What is the difference between a solar panel and a solar inverter

Solar panels convert sunlight to DC (e.g., 300W panel: ~32V, 9.4A), while inverters change DC to AC (120/240V) for home use, with 95-98% efficiency.

What is a Solar Panel?

In 2023, the global solar panel market saw installations exceeding 440 gigawatts (GW), highlighting their widespread adoption. A typical residential solar panel you'd buy today produces between 370 to 450 watts (W) of DC (Direct Current) power under standard test conditions. Physically, a standard 60-cell panel measures roughly 1.7 meters tall by 1.0 meter wide (about 5.6 ft x 3.3 ft), has a surface area of approximately 1.7 square meters (18 sq ft), and weighs between 19 to 23 kilograms (42 to 50 lbs).

At its core, a solar panel is a sealed, framed assembly containing many individual solar cells, typically 60, 72, or 144 cells in modern designs, connected in series to build up voltage. Each cell is a thin wafer, usually made from silicon, that acts as a semiconductor. When sunlight hits a cell, its energy knocks electrons loose, creating a flow of DC electricity.

A single cell only generates about 0.5 to 0.6 volts, regardless of its size, which is why they are chained together; a standard 60-cell panel has an open-circuit voltage (Voc) of about 38 volts and an operating voltage (Vmp) around 32 volts. While laboratory cells can exceed 47% efficiency, the panels available for your roof have commercial efficiencies ranging from 19% to 24%. This means a 1.7 m² panel with 22% efficiency will produce more power in the same space than a panel of the same size with only 18% efficiency.

A critical but often overlooked detail is the temperature coefficient. A panel's rated power is measured at 25°C (77°F), but on a hot roof, its temperature can easily reach 65°C (149°F). For every degree above 25°C, the panel's power output decreases by about -0.3% to -0.5% per °C. So, a panel rated for 400W at 25°C might only output about 340W on a very hot day, a 15% reduction.

Monocrystalline panels, made from single, pure silicon crystals, are the most efficient (typically 20-24%) and most expensive, often having a uniform black appearance. Polycrystalline panels, with cells made from fragmented silicon crystals, are slightly less efficient (typically 15-17%) and usually have a blue, speckled look. Thin-film panels use layers of photovoltaic material applied to a surface; they are less efficient (10-13%) and degrade faster, but can be cheaper and more flexible.

What is an Inverter?

Physically, it's a box, usually mounted on a wall near your main electrical panel, about the size of a small suitcase, often 50-70 cm wide, 30-50 cm tall, and 15-25 cm deep (20-28 in x 12-20 in x 6-10 in), and weighing 15 to 40 kg (33 to 88 lbs). Its singular, critical job is to convert the Direct Current (DC) electricity produced by your solar panels into the Alternating Current (AC) electricity that powers everything in your home and feeds back into the grid. This device typically represents about 10% to 20% of a residential solar system's total upfront cost. Modern inverters operate with impressive peak conversion efficiencies of 97% to 99%, meaning they lose only a tiny fraction of the precious DC power your panels generate.

It takes in variable DC power, which for a residential system might be at several hundred volts (e.g., 300-600V DC), and outputs a steady 120V or 240V AC at 60 Hz (or 230V at 50 Hz). This process happens thousands of times per second using modules called IGBTs (Insulated-Gate Bipolar Transistors). A critical sub-function is Maximum Power Point Tracking (MPT). Because a solar panel's voltage and current output change constantly with sunlight intensity and temperature, the inverter's MPT algorithm, which makes adjustments hundreds of times per day, finds and locks onto the exact voltage (the "Maximum Power Point") that will extract the absolute most watts from the panel string at any given moment.

A high-quality MPT circuit can increase total energy harvest by up to 30% compared to a system without it, especially on partly cloudy days. The inverter's own conversion efficiency isn't a fixed number; it's a curve. It might achieve 98.5% efficiency at 30% of its rated load, hit a peak of 99% at 50% load, and then dip slightly to 98% at full 100% load. High ambient temperature also reduces efficiency; for every 10°C (18°F) above its rated operating temperature, efficiency can drop by approximately 0.5%. There are three primary inverter types. String inverters are the most common, handling 1 to 3 strings of panels with a typical power rating between 3 kW to 10 kW for homes.

Microinverters are smaller units, one attached to each solar panel, each with a power rating of 250W to 800W. While they increase upfront equipment cost by about 15-25%, they allow each panel to operate independently, mitigating shading losses and offering panel-level monitoring. Hybrid or cell-ready inverters are more complex units, often 15-20% more expensive than a comparable string inverter, that can integrate a DC-coupled cell like a 10 kWh lithium-ion pack directly, with charge/discharge efficiencies around 95-97%.

