How Solar Power Works In Canada

This page covers the basic technical information about how solar power works in Canada while answering frequently asked questions about solar system set-up, solar panel efficiency, and need-to-know information.

If you prefer to read about rebates, utility policies, performance payment programs, and other policy-related information about installing a solar system in your home province – then be sure to check out your province’s complete solar power guide.

Otherwise, continue to read about how solar power works in Canada by reading this page top to bottom, or by selecting your preferred section by clicking on it below:

Solar Power Components

At the most basic level, every residential, commercial, and rural grid-tied solar power system is composed of five unique components:

Solar Panels

Output: Power (Watts)

Efficiency: 16% – 22%

Materials Cost: $0.70-$1.10/Watt

The first and most obvious component of every solar system is the panels. Solar panels work by converting light (electromagnetic radiation) into electricity (electrical potential energy) at an efficiency of around 20%. However, the electricity produced by solar panels is “Direct Current” (DC) and must be converted into “Alternating Current” (AC) before it can be used by home appliances or be sent back to the energy grid. For this reason, a second piece of equipment is always needed when generating electricity from solar panels called an inverter.

Solar panels are typically rated in terms of their peak power output – which is the maximum amount of power that the panel is able to produce under ideal conditions. This is also referred to as the ‘size’ of the panel and it ranges from 250 to 370 Watts for most commercially available panels. The higher the power rating of the panel, the less panels you will need to use to offset your energy usage.

Almost all solar panels used in 2018 for residential systems are composed of silicon, including the two most popular types on the market:


Monocrystalline Solar Panel


Polycrystalline Solar Panel

Monocrystalline panels are more efficient and tend to perform better in high heat and low light conditions, making them far superior to polycrystalline panels in terms of performance – they also tend to be more visually appealing because of their black appearance (but they can also be blue). Monocrystalline panels can only be blue and tend to be less expensive than polycrystalline panels.

Got more questions? Ask us in the comments at the bottom of the page.

Quick links: Solar Panel Efficiency (this page), Calculate Number of Watts Need For Your Home (another page), Cost of Installation (another page).


Output: Power (Watts)

Efficiency: 90% – 99%

Materials Cost: $0.20-$0.50/Watt

Inverters are need to convert the power produced by solar panels from Direct Current (DC) to Alternating Current (AC). This is because Alternating Current is the only form of electricity that can used with modern appliances and on the energy grid here in Canada.

There are several types of inverters that Canadian installers will use with your solar system:

MicroinvertersMost Efficient, common for roof-mounted systems
String InvertersLess Efficient, common for ground-mounted systems
Power OptimizersLeast common, used with string inverters
Smart ModulesNew technology, used primarily in roof-mounted systems

Microinverters Microinverter Diagram

Microinverters work by converting power from DC to AC at each individual panel. This makes microinverters more efficiency than other inverter types if you expect shading on your system or if your system faces more than one direction (see inverter efficiency section for details).

Converting power at the panel level also allows you to monitor individual panel performance – an important consideration if you want to be able to quickly identify unforeseen shading (leaves, bird droppings). Most microinverters will allow you to track performance in real time using a mobile app or desktop, and send you email alerts if power output drops below the expected range for an extended period of time.

Individual panel tracking can also be used to take full advantage of your 25-year power output guarantee. Not only will you be able to easily identify which panel is performing sub-optimally, but your installer can too. This makes identifying the problem and changing the panel a quick and easy process.

an important consideration should any warranty work be needed because installers can quickly and easily identify the problem. This also makes it easy for you to track the performance of your panels over time

The downside of microinverters is their relative price. Because so many individual units are needed (one per panel or one per every two panels), they tend to be more expensive.

String Inverters

String Inverter Diagram

String inverters work similar to how they sound: a series of panels are tied together in a ‘string’, and then the combined electricity by the panels is converted from DC to AC power. String inverters are best suited when all panels are facing the same direction AND if no shading is expected (see inverter efficiency section for details) – this is most often the case for ground-mounted systems.

