Solar Panel Inverters: Definition, Types, Cost, Benefits and Risk

A solar panel inverter is a device that converts the electricity produced by solar panels into a form that is usable for households and businesses. This conversion is necessary because solar panels generate electricity in the form of Direct Current (DC), whereas Alternating Current (AC) is the standard current for most appliances and devices, and the electrical grid. Solar panels harness the power of sunlight via the photovoltaic effect, creating a one-way flow of DC electricity within their cells.

By manipulating the flow of current, solar inverters are able to transform the pattern of the DC to produce AC electricity compatible with household appliances and the electrical grid. Solar inverters are an essential component of a solar panel system, because, without them, the integration of solar power into our existing energy systems becomes challenging, diminishing the viability of solar as a renewable energy source.

Beyond their main purpose of converting DC power to AC power, solar panel inverters perform additional functions that contribute to the overall efficiency and safety of solar panel systems. These functions include maximizing power output, monitoring performance, and providing safety mechanisms.

There are multiple types of solar panel inverters, which have different advantages depending on their application. String inverters are the standard solar inverter type for residential purposes. However, microinverters have become increasingly popular in recent years, allowing the performance of individual solar panels to be tracked. A hybrid inverter performs the duty of a solar inverter and a battery inverter in one device, making it a great choice for those who plan to store excess power.

Central inverters are most commonly used for industrial purposes, like large-scale utility applications including solar farms. A central inverter is essentially a type of string inverter designed to handle a much larger capacity.

Different types of applications suit certain solar inverter types and come with various considerations around the cost and viability of particular American inverter brands and models.

What is a Solar Panel Inverter?

A solar panel inverter, or solar inverter, is a device that converts the direct current (DC) electricity generated by solar panels into alternating current (AC) to power appliances or for use on the electrical grid. Solar panel inverters are a critical component of a solar panel system, as they enable solar energy to be directly usable for powering households and businesses. The inverter device itself consists of interconnected circuits housed within an enclosed box. This box is typically installed in a shaded area close to the solar system that it is wired to.

The parts of a solar panel inverter primarily include a DC input, a Maximum Power Point Tracking (MPPT) circuit, an AC output, a control and monitoring circuit, a cooling system, a user interface, an enclosure, and additional wiring connectors.

How does a Solar Panel Inverter work?

The main function of a solar panel inverter is to convert the electricity produced by solar panels from Direct Current (DC) into Alternating Current (AC), to make it compatible with the electrical grid and household appliances. This is achieved by rapidly “switching” the DC input, which involves using transistors to manipulate the flow of current until it closely matches the AC output required. Other important functions of solar inverters include optimizing the maximum power output of the PV system, providing safety mechanisms (like switching off during a power outage), and displaying important solar tracking measurements.

Solar panel inverters are an essential component of any solar panel system because, without them, the electricity generated is not usable. Each solar panel produces direct current, meaning that a steady and unidirectional flow of electrical charge is produced when sunlight hits the panels. However, almost all residential and commercial electrical appliances, as well as the electrical grid itself, run off Alternating Current, where the current changes direction continuously (hence “alternating”). This is because Alternating Current is thought to be safer, especially in the case of electrical shock to humans.

Solar inverters operate via a combination of electrical components (like transistors), control circuitry, and software algorithms, which enable their various functions. Whilst the primary function of a solar inverter is to convert current from DC to AC, in most cases they perform important additional functions like maximizing power output, detecting electrical faults, and monitoring performance. These secondary functions of the solar panel inverter work as a result of sophisticated technologies and algorithms such as Maximum Power Point Tracking (MPPT), Ground Fault Detection, and sensor technology:

• Maximum Power Point Tracking (MPPT): MPPT is a control algorithm within solar inverters that optimizes the power output of a solar PV system to produce maximum power. By adjusting the ratio between voltage and current, the MPPT controller within solar inverters is able to achieve the best result for solar panels.
• Ground Fault Detection: Solar inverters detect instances of ground faults, which are the most common type of fault within PV systems. Ground faults occur when an unintentional electrical connection is made between the PV system and the earth. The solar inverter is able to disrupt this connection, reducing the risk of hazards such as arc flashes and fire.
• Anti-Islanding Protection: Grid-tied solar inverters are designed to switch off during a power outage due to a feature called Anti-Islanding Protection. This safety feature ensures that when a blackout occurs, solar inverters stop feeding electricity back onto the grid to prevent electrical shock to utility workers doing repairs.
• Sensor technology: Solar panel inverters are equipped with sensors that measure parameters like voltage, current, and temperature. The data from the sensors is collected and used to provide insights into the performance of the solar PV system. Most solar inverters feature a display panel for direct access to these performance metrics.

