Solar PV system meaning: Simple explanations for installers and purchasers

In the world of solar panel systems, we often come across the abbreviation "PV", which many people automatically associate with solar energy – but what does it actually mean? PV, or photovoltaic system, refers to one of the most common ways of converting sunlight into electrical energy. In this blog article, we will take a simple and understandable look at the meaning of PV systems, how they work, and the key concepts associated with them.

We will take a closer look at what photovoltaic means, its significance for professionals, and we will also explain in detail how photovoltaic panels work, what we mean by PV capacity, and how solar energy production can be measured for a given system. We also pay special attention to net present value calculations, which are essential for investment planning and understanding long-term operation.

The article not only explains the technical details, but also provides practical examples to help those involved in solar panel systems as installers or purchasers. Read on to gain a confident understanding of PV-related data and decisions.

What does photovoltaic mean in relation to solar panels?

The term "photovoltaic" (abbreviated PV) comes from the Greek word "phos" (light) and "voltaic" (related to voltage), derived from the name of Alessandro Volta. Essentially, it is a process that converts light energy directly into electrical energy. This technology is the basis for the operation of solar cells, which generate electrical energy fromsunlight without any mechanical movement.

The heart of a solar cell is the photovoltaic cell. It is most often made of silicon, which has semiconductor properties that enable it to convert light into electric charge carriers, or electrons. When these charges move, they generate direct current (DC) , which is converted by an inverterinto alternating current so that the electricity can be used in households or fed back into the grid.

A photovoltaic system is therefore an energy solution that converts the sun's energy directly into electricity. Not only are these systems environmentally friendly, they also offer a long-term, economical solution and are one of the cornerstones of the transition torenewable energy sources.

How photovoltaic panels and systems work

The basis of how a photovoltaic system works is the process by which solar energy is directly converted into electrical energy. The central element of the system is the photovoltaic panel, which consists of solar cells. These cells are typically made of crystalline silicon and generate direct current (DC) when exposed to light. This electrical charge is transmitted via cables to the inverter, which converts the direct current into alternating current (AC), which can then be used by household appliances or the electrical grid.

A solar power system consists of more than just panels and an inverter. The complete system also includes the mounting structure, cabling, fuses, surge protection, consumption meters, and, in some cases, a battery. Modern inverters are equipped with MPPT (Maximum Power Point Tracking), which automatically finds the best operating point for the current light conditions.

For example, connecting ten 400 W solar panels in an installation results in a nominal system capacity of 4 kW. This value is not the actual output, but only the maximum output under ideal conditions. When dimensioning the system, the orientation and angle of the roof, the expected amount of sunlight and consumption habitsmust alsobe taken into account .

When installingsolar panels, it is important to use high-quality and reliable components. To make the right choice, it is worth reviewing the range of solar panels and inverters available.

What is PV capacity and how is it measured?

PV capacity (also known as nominal power) indicates how much electrical energy a solar panel system can generate under ideal, standard measurement conditions (STC – Standard Test Conditions). This value is given in watts (W) or kilowatts (kW) and is often used in the form ofkWp (kilowatt peak) for systems .

Capacity is easy to calculate: multiply the number of solar panels by the nominal power of each module. For example, with ten 400 W solar panels, 10 × 400 W = 4000 W, i.e. 4 kWp or 4 kW. This means that the system is theoretically capable of delivering 4 kilowatts of power under maximum sunlight.

However, capacity should not be confused with annual energy production. The former is a momentary power value, while the latter depends on several factors, such as the orientation and angle of the installation, the intensity of local solar radiation, and the daily cycles ofthe sun.

Accurate capacity determination plays a key role in the sizing of PV systems. During the design phase, calculations are made taking into account the expected yield and consumption profile. A detailed solar panel performance calculation can help with this and also provides a basis for selecting the right system.

PV solar energy production: how is it calculated and what does it depend on?

Relevant solar energy production refers to how much electrical energy a solar panel system generates in a given period of time. According to the general formula:

Annual production = PV capacity (kWp) × number of hours of sunshine per year

In Hungary, the average number of hours of sunshine is approx. 1100–1300 h/kWp/year, so a 4 kWp system,for example , generates approx. 4400–5200 kWh of energy per year.

The calculation is as follows: for a 4.4 kWp system, if the number of hours of sunshine per year is 1200, then 4.4 × 1200 = 5280 kWh/year.

This value helps to predict the annual production of the system and compare it with consumption.

What does production depend on?

• Panel type: for example, monocrystalline panels achieve better efficiency than polycrystalline or thin-film panels.
• Angle of inclination and orientation: ideally ~35° and facing south. Deviations from this can result in losses of up to 10–20%.
• Temperature and weather: the performance of the panels can decrease due to overheating (the optimal temperature is approx. 20–25°C).
• Shading and system optimization: Shaded panels can drastically reduce the yield of the entire system, which is why optimizers are often used.