The main benefit of using string inverters is that they are cheap, mostly because less equipment is needed. However, you lose the ability to track the performance of individual panels (like you can with microinverters), making it difficult to isolate a problematic panel should performance decline faster than expected.

Since the electricity from all the panels is combined before it’s converted from DC to AC, the power lines have a very high voltage making them unsafe for most on-roof applications. Ground mounted systems, again, are the most suitable application because power lines are typically buried.

Power Optimizers

Power Optimizer Diagram

Power optimizers can be used with string inverters to ‘regain’ some of the benefits that microinverters offer while remaining relatively cheap. Power optimizers work by ‘conditioning’ the electricity (matching the output voltage of the panel with the voltage of the string), but conversion form DC to AC electricity still doesn’t happen until it reaches the string inverter.

Using power optimizers allows you to track individual panel power output and make the system suitable when panels are facing in more than one direction or if shading is expected (exactly like microinverters). However, power lines remain at high voltage making these systems generally unsafe for on-roof use and more suitable for ground-mount systems.

Smart Modules

Smart Module

A smart modules functions almost exactly like a micro-inverter. The only difference is that it’s integrated right into the panel itself, and not a separate component that must be installed. This allows for all the benefits of microinverters (more efficient, individual panel monitoring, safe for on the roof) while still being relatively inexpensive and much quicker to install. Another benefit of smart modules is that they can be used on ‘rackless’ solar systems. This again saves on material costs and installation times.

Smart modules are considered a new technology and are still relatively uncommon among residential solar installers. However, we feel they are promising given their low cost and high functionality.

Energy Storage Device

Output: Energy (Watt-hours)

Efficiency: ~90%

Materials Cost: ~$0.75/Watt-hour

The last component that’s needed is some sort of storage compartment for excess energy that’s produced. Most homeowners will elect to use the existing energy grid as their energy back-up and storage system by joining a net metering program, while some will elect to use a battery back-up.

This selection will also dictate whether your system is considered on-grid (using net metering) or off-grid (using a battery).

Battery Back-up (“off-grid”)

Tesla Powerwall, ElectrIQ Power Battery.

Energy Grid (“on-grid”)

If you’re participating in a net-metering system with your utility, then chances are you’re choosing to remain on the grid. This means that excess energy is sent to the grid when you use more than you consume, and you draw energy from the grid as your back-up when you’re not producing enough energy to meet your needs.

Bi-Directional Meter

Function: Net Metering

Materials Cost: Varies by Utility

Every province and territory in Canada (except Nunavut) offers some type of net metering program. A net metering program is a standard agreement between you (the small energy producer) and the utility company (your energy supplier or distributor).

Excess energy

Carry over

Sizing the system


Costs that don’t go away


Function: Panel Mounting

Materials Cost: $0.20-$0.50/watt

Solar Power Efficiency

There are several factors that contribute to the loss of overall energy production in a solar power system. These factors include the components that make up the system, the way you combine them, the way you set them up, as well as external factors like snow and dust.

You can read the solar power efficiency section from top to bottom, or jump to a specific topic of your choice by clicking on it below:

Solar Panel (Module) Loss

Solar panels are the efficiency factor that get the most attention – and for this reason research and improvements in panel efficiency have skyrocket over the past several years. We will briefly cover the main factors that affect panel efficiency, but you can also read about these factors in-depth in this SunPower Module Degradation PDF.

Conversion Efficiency

When it comes to questions about efficiency, the first question that people usually ask is: “How efficient are solar panels?”. This question is unique because it’s the only efficiency factor that can’t be controlled (except for buying a better performing panel).

The efficiency rating of solar panels is usually given as a percentage (%) of the total electromagnetic radiation (energy from light) that will be converted by the panel into DC power. For modern solar panels, this number usually ranges between 16% – 22%.

