How does a solar panel work?
Through the photovoltaic effect — light knocking electrons loose in a semiconductor, with the material's structure arranged so those electrons flow in one direction rather than simply recombining.
The mechanism. A silicon cell has two layers doped differently: one with a slight excess of electrons, one with a deficit. Where they meet, a junction forms with a built-in electric field. When a photon of sufficient energy strikes the silicon, it knocks an electron free, leaving a positively charged hole behind. The junction's field sweeps the electron one way and the hole the other, so instead of recombining they separate — and connecting a circuit between the two sides lets the electrons flow through it as current.
Why efficiency is limited. The fundamental constraint is that each photon must carry at least a minimum energy to free an electron. Photons with less energy pass through uselessly; photons with more waste the excess as heat. This alone caps a single-junction silicon cell at around 33% in theory — the Shockley-Queisser limit — with commercial panels typically reaching the low twenties.
What actually reduces output in practice:
Temperature. Efficiency falls as panels get hotter, typically by a fraction of a percent per degree — which is why a cool bright day outperforms a hot one, counter to intuition.
Angle and orientation, since output depends on light striking perpendicular.
Shading. In a conventional string, shading one cell can throttle the whole string, which is why bypass diodes, optimisers and microinverters exist.
Dirt and soiling, and gradual degradation of around half a percent per year.
What else is in the system: an inverter, converting the panel's direct current to alternating current for the house and grid; mounting and wiring; and optionally a battery.
Beyond silicon: multi-junction cells stacking materials tuned to different photon energies exceed the single-junction limit at high cost, and perovskite tandem cells are the most active research area, promising higher efficiency with durability still being solved.