This is How Solar Power Inverter Works

This is How Solar Power Inverter Works

There are several components to a solar-powered system, and one of the most integral is the solar power inverter. The inverter is often viewed as the brains of the solar power system and is essential to converting energy so that it can be utilized to power a home or business. But how does it work?

Solar power inverters work by converting the direct current (DC) output of a photovoltaic (PV) solar panel into alternating current (AC). Once it has been converted to AC, it can be fed into an electric grid or a private electrical network for power.

Although this is the basic explanation of how a solar power inverter works, numerous features play key roles. Additionally, several classifications of solar power inverters are better suited for certain grids and electrical networks than others, so it is important to understand their distinctions before installation.

How Solar Power Inverters Work

Before discussing how solar power inverters work in greater detail, it is important to first understand this piece of equipment. While the solar panels do all the heavy lifting in a solar power system, the solar power inverters are the masterminds behind the operation.

Physically, solar power inverters are small computers inside the system that ensure solar energy is properly inverted so that it can be used to power a home, building, or other technology.  Without this computer, the DC energy is inaccessible and incompatible with AC energy necessary to power most technologies.

Features of Solar Power Inverters

There are various features of a solar power inverter that allow it to invert energy and ensure your system runs effectively. It also provides enough feedback for the user to effectively manage the system when necessary.

Most of these features have been added over time so that the inverter’s sole purpose is no longer DC to AC conversions but a series of other responsibilities as well. Some of these occur post-installation to maintain energy production and optimal performance.

  • Power maximization: the best inverters will find the optimal voltage point quickly and accurately using Maximum Power Point and Maximum Power Point Tracker, which will result in higher power yields.
  • Panel Optimization: this feature refers to systems that use microinverters or power optimizers. These will ensure that the panels produce their maximum output regardless of shade or obstructions on the panels.
  • Data and consumption monitoring: by hooking up to the internet, inverters also allow users to see how much power they are generating, using, storing, and where the system can be improved.
  • System regulation: depending on the solar system, its invertor might be necessary to send additional power back to a utility grid, store it in a battery, and manage it in some alternative manner to keep the overall system running efficiently.
  • Emergency grid disconnection: in the case of grid-tie inverters, the solar energy system’s functionality is connected to a utility grid. Therefore, if a dangerous malfunction is present or the grid loses power, this feature is a preventative measure to ensure system safety.

Functions of a Solar Power Inverter

As previously stated, a solar power inverter is responsible for converting the DC energy output acquired through the solar panels into AC energy that is compatible with electrical grids or a personal off-grid network. Without the solar power inverter, the solar panels’ energy is inaccessible to the solar power system because it cannot harness the DC energy.

Once the inverter has sufficiently inverter the DC energy to an AC energy, it can then feed the solar energy to your home appliances and electronics. However, if there is an excess of energy that is not being used for power, the inverter will feed this back into the grid for future use.

Another essential role of a solar power inverter is its ability to connect your solar energy system to the internet for personal management.

The inverter itself is crucial to system regulation by connecting to the internet, which allows the user to manage their power as they see fit. This is typically done through a solar energy system application downloaded onto a cellular or electronic device.

By putting your solar energy system online, you can monitor how much energy is being consumed compared to how much your system is producing. This will allow you to make changes to your system to ensure it is not over-consuming energy and ultimately save money on electric bills.

Having your system online is also crucial to regulation and system maintenance. Most solar energy system applications will allow the user to run analytics or diagnostics on their system to ensure it is functioning properly or quickly determine when a malfunction is present.

Classifications of Solar Power Inverters

There are three main classifications of solar power inverters. Each classification has its pros and cons to functionality. Some classifications can be supplemented with other equipment for maximum production and storage, while others are composed of these elements intrinsically. It is important to understand the different classifications of solar power inverters to determine more effectively, which is best for you.

Grid-tie Inverters

Grid-tie inverters utilize the solar PV system, which means that they are integrally connected to the power supplied by utility grids. Without a grid connection, grid-tie inverters are incapable of functioning.

One unique function of a grid-tie inverter is that any energy that is not being utilized by the property’s appliances or electronics are automatically injected into the grid through a bi-directional meter.

