How solar power works

Solar energy is light or heat that comes from the sun. Solar power is generated when this energy is collected and converted into usable electricity. Solar power systems are often referred to as PV or photovoltaic systems and generally consist of three main components solar panels, an inverter and a metering system. Other system components include electrical wiring, protection devices and switches, mounting frames for the panels and monitoring systems.

Solar power systems (photovoltaics) are sometimes confused with solar hot water systems, which use solar energy to heat water rather than produce electricity.

Solar panels

Most solar power systems use PV modules (or panels) installed on a rooftop to create electricity from sunlight. There are different types of PV modules, but most consist of a collection of solar cells made of thin wafers of silicon. When light falls on the cells an electric current is produced.

Most homes or commercial buildings will need around 12 to 15 square metres of unshaded, north-facing roof space to mount the modules for a 1.5kW solar system. Ideally, for the Sydney area, the modules should be tilted towards the sun at around 30 degrees to maximise the solar collection. If the roof’s slope is not at the right pitch, a good designer can create a special mounting frame for the modules. Cloud cover and shading can dramatically reduce a solar power system’s output.


An inverter converts the direct current (DC) electricity generated by solar panels into alternating current (AC), the form of electricity conventionally used in homes and businesses. The inverter can be placed inside or outside your home, but should be well ventilated and protected from the elements. 

Most inverters have indicator lights to show whether the system is producing electricity and a simple electronic display that shows how much solar electricity has been generated. Some inverters may have additional monitoring features such as wireless in-home displays but these are usually at an extra cost to the basic inverter system. Speak to your solar installer for more information.

For safety reasons, when your electricity supply from the grid is interrupted, your inverter must automatically and immediately turn off. It’s possible to have a system that will provide emergency electricity when the grid goes down, with the use of a suitable inverter, battery bank and appropriate change over switches, but this can be expensive.

Metering system

A grid connected solar power system is connected through a metering system to the main electricity network. The metering system can be configured as either a GROSS or NET system.

In simple terms, a GROSS metering configuration is set up in such a way that any electricity generated by the solar power system is fed directly to the electricity grid.  The electricity consumed in the household is unaffected.

A NET metering configuration is setup in such a way that any electricity generated by the solar power system is always used on the premises first. Electricity generated by the solar power system is only fed back into the electricity grid when the amount generated is more than is being used on the premises at the time.

For more information about solar metering in Ausgrid’s network area, please refer to the Electrical Supply Standards - Metering Installation Requirements (ES3 Part A) document.  We also have further information about reading your own meter on the metering section of our website.