However, the efficiency rating is sometimes given (and promoted) for both the solar panel and the solar cell – but these are two separate things.

Solar Cell Efficiency NREL
Best Research-Cell Efficiencies (10.6% – 46.0%), data by NREL. See full size image.

Solar cell efficiency. Some manufacturers (and installation companies) will try and make their panels sound better than they are by reporting the efficiency of the ‘solar cell’ contained within the panel. However this is not a true measure of the panel’s output efficiency because it doesn’t take into account the other components within the panel. The cell efficiency is meant for scientific research, analysis, and comparison – not to represent the end-product.

Solar panel efficiency. The real number that you’re looking for is the solar panel efficiency. This number takes into account the efficiency of all cells within the panel, the spacing between them, and the internal resistance of the panel itself. The solar panel efficiency rating (also called the ‘module efficiency’) is the true % of light that’s converted into DC power.

Panel Degradation

Solar Panel Degradation SunPower
Solar Panel Degradation, SunPower vs. Conventional Panel.

All solar panels will lose some of their capacity to produce power over time as the silicon-based molecules within the cells naturally degrade. Typically, power output in will decrease between 0.75% and 0.25% per year. However, manufacturers will typically state degradation over a 25 year time-frame.

For example, after 25 years SunPower solar panels are guaranteed to produce 92% of the power that they produced on day one. This would be equivalent to 0.32% yearly degradation [(100% – 92%) / 25 years].

Since output is almost always guaranteed over 25 years, this means that panel degradation is well known by manufacturers and most installation companies will factor in panel degradation into their long term energy production forecasts. (This is a good question to ask them)

Most Efficient Panels

Here are the top 3 most efficient solar panels in 2018*:

  1. SunPower is regarded as having the most efficient solar panels on market with a 21.5% peak efficiency. As it turns out, they also have one of the best production warranties – after 25 years, their panels are guaranteed to produce 92% of the energy that they produced on day one!
    • Cell efficiency: not stated
    • Panel efficiency: 21.5%
    • Power rating: 345 Watts (STC)*
    • Spec Sheet
  2. LG has the next best panel with a 21.1% energy conversion efficiency. This panel also has a 25-year output warranty, but it’s only guaranteed to produce 87% of the energy that it produced on day one.
    • Cell efficiency: not stated
    • Panel efficiency: 21.1%
    • Power rating: 365 Watts (STC), 274 Watts (NOCT)*
    • Spec Sheet
  3. Panasonic is third in line with their most efficient panel converting at 19.1% and a 25-year production output guarantee of 91%.
    • Cell efficiency: 21.6%
    • Panel efficiency: 19.1% (remember, only this number matters)
    • Power rating: 315 Watts (STC)
    • Spec Sheet

*Only commercially available products in Canada were considered. STC – Standard Test Conditions (laboratory conditions). NOCT – Normal Operating Cell Temperature (realistic conditions).

Energy Sage also has a nice chart on their website showing the highest efficiency panels rated by brand.

Inverter Loss

Inverter loss is usually missed in conversations about energy efficiency but it’s actually an extremely important consideration. There are three main ways that inverters can cause your system to be less efficient:

Inverter Resistance

Panel-Inverter Mismatch

In almost all cases, your inverter will cut 10-20% from your peak power output. This is because inverters (necessary to convert DC power to AC power) are often rated for a lower peak power output than the panels they are used with.

For example, let’s say the maximum power rating of your solar panels is 320 watts but the maximum rating of your inverter is only 280 watts. This means that even if your panels are producing 320 watts of power, your inverters will only put out 280. That’s a 12.5% loss on peak power just for mismatched components.

And this isn’t a far fetched scenario either – most installers need to do these calculations when filling out their application forms for net metering and utility hook-ups. They calculate what’s called “apparent power” and “real power” separately.

Apparent Power. Apparent (or “nominal”) power is calculated by adding up the peak power rating on all your panels. This is the number that you’ll often see in your proposal or contract agreement with the installation company. But this isn’t really a ‘realistic’ number.

