How Solar Panels Work with Electric Company – Microgrid Media

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As the world increasingly turns to renewable energy sources, solar panels have emerged as a popular and effective solution for generating electricity. Understanding how these panels work in conjunction with electric companies can help homeowners make informed decisions about their energy use. This guide explains the process in detail, covering everything from basic operations to the benefits and incentives involved.

Basics of Solar Panel Technology

Solar panels are composed of photovoltaic (PV) cells that convert sunlight into electricity. When sunlight hits these cells, it generates direct current (DC) electricity. Since most homes and businesses use alternating current (AC), the DC electricity must be converted using an inverter. This conversion allows the solar-generated electricity to power modern appliances and lighting.

Integration with the Electrical Grid

Solar panels can operate independently or be integrated with the local electrical grid. Integration is common and beneficial for various reasons, primarily through mechanisms like net metering and feed-in tariffs.

1. Net Metering

Net metering allows homeowners to connect their solar panels to the public electrical grid, sending excess electricity back to the grid when production exceeds their immediate energy needs. This system uses a bidirectional meter that can run both forwards and backwards, tracking energy usage and production. Homeowners are typically credited for the excess energy they contribute, which can offset costs when solar panels do not meet total energy demand.

2. Feed-in Tariffs

Under feed-in tariffs (FITs), homeowners are paid a set rate for the electricity their solar panels generate, which is often higher than the retail electricity rate. This incentive is designed to encourage the adoption of renewable energy by making solar installations financially attractive. The rate is guaranteed for a specified period, providing a predictable income stream from solar energy production.

While net metering and feed-in tariffs are popular, there are other innovative methods to integrate solar panels with the electrical grid. Here are some of the advanced options:

While net metering and feed-in tariffs are popular, there are other innovative methods to integrate solar panels with the electrical grid. Here are some of the advanced options:

Solar Plus Storage: Solar plus storage systems pair solar panels with energy storage solutions, like batteries, to improve energy management. By storing excess electricity generated during peak sunlight, these systems ensure a stable and consistent power supply, even when solar production is low. This not only helps in maximizing the utilization of solar energy but also enhances grid stability.

Advanced Inverter Technologies: Modern smart inverters play a crucial role by managing the flow of electricity between solar panels and the grid. These devices can adapt to changes in grid conditions, help maintain voltage levels, and even support the grid during outages by providing black start capabilities. This technology is essential for integrating renewable energy sources seamlessly into the existing power infrastructure.

Building-Integrated Photovoltaics (BIPV): Building-integrated photovoltaics (BIPV) seamlessly incorporate photovoltaic materials into building structures, such as roofs, facades, or windows. This not only makes efficient use of building surfaces but also contributes to the building’s aesthetic and energy efficiency. BIPV is an excellent solution for urban environments where space is at a premium, helping buildings generate their electricity and reduce reliance on the grid.

Frequently Asked Questions

1. How do I know if net metering is available in my area?

Net metering policies vary by location, depending on state laws and local utility company regulations. To find out if you’re eligible, contact your local utility company or check the website of your state’s public utility commission.

2. Are solar panels still effective on cloudy days?

While solar panels are most effective in direct sunlight, they do still generate electricity on cloudy days, though at a reduced rate. Advances in PV technology have improved their performance under various lighting conditions, making them more effective across different climates and weather conditions.

3. What happens to my solar system’s excess energy if I don’t have net metering?

If your area does not offer net metering, excess energy can be stored in batteries for later use or simply go unused. However, many utilities will offer some form of compensation through alternative metering policies or voluntary crediting for excess generation.


The interaction between solar panels and electric companies through systems like net metering and feed-in tariffs provides significant benefits, not only to individual homeowners but also to the broader electric grid and the environment. With the potential for cost savings, enhanced energy security, and environmental benefits, solar technology represents a key component of future energy strategies aimed at sustainability and resilience.

This comprehensive approach to understanding how solar panels work with electric companies empowers homeowners to make informed decisions about their energy use, contributing to a greener and more sustainable future.

Jonas Muthoni is an entrepreneur and renewable energy expert. He is the founder of, a website dedicated to bringing the latest news and information about solar energy and other renewable energy sources to the public. Jonas is passionate about promoting sustainable energy solutions and educating the public about the benefits of renewable energy. He is a regular speaker at industry events and conferences and is committed to driving the transition to a cleaner and more sustainable energy future.

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