grid in return for a credit on your electricity bill.

Solar usage RACV

Grid vs off-grid systems

There are two kinds of solar set up - one that works with the grid, and one that’s off-grid. Most solar owners stay connected to the grid as this provides the reassurance they’ll have electricity if they don’t generate enough solar power.

Off-grid homes or businesses are run without any electricity from the grid at all. They're sometimes referred to as 'stand-alone systems' and have battery storage for back-up power. Many off-grid system owners often invest in ways to minimise their energy use, like passive heating and cooling.

Off grid Foster1