Renewable Energy: What is Solar Power and How Does it Work?

Solar is central to decarbonisation. 

Costs have fallen sharply and deployment has accelerated, with solar photovoltaic (PV) on track to become the largest renewable source by 2029 according to the International Energy Agency (IEA).

What is solar energy

"Solar energy works by converting energy from the sun into power, producing both electricity and heat," says the National Grid.

Panels are typically silicon-based within a metal frame and glass casing. 

When this material is exposed to photons of sunlight it releases electrons and produces an electric charge.

That direct current is then inverted to alternating current for use in homes and businesses, National Grid says. 

According to the Solar Energy Industries Association (SEIA), PV devices use semiconductors to free electrons and drive current through a circuit, powering devices or feeding the grid.

Types of solar energy 

According to SEIA, PV devices use semiconductors to free electrons when struck by photons, driving a current that powers devices or feeds the grid.

It can scale from calculators and signs to homes and large businesses. 

“Photons strike and ionise semiconductor material on the solar panel, causing outer electrons to break free of their atomic bonds,” says SEIA.

“Due to the semiconductor structure, the electrons are forced in one direction creating a flow of electrical current. 

“Solar cells are not 100% efficient in crystalline silicon solar cells, in part because only certain light within the spectrum can be absorbed. 

“Some of the light spectrum is reflected, some is too weak to create electricity (infrared) and some (ultraviolet) creates heat energy instead of electricity.”

Beyond standard PV, SEIA says hybrid photovoltaic-thermal (PVT) panels cool the PV layer and capture heat, lifting electrical output by up to 20% and counting thermal energy, delivering up to four times the power of PV alone. 

For heat, SEIA says solar water heating uses collectors, insulated piping and a storage tank, while solar air heating uses wall-mounted, perforated collectors to provide low-carbon space heat and drying. 

Concentrating solar power (CSP) systems, parabolic trough, compact linear Fresnel, power tower and dish-engine, use mirrors to create high-temperature heat for turbines, with thermal storage enabling generation after sunset.

“Almost every nation has enough sun, wind or water to become energy self-sufficient,” says António Guterres, United Nations Secretary-General.

Which big companies are using it?

Major corporations are scaling solar fast. 

Amazon is the world’s largest corporate purchaser of renewables, with 600+ wind and solar projects and prioritises regions where new capacity cuts emissions most.

Tesla uses solar across its energy business and, after acquiring SolarCity for US$2.6bn, now pairs PV with storage at scale.

In 2024, Intersect Power announced a 15.3 GWh storage contract with Tesla and the firm has applied to Ofgem to supply UK customers using its solar and battery network. 

Shell is expanding through platforms such as Sprng, Savion, sonnen and Green Tie Capital, with projects including the 71.1 MW Koegorspolder park in the Netherlands and the 20 MW Zamboni park in Italy. 

NextEra Energy Resources is the world’s largest generator of wind and solar.

Its subsidiary FPL added 894 MW of solar in Q1 2025 and targets roughly 35% solar generation by 2034, according to the company.