It is advisable to monitor the actual output of PV systems on a daily, monthly or annual basis. This can be done using monitoring systems and the built-in logs of the inverter. These not only record the amount of electricity generatedeach day , but also help to detect any faults, yield reductions or component failures.

A detailed solar power calculation is useful for estimating accurate production in advance. This helps to assess how much energy the system can generate and how the payback period can be optimized. When performing the calculation, it is advisable to take into account the number of hours of sunshine in the local area and the percentage reduction in system efficiency (e.g. cabling losses, inverter efficiency, contamination, etc.).

What is net present value calculation and why is it important when designing solar panel systems?

Net present value (NPV) is an economic calculation method that shows how much value an investment – such as a solar power system – will generate in the future, taking into account the time value of money. Essentially, future cash inflows (saved electricity costs) are discounted to the present and then the investment costs are deducted. The resulting value is the "net benefit" of the project.

The NPV formula is:

NPV = ∑ (Rt / (1+i)^t) – C0

Where:

• Rt is the future annual cash flow (e.g. energy costs saved),
• i is the discount rate (e.g., inflation or expected return),
• t is time (years),
• C0 is the initial cost of the investment.
•  

If the NPV is positive, the investment will pay for itself and generate a profit. If it is negative, it will be unprofitable in the long term.

In the case of solar power systems, calculating the net present value helps with long-term planning. Annual production, energy prices, the system's lifespan (usually 20–25 years), and any maintenance costs can be taken into account . It is important to work with realistic estimates, such as a stable discount rate of 4–6%.

A well-done present value calculation allows the investor or installer to objectively assess which system offers the best financial return and which may be the best choice in the long term for the given environment.

How do we use these during operation?

The task does not end with the installation of a solar power system – monitoring and optimising its operation is essential for long-term economic efficiency. This is based onthe PV capacity calculated during installation , the annual PV solar energy production and the dataobtained from the net present value calculation.

During operation, production data must be checked regularly, for which inverters and data collection systems provide real-time feedback. The amount of electricity generated and the yield curves can be compared with the pre-calculated annual expectations. Significant deviations may indicate a technical fault or a drop in efficiency, e.g. dust coveringthe solar panels, shading or a faulty inverter.

The present value calculation can be recalculated in light of maintenance costs and any efficiency losses to provide an up-to-date picture of the financial performance of the investment. This is particularly important for industrial-scale investments, where investors expect accurate yield estimates.

Long-term monitoring of data is not only useful for detecting faults, but also helps the operator to continuously optimizethe system , for example by adjusting inverter parameters or developing periodic maintenance schedules.

Such operational awareness is particularly important for projects such as the installation of industrial solar PV systems, where the size and economic weightof the systems are significantly greater.

The aim of this article is to provide a clear overview of solar PV, how it works and its most important economic aspects for anyone who is considering installing a solar PV system or is already actively involved in this field. We have learned about the meaning of photovoltaics, which is nothing more than the direct conversion of sunlight into electrical energy – a process that represents one of the most advanced solutions in renewable energy.

We have explained in detail what PV capacity means, how to calculate the size and performance of a system, and what factors influence actual PV production. Capacity alone does not guarantee high yields – it is also important to consider the effects of location, shading, and weather conditions.

The net present value method plays a key role in calculating the economic return , as it helps to objectively assess the long-term benefits of the investment. Thepresent value calculation allows you to examine future savings, operating costs, and the profits that can be achieved over the lifetime of the system.

Finally, we also highlighted how this data can be used in the day-to-day operation of the system: by monitoring yield, quickly identifying faults and supporting operational decisions, the owner can ensure the proper functioningof the system in the long term .

A well-designed and monitored photovoltaic system not only generateselectricity, but also provides stable, predictable energy while supporting environmentally conscious energy management.

FAQ – Frequently Asked Questions

1. What does PV mean in solar panel systems?

PV is short for "photovoltaic" and refers to the technology that uses semiconductors to convertsunlight directly intoelectrical energy. This is the basis for how solar panel systems work.

2. How can I calculate the approximate amount of energy my system will generate?

Annual production iscalculated based onthe PV capacity (kWp)of the system and the number of hours of sunshine in the area. The formula is: Annual production = kWp × hours of sunshine/year.

3. What is the net present value and why is it important for a solar investment?

The net present value calculation can be used to determine the financial value of the investment over its entire lifetime, taking into account the initial costs and future savings.

4. How often should the system be checked?

It is recommended to review the electricity production data at least once a month . Continuously available inverter logs and monitoring systems are a great help in this regard.

5. What types of panels can I choose from?

The most common types are monocrystalline solar panels. The best choice depends on the intended use, roof structure, and budget.