Real Power. Real power is calculated by taking adding up the peak power ratings of your inverters that are connected to panels (there are other ways to calculate this, but this is a simple way done by many installers) – this is the actual amount of peak power that your system will produce during sunny summer days.

Thus, selecting an inverter that’s a comparable size (or larger) to your panels would result in less energy loss at peak production. But the story doesn’t end here!

Inverter Selection

There is also a major efficiency consideration in selecting which type of inverter to use. The technical differences between inverter types are explained in the inverter component section near the top of the page, but here is what you need to know just in terms of efficiency:

Micro vs. String Inverters (efficiency)

Micro-inverters are more efficient than string inverters for several reasons. String inverters are designed to only produce as much power as the least productive panel in the ‘string’. However, power output between panels often vary due to system shading (debris, trees, buildings, other panels etc.) or due to individual panel failures.

Here is a good illustration from Enphase that shows how shading affects a micro-invert system and a string inverter system:


Microinverter efficiency

String Inverter

String Inverter Efficiency

As you can see, a 50% decrease in energy production from a single panel in a string inverter system will cause the whole system to lose 50%! For this same reason, micro inverters are also more efficient than string inverters if you panels face in more than one direction* because different directions will produce different amounts of power

Thus, string inverters are only appropriate for use when differences in individual panel power production is not expected and panels are all facing the same way (ground mount system with no shading).

So why do installers use string inverters when they aren’t supposed to? Because string inverters are cheaper than micro inverts, and sometimes they may not know this information themselves!

*There is an exception to this rule that is sometimes permissible: You must use a multiple MPPT string inverter and each string must be connected to groups of panels with similar performance expectations (for example, one group may be all east-facing panels, another group may be all south-facing panels). Power optimizers used with string inverters are also permissible.

System Set-up Loss

In terms of efficiency, there are many things to consider when setting up your system, but we can easily cover the top three considerations just by comparing ground and roof mount systems.

As a general rule, ground mount systems are going to more efficient than roof mount systems because of three reasons:

  • Ground mount systems can easily be set facing the optimal direction (south)
  • Ground mount systems can easily be set tilted to the optimal angle (45°)
  • Ground mount systems have more free-flowing air underneath and therefore they are cooler (solar panels are more efficient in the cold)

Weather Loss


The amount of solar irradiation (light that’s useful for solar panels) is the first and most important ‘weather’ consideration. The above map shows how much power your system will be able to produce over the course of a year due to annual average sunlight.

Prevailing weather patterns have a large impact on the total amount of energy that your system is able to produce – the above maps shows the intensity of solar irradiation (light that’s useful for solar panels) in Canada. This map takes into account cloud cover and fog.

Solar Panels Cleared of SnowThe issue of snow is covered extensively in our article about snow and power production. But in summary, panels that aren’t cleared of snow will produce about 5% less energy over the course of a year than panels that are. This means that investing in a snow rake would be a good idea, but it’s not the end of the world if you don’t.

Natural fluctuations in cloud cover from year to year can account for >15% variation in energy output.

The only other consideration that you may want to make is with regards to dust cover (or bird droppings). Solar panels are made to last a long time but just like your deck, it’s a good idea to clean them from time to time. As a general rule, you should clean your panels about as often as you would pressure wash your deck – once every one or two years. The rain will do the rest.

Future of Solar Power Efficiency


Solar Power Need To Know

25-Year Warranty

Virtually every solar panel manufacturer offers a 25-year warranty on their panels. This is usually broken into two pieces a performance guarantee and a

means that they are guaranteed to produce a specific fraction of energy (usually around 80%) after 25 years.


<Durability video>

Roof & House Condition

home condition, shingles,

Timeline & Paperwork

time to system being turned on (inspections and approval)

Policy, Rebates, & Other

See guides.

Choosing a Solar Installation Company


How Solar Power Works in Canada: Summary