What are the benefits of a Solar Panel Inverter?

The five main benefits of solar panel inverters are outlined below.

• Converts solar energy into usable electricity: Solar inverters are critical in allowing the electricity harnessed by solar panels to be used for practical applications like powering homes and appliances.
• Ensures safety of solar panel systems: The safety features and mechanisms built into the design of solar inverters are pivotal in preventing electrical hazards like arc flashes, electrical fires, and electric shocks to humans. An example of a solar inverter safety feature is Ground Fault Detection.
• Reduces electrical bills: Grid-tied solar inverters allow the feeding of excess electricity generated by the PV system back onto the grid. Homeowners receive payment for this excess, in the form of a “feed-in tariff”.
• Maximises performance of solar panels: Solar inverters are able to optimize the amount of power generated by solar panels using Maximum Power Point Tracking (MPPT). MPPT is an algorithm that finds the ideal combination of voltage and current to produce the most solar power possible at any given time.
• Monitors important solar metrics: Solar inverters are able to track solar metrics like energy production and consumption in real-time using a Solar Panel Monitoring System. These systems are typically built-in with a display on the inverter box, but some solar homeowners choose to use a third-party monitoring system for enhanced capability.

What are the risks of a Solar Panel Inverter?

The five main risks posed by solar panel inverters are explained below.

• Electrical hazards: Solar inverters are responsible for managing the electrical currents that govern the operation of the overall solar panel system. When a solar inverter is improperly installed, or a system fault takes place, this has the potential to cause safety hazards like power surges and electrical fires.
• Improper installation: Solar inverters which are not installed properly have the potential to undermine the efficiency of the PV system and even pose significant dangers. One critical aspect of proper installation is ensuring that the capacity of the inverter is appropriately matched to the output of the solar system. It is normal for an inverter to be slightly mismatched to the size of the inverter. This is called “underproduction” when the inverter in a PV system is undersized, and “overloading” when the inverter is oversized. When installing an inverter, it’s crucial that the overloading is not more than 133% of the size of the inverter. Otherwise, there is a risk of significant issues like PV system inefficiency and safety hazards. Only qualified professionals must handle the installation, repair, and maintenance of inverters to ensure inverters are properly set up and wired.
• Overheating: Solar panel inverters generate a substantial amount of heat, especially during peak sunshine hours, which sometimes leads to overheating. Excessive overheating harms a solar inverter's efficiency and lifespan, even leading to component failure in some cases. Overloading, when the inverter is too small for the solar panel output, is another factor with the potential to cause overheating. To reduce the risk of overheating, a solar panel inverter must be properly ventilated and cooled.
• Inverter failure: Inverter failure occurs as a result of component wear, manufacturing flaws, overuse, problems in other parts of the solar system, or external factors that damage the system, like weather conditions and electrical emergencies. The most common form of inverter failure is when the capacitors are worn down electro-mechanically and need to be repaired or replaced. Regular maintenance of solar inverters reduces the risk of capacitor wear or inverter failure generally.
• Arcing: Arc faults, or ‘arcing’, refers to electrical current traveling along an unintended path, such as jumping from one wire to another in a flash of light or heat. The risk of arcing of a solar system occurs if there is loose wiring between the inverter and other components. Arcing causes extreme temperatures and increases the risk of fire.

How much does a Solar Panel Inverter cost?

The most common size for American solar panel users is a 5kW inverter, which costs between $2000-$3000 on average. Other common solar inverter sizes include 1kW, 2kW, 3kW, 4kW, and 10kW, which typically cost anywhere between $100 and $6000.

Common solar inverter brands that offer budget pricing are Renogy, Wagan, and MarsRock, each offering inverters for around $800 to $1000. SMA. SungoldPower offers competitive mid-range pricing at $1100-$2000.

String inverters are the most common solar inverter type, usually costing from $1000-2000. Hybrid Inverters, which have the dual capability of both a string inverter and a battery inverter, commonly cost up to $3000 or more.

Microinverters are an increasingly common form of solar inverter, involving small individual inverters attached to each panel. As such, the cost of purchasing microinverters depends on the number of solar panels within the PV system. Usually, microinverters cost about $150-250 per panel. Microinverters are typically a more expensive option than traditional string inverters, usually working out about 15-30% costlier than a string inverter for the equivalent size of a PV system.

What are the types of Solar Panel Inverters?

The five main types of solar panel inverters are microinverters, hybrid inverters, string inverters, central inverters, and optimized string inverters.

1. Microinverters

Microinverters are small devices used on individual solar panels to convert the Direct Current (DC) electricity generated into Alternating Current (AC) for use by household appliances and the electrical grid. In contrast to string inverters, which manage the output of