How Do Solar Panels Make Electricity? 7 Inputs (PVWatts Modeled)

How PVWatts V8 estimates solar production

PVWatts V8 is NREL’s current production model. Compared with version 6, NREL’s documentation says V8 adds a bifacial module option, new inputs for monthly irradiance losses and albedo, and updated module, inverter, and thermal models. For locations covered by the National Solar Radiation Database (NSRDB), it uses 2020 TMY weather data. TMY means “typical meteorological year,” a representative year of weather rather than a forecast of any single year.

You give the model a location and a system description. It returns estimated monthly and annual output.

Inside the model, the steps are:

1. Weather: it selects typical-year weather data for your location.
2. Sunlight on the array: for each hour, it works out how much sunlight reaches panels at your tilt and azimuth.
3. DC output: it converts that sunlight to DC power and lowers output as the modeled panel temperature rises.
4. AC output: it applies your system-loss percentage and the inverter’s efficiency.
5. Totals: it adds the hours into monthly and annual kWh.

Summary: PVWatts turns a location and a system description into estimated energy output in kilowatt-hours. It describes a modeled process, not a measured result.

What PVWatts V8 returns

The documented outputs include monthly and annual AC energy (kWh), monthly plane-of-array irradiance, monthly DC output, daily solar radiation (kWh/m²/day), and a capacity factor. Hourly values are available when you request hourly output. The response also reports which weather station and dataset were used, so you can see what the estimate is based on.

Production, self-consumption, and export

• Production: electricity the PV system generates.
• Self-consumption: generated electricity used at your home or business as it is produced.
• Export: generated electricity that flows to the grid.

Your bill depends on your utility’s rates, your usage pattern, and its export compensation rules. None of these appear in a production model.

Using the Solar Output Calculator

Our Solar Output Calculator models daily, monthly, annual, and year-25 production from the inputs on its page, including system size and daily peak sun hours, with efficiency and degradation available as advanced inputs. Treat its output as a modeled estimate for the numbers you enter.

The calculator is a simplified estimate, not a copy of PVWatts. It uses one formula:

Annual kWh = system size (kW) × peak sun hours per day × 365 × efficiency factor

The default efficiency factor is 82 percent. That single number stands in for the system losses, inverter conversion, and typical temperature effects that PVWatts models in separate steps.

Summary: Use the calculator for speed and PVWatts for site detail. As a modeled example of the simple formula, an 8 kW system at this site’s US-average assumption of 4.5 peak sun hours gives about 10,775 kWh a year (8 × 4.5 × 365 × 82%). At Arizona’s state-average sun hours the same system gives about 15,564 kWh, and at Washington’s about 9,578 kWh. These use approximate state averages and are not results for any address.

The two tools also work together. The daily solar radiation PVWatts reports for your array is the same quantity as peak sun hours, so entering that value in the calculator gives it a sun-hours input that already reflects your location, tilt, and azimuth.

It does not know your utility, rate plan, installation quote, or incentive eligibility, so it does not calculate savings, payback, or net cost.

What a production estimate cannot tell you

• Your exact output in a specific year, since TMY data represents a typical year.
• Shading, roof condition, or equipment performance at your actual site unless you account for them in your inputs.
• Bill savings, payback period, or return on investment.
• Whether a particular system size fits your annual electricity use.

NREL’s own caution on the calculator is that results include many inherent assumptions and uncertainties and do not reflect variations between PV technologies. The calculator also shows a range based on 30 years of historical weather to illustrate how much output can vary from year to year. The three module types are generic classes, so differences between specific panel models are not captured.

For related topics, see Solar Production in Winter and South-Facing vs West-Facing Solar Panels.