A potential downfall of having a grid-tie inverter is its anti-islanding function, which ensures the inverter shuts down whenever there is a power cut and/or the connected grid is compromised.

This is a safety feature to protect the integrity of the inverter and its solar power system, but since grid-tie inverters don’t typically have battery backups, shutting off during a power cut will leave the system without power.

The best way to avoid this feature inhibiting your daily power is to install a grid-tie inverter if you are located in a region with infrequent power cuts or use a normal inverter battery system as a backup power source.

Off-grid or Stand-alone Inverters

An off-grid inverter is used in isolated systems and derives its power from photovoltaic solar panels that draw in DC energy to be inverted to AC energy. Once inverted, this power then charges the solar battery for utilization and storage.

Because off-grid or stand-alone inverters benefit from relying on a charged solar battery, the inverter can draw power from the battery in the case of a power cut, rather than relying on the grid and losing power completely.

Off-grid inverters do not intersect with the utility grid, and so, they do not typically have an anti-islanding feature because they are not at risk of losing power during a cut. Therefore, this type of inverter is most effective for buildings located in regions subjected to frequent power cuts.

Hybrid Inverters

Hybrid inverters essentially combine the benefits of both a grid-tie and an off-grid inverter into one inverter. This means that this inverter is connected to a utility power grid and has its own battery backup. If utilized properly, this inverter can be highly effective because it will not only power appliances and electronics within the building, but it can also charge the solar power battery and transfer all excess power into the utility grid.

A hybrid inverter is arguably the most universal inverter and can be used in locations that are both prone to power cuts and rarely subjected to outages. These systems are highly intelligent and can be managed to prioritize acquired power in a highly versatile manner.

Different Types of Solar Power Inverters

In addition to the several classifications of solar power inverters, there are also various types of inverters within those classifications that can be utilized for solar power systems. Some of these inverter types are more compatible with large businesses, small homes, or solely reliant on personal preference for your system’s functionality.

String Inverters

String inverters are arguably the oldest and most common type of inverters since solar power energy systems were created. These types of inverters are conducive to solar panels, which are typically installed in rows and on strings.

Each row of solar panels is provided its own string that is then connected to a string inverter. One string inverter is typically hooked up to multiple solar panels strings and inverts all AC energy from this string into DC energy to be stored in the solar power system battery.

One downfall of string inverters is that they function insufficiently in shaded areas. If one solar panel is shaded, it compromises the whole string of panels and forces them to reduce their overall output to whatever the most compromised panel is absorbing.

Contrarily, a significant benefit of string inverters is that they tend to be the cheapest type of inverters and are typically utilized for residential buildings or small businesses.

Central Inverters

Central inverters function similarly to string inverters, with the greatest difference being in the inverter’s size. A string inverter is typically connected to five strings, more or less, of solar panels.

A central inverter increases this number of connections exponentially. These inverters are used for more wide-scale installations and allow a mass of solar panels to be connected to one central inverter by using a pad or a common combiner box.

Rather than the string being directly connected to the central inverter, they all come together in the common combiner box. This is then connected to the inverter that will invert the DC energy to AC energy. As these inverters are suitable for high-capacity use, they are not conducive to residential solar power systems.


A relatively recent development in the technology of solar power systems, microinverters have become an increasingly popular choice to power residences and commercial buildings.

As opposed to string inverters that will connect a row of solar panels to the inverter, microinverters are installed onto each individual solar panel. This means that the microinverter system will invert the DC energy to AC energy at the solar panel site, rather than the energy being transferred down a string to meet at a string converter in a different location.

Microinverters are exceptional options, especially if you have panels covered in the shade. Because the inverters are installed into each individual solar panel, they effectively optimize the output independently rather than one panel on the string, compromising the whole system. 

These inverters are particularly suited for buildings with complex rooftops with various structures, such as chimneys, pillars, or antennae casting shade onto the solar panels.

Of course, microinverters’ benefits come at a cost, and in this case, it is a high cost. Although microinverters are arguably the most efficient option for residences and commercial buildings, they are also much more costly than string inverters. They are also potentially difficult to repair because all of the components are found on the roof with the solar panels versus other inverters located elsewhere.

