When light energy is absorbed by a material known as a semiconductor, an electrical charge is created, this property of the material is known as the photoelectric effect. Silicon is the most common semiconductor used by PV cell manufacturers.

A grid-connected PV system is one which connects to the electricity grid. The electricity produced by the PV system is "exported" to the grid. The main advantage of using a grid-connected PV system is that the grid can be used as what is effectively an electricity storage system, where the electricity is "stored" and then "re-purchased". A grid-tied system of this type is of interest when a payment is available for the electricity being exported to the grid, to offset the cost re-purchasing of electricity exported to the grid. Grid-connected PV systems do not need physical storage systems (batteries) and so the investment cost is reduced.

In a typical grid-connected PV system, the electricity is fed from the PV modules into an inverter. The inverter converts the electricity produced by the PV system (which is DC) into AC electricity for export to the electricity grid. The inverter is usually connected to either the main circuit breaker or fuse box, or else connected directly to the incoming cables from the grid. If the PV system is not supplying sufficient electricity to power the loads in the building (e.g. at night, when there is no solar energy available), then the electricity from the grid is used. When the electricity supplied by the PV system is greater than the loads in the building, then the electricity can be exported to the electricity grid. In cases where there is a payment available for exporting electricity, this is an attractive option. Obviously it depends on the level of payment being offered.

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