Their Main Jobs

If your panels convert 18.5% of sunlight to DC power, and your inverter converts 97.5% of that DC power to AC power, your system's overall "sunlight-to-socket" efficiency is roughly 18.0%. Over a 25-year lifespan, a 1% difference in the inverter's conversion efficiency can equate to the loss of thousands of kilowatt-hours of electricity, directly impacting the system's financial return by a meaningful margin.

Their core responsibilities are distinct and specialized:

l The Solar Panel's Job: To generate Direct Current (DC) electricity from sunlight. It is a specialized energy harvester. Its entire design—from the anti-reflective glass coating that increases light capture by ~3% to the grid of silver busbars that collect current—focuses on this single physical conversion. It doesn't "know" or "care" about your home's appliances; it simply outputs DC power at a voltage and current determined by sunlight and temperature. A panel's performance warranty, which typically guarantees at least 90% of original output after 10 years and 85% after 25 years, speaks directly to the longevity of this sole function.

l The Inverter's Job: To convert that DC electricity into grid-compatible Alternating Current (AC) and manage the system. It is a sophisticated power manager and adapter. It must take the panel's raw, variable DC output and transform it into perfect, utility-grade AC that matches the grid's 60 Hz frequency (or 50 Hz) and 240-volt standard within a tolerance of about ±0.5 Hz and ±5 volts.

A 400-watt panel is named for this ideal DC output. Its real-world production fluctuates second-by-second, with its Maximum Power Point (MPP)—the ideal voltage for maximum yield—shifting with weather. On a cool, bright day, a panel might produce 105% of its rated power for a brief period; on a hot day, it may drop to 85%.

The inverter's work is complex and active. It has four core operational duties:

l Conversion: This is its fundamental task, performed by high-speed transistors switching thousands of times per second. A high-quality inverter maintains a weighted efficiency (Euro or CEC) of over 97% across a wide load range, from 20% to 100% of its capacity.

l Optimization: Its Maximum Power Point Tracking (MPPT) circuitry constantly scans the panel string's voltage-current curve, making adjustments hundreds of times an hour to find the exact point of peak power harvest. This can recover 5% to 25% of energy that would otherwise be lost due to non-ideal conditions.

l Grid Synchronization and Safety: It must precisely match the grid's AC wave pattern. If the grid power fails, the inverter must shut down entirely within 2 seconds (a requirement called anti-islanding) to protect utility workers. It also enforces voltage and frequency limits, ceasing export if grid levels deviate by more than ~5%.

l Monitoring and Communication: It acts as the system's data hub, logging performance parameters like daily kWh yield, current power (kW), and error codes, typically transmitting this data every 5-15 minutes to a user portal. A drop in output of more than 10% from expected values will often trigger a monitoring alert.

How They Connect

The DC wiring that runs from your roof to the inverter, for example, must be sized to handle the system's voltage and current with minimal power loss, typically kept below 1.5%. This run often uses 10 AWG or 8 AWG copper wiring, protected in conduit, and the total distance from the farthest panel to the inverter should generally not exceed 100 to 150 feet for a standard string system to avoid excessive voltage drop. The connections are made with specialized, tool-less MC4 connectors that are rated for 600V to 1500V DC and are designed to withstand over 25 years of UV exposure and weather.

For instance, connecting 12 panels, each with an open-circuit voltage (Voc) of 40 volts, in series creates a string with a total Voc of 480 volts. This high voltage is necessary to efficiently transmit power over the 60-100 foot cable run to the inverter with minimal loss. The inverter's Maximum Power Point Tracking (MPPT) input has a specific operating voltage window, usually between 250 to 600 volts for a residential model.

Your string's calculated operating voltage (Vmp), which for our 12-panel example might be about 384 volts (12 panels x 32V Vmp), must fall squarely within this inverter window, typically at 70-90% of its maximum voltage rating, for optimal performance. For larger systems, multiple strings are connected in parallel at a DC combiner box mounted on the roof. Here, the positive and negative leads from, say, 3 separate strings are merged. While voltage remains the same, the currents add up. If each string has a maximum current (Imp) of 10 amps, the combined current entering the inverter via the main DC cables would be 30 amps.