Battery-based Inverter/Charger

A battery-based inverter/charger is bi-directional due to its dual components. Without a battery, these inverters cannot operate. These inverters can be beneficial for their versatility because they can be grid-interactive or stand-alone/off-grid.

The battery element of a battery-based inverter ensures that it will function consistently regardless of the condition of any utility grids connected to the system. Even if you have a grid-tied battery-based inverter and a power outage occurs, the battery will have sufficiently stored enough energy to continue to power appliances and electronics without the utility grid.

In the case of a power outage, battery-based inverters are designed to supply AC energy to selected loads in addition to its feature that ensures the system is protected from the anti-islanding function all grid-tie inverters utilize during a power cut.

Power Optimizers

Power optimizers aren’t inherently considered to be inverters. Rather, they are devices paired with string inverters that condition DC energy electricity and send it to the string converter rather than inverting it to AC energy itself.

There are various similarities shared between power optimizers and microinverters, such as their ability to increase function and optimization of solar panel output while in shaded areas.

As previously discussed, a detriment of string inverters is that when a solar panel is in the shade, it compromises the entire string’s efficiency. Power optimizers will reduce the effect of shade on panels and increase the system’s efficiency than if the system was solely relying on a string inverter. 

Therefore, power optimizers are beneficial devices that provide additional support for string inverters. They also achieve most of the same functions of a microinverter at a fraction of the cost.

This makes them an affordable alternative for home or business owners that already have a string inverter and are experiencing panel shading difficulties but cannot afford to invest in microinverters.

Average Cost of a Solar Inverter

Solar power systems come with some heavy costs, such as the bulk price for panels, the installation fees, and fees tied to inspections and warranties to ensure the system’s overall safety.

However, solar inverters have their own costs. They typically need to be replaced sooner than other solar power system components, which could render them one of the system’s most expensive components overall.

Cost of Solar Inverter

As is the case with most components of a solar power system, the overall price of a solar inverter depends on how big the system is and the type and classification of the solar inverter you are installing.

It was estimated in 2016 that the average solar inverter costs about $0.18 per watt but can range from $0.27 per watt to $0.09 per watt. On average, the overall cost for just the inverters necessary for one solar power system ranges from about $1,000-$1,500 without factoring in the installation fees.

These figures are the results of the most recent report conducted by the National Renewable Energy Lab. Over the past five years, the pricing of solar power energy systems and their components, especially solar panels, have decreased exponentially. Therefore, it is highly likely that these prices per watt have decreased by 2020.

Cost of Solar Inverter Installation

The installation of solar inverters is its own separate cost because it requires solar power system specialists to safely and effectively install any component of these systems.

In accordance with the costs per watt previously mentioned, it is estimated that the average installation cost per watt is about $2.93, combined with an $0.18 per watt converter price would render a 5.6kW installation at about $16,408.

In comparison, the inverter itself would cost approximately $1,000 of the installation total. This hefty sum typically accounts for about 6% of the total cost of installing a solar power system.

If you have a larger system, especially a system that uses central inverters used for wide-scale systems, these prices will increase exponentially. The more solar panels needed to cover an area and the more inverters needed to connect to the panels, the higher the cost per inverter and overall installation cost.

Cost of Solar Inverter Replacement

Sometimes it isn’t the immediate cost of the equipment and installation that is the priciest, but rather the equipment’s maintenance over time. Most solar panels in a system will have a warranty that guarantees their protection and functionality for 25-30 years. Unfortunately, inverters only last about half of this time and, therefore, require replacements more frequently.

On average, a solar inverter needs to be replaced every 11 years, and these replacements certainly aren’t cheap. In fact, replacing solar inverters could potentially be the most expensive cost of a solar power system.

Depending on the system, the type and class of inverter, and how many need to be replaced, replacement costs can range from $3,000- $20,000. Ultimately, the replacement cost of solar inverters could potentially match its initial installation cost.

Affect of Federal and State Incentives on Cost of Solar Inverters

Although all of these prices previously listed can make a solar power system seem financially inaccessible, there are some ways that homeowners and small businesses can reduce the overall cost of installation.

