Solar panels, or solar modules as they are sometimes called, are typically installed on the roof. These panels are made up of photovoltaic (PV) cells, which convert sunlight into direct current (DC) power.

http://www.gosolarcalifornia.ca.gov/equipment/pvmodule.html

Inverter

The DC power from the solar panels is sent to an inverter, where it is converted into alternating current (AC) power, or standard electrical current used your home.

AC power travels from the inverter to the electrical panel, often called a breaker box. This power is now ready to use in your home.

Utility Meter

The utility meter continually measures your electrical supply; when your solar system produces more power than you need, the meter literally spins backwards, accumulating credits with the utility company that will offset your next bill.

Utility Grid

Your home remains connected to the utility grid to supply you with electricity when you need more power than your system has produced, such as at night.