A 30-amp circuit typically requires a minimum of 10 AWG copper wire. From the combiner box (or directly from a single string), two ~0.5 inch diameter DC cables—one positive, one negative—are routed to the inverter's DC input terminals. Inside the inverter, the power is converted to AC. The output side is then connected via an AC circuit breaker to your home's main electrical panel (load center). The size of this AC breaker is determined by the inverter's maximum continuous AC output current. A 7.6 kW inverter on a 240-volt system outputs about 31.7 amps (7,600W / 240V), so it would be connected via a 40-amp, double-pole circuit breaker.

Comparing Features

The cost split is a good starting point: for a typical $20,000 residential system before incentives, the panels themselves might represent 50-60% of the equipment cost, the inverter 10-20%, with the remaining 25-35% covering racking, wiring, and labor. Their performance and longevity metrics also diverge sharply. While a premium solar panel is built to lose less than 0.5% of its output per year, an inverter's internal electronics are under constant electrical stress, making its 10-12 year standard warranty a key financial consideration, as you'll likely need to replace it once over the system's 25+ year life.

The panel and inverter are fundamentally different pieces of hardware, which is evident in their core attributes:

l Physical Form and Environment: The panel is a passive, weather-sealed sheet designed for constant outdoor exposure. Its aluminum frame and tempered glass must withstand +/- 2,400 Pascal wind and snow loads, 1-inch diameter hail at 50 mph impact, and temperature cycles from -40°C to +85°C. The inverter, however, is an active electronic device. While some are rated for outdoor mounting, most are installed in a sheltered location like a garage or basement wall to protect its circuitry from extreme heat and moisture. Its operating temperature range is narrower, typically -25°C to +60°C, and its cooling fans or heat sinks must dissipate the 1-3% of system power lost as heat during conversion.

l Key Performance Metrics: For a panel, the critical numbers are all about DC output under standard lab conditions: its nameplate power rating (e.g., 420 watts), its efficiency percentage (21.2%), and its temperature coefficient (e.g., -0.30% per °C). For an inverter, the vital metrics are about conversion and management: its maximum AC power output (e.g., 7.6 kW), its weighted or peak efficiency (98.5%), the voltage range of its MPPT inputs (250-600V), and its number of MPPT trackers (e.g., 2 independent trackers).

l Degradation and Lifetime: The industry standard is linear degradation, with an initial drop of about 1-2% in the first year, followed by roughly 0.4-0.6% per year after that. Its 25-year performance warranty is a guarantee on this slow fade.

l Technological Evolution: Panel technology evolves incrementally, with average module efficiency increasing by about 0.3-0.5% per year over the last decade. The shift from standard PERC cells to TOPCon or HJT designs might add 0.5% to 1.0% to absolute efficiency.

Making the Choice

Your total system cost breaks down roughly into 60% for equipment and 40% for installation and soft costs. Within the equipment portion, a 10% increase in your panel budget might boost system efficiency by 0.5%, but allocating that same 10% more to a higher-grade inverter could improve system-wide harvesting by 2-3% through superior electronics and software. The decision matrix hinges on at least five quantifiable factors: your available roof area in square feet, your average monthly electricity consumption in kilowatt-hours (kWh), the local cost per watt installed (often $2.50 to $3.50), any roof shading patterns, and your plans for future cell storage.

A tight budget prioritizing the fastest return on investment might lead you to a standard efficiency (~20%) panel from a reputable maker and a reliable single-string inverter, aiming for a system cost of $2.80 per watt and a simple payback period of 7-9 years. If your budget allows a 15-20% higher initial investment, you can target higher long-term value. This could mean moving to high-efficiency panels (22%+) to maximize production from a limited roof area, or investing in a system with panel-level power electronics. For example, if shading from a chimney causes a 40% production drop on 3 of your 20 panels, a traditional string inverter could lose 6% of total system output, whereas microinverters would limit the loss to just those 3 panels, recovering roughly 4% of that energy annually.

The most critical technical match is ensuring the panel's electrical characteristics align with the inverter's input specifications. If the combined open-circuit voltage (Voc) of your panel string exceeds the inverter's maximum input voltage, even in cold weather, it can cause permanent damage. Conversely, a string voltage too low won't allow the inverter to start. Professional installers model this using local historic temperature extremes.

A panel with a 25-year performance guarantee that degrades at 0.5% per year will produce about 8% more electricity over 25 years than one degrading at 0.7% per year. For the inverter, the standard 10-year warranty is a pivot point. Extending it to 20 or 25 years for an added $300 to $600 effectively pre-pays for the most likely point of failure, stabilizing your long-term cost of ownership.