Federal Solar Tax Credit

When claimed properly before the federally stated deadline, solar power system owners can apply for the investment tax credit (ITC), also referred to as the federal solar tax credit.

This credit is meant to be an incentive for homeowners to transition to economically and environmentally friendly solar power systems. It allows the owner to deduct 26% of the cost of system installation from their federal taxes.

There is no cap on the installation cost, and this tax credit can help significantly alleviate the financial burden of installing a new solar power system. For instance, if the overall cost of installation for your solar inverters comes to about $16,000, the ITC will reduce this cost by a fourth at $4,000.

State Incentives

Additionally, some states will also have their own incentives to reduce the installation cost of solar power systems that adhere to their region-specific guidelines. These incentives can come in four forms:

  • State tax credits
  • Cash rebates
  • Solar renewable energy certificates (SRECs)
  • Performance-based incentives (PBI’s).
State Tax Credits

This form of an additional tax credit is typically limited to the cost of installing a solar panel system, which is almost exclusively used on residences. State tax credits function very similarly to the ITC.

In order to encourage homeowners to transition to solar energy systems, some states will allow owners to deduct a portion of the overall solar panel system cost from their state tax bill.

It is important to note that the amount they are permitted to deduct can differ significantly between states, and some states won’t offer this incentive at all. Fortunately, if you find your state does not permit state tax credits, it could still potentially allow SRECs.

Cash Rebates

This is not the most common incentive, but it is permitted in some states for solar power system owners to receive a cash rebate from their state.

If their state does not offer this option, they could potentially receive a cash rebate from their municipality, utility company, or other promotional solar energy organizations as well.

Again, the cash amount that owners receive varies significantly between states and organizations. However, it is estimated that cash rebates can reduce the overall system cost by 10%-20%.

Rebates also tend to be a limited time offer and, in the case of companies, might not be available past a certain amount of solar power system installations.

Solar Renewable Energy Certificates (SRECs)

SRECs can be a nice hefty way to earn hundreds or even thousands of dollars per year in supplemental income, all from the energy you make daily to power your home.

Solar renewable energy certificates will state the amount of electricity your solar power system produces, which you can then sell to your state market for profit. These certificates are bought through your utilities that the state will count towards their solar power energy quota.

Some states, such as Maryland, Massachusetts, New Jersey, and Ohio, are legally required to generate a certain percentage of their electricity used for utilities from solar power. Therefore, they will either allow all residences with solar power or the select few on their market before closing to acquire SRECs to contribute to their quota and receive additional income.

Performance-based Incentives (PBIs)

One of the more unique offers is PBIs utilized by some states or utilities without being sold through a market like SRECs. Essentially, PBIs will pay solar system owners a per kilowatt-hour credit for the electricity produced by their systems.

Although you don’t need to enter a market for PBIs, some states or utilities will require solar system owners to install equipment manufactured in-state before they are permitted to apply or benefit from the incentive.

Potential Regulations of Solar Inverters

Although most states and organizations attempt to support the transition to solar power energy systems, some states have regulations concerning residential system output. States such as Massachusetts will have limits on a system’s size due to its maximum power output. This output is dependent on the inverter and not the solar panels.

Although solar panels create the DC energy, it is the inverter that creates the DC energy that is then available to power electronics and appliances.

A grid-tie inverter that produces a high-power output is designed to send any unused power back into the utility grid, which could cause complications to both systems. Therefore, it is important to be aware of any restrictions or regulations in your state before installation.

Final Thoughts

Solar power inverters have progressed exponentially in the past decade, as have many components of solar power systems. Once, these integral pieces of equipment were solely responsible for converting DC energy into AC energy.

Now, engineers and manufacturers strive to include more analytic and preventative responsibilities into inverters for increased system productivity.

Additionally, these companies are making great strides to make inverters smaller and more financially accessible so more homeowners can make the environmentally and economically beneficial decision to transition over to solar power energy systems.

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The articles here on are created by Greg, a Tesla vehicle and Tesla solar expert with nearly half a decade of hands-on experience. The information on this site is fact-checked and tested in-person to ensure the best possible level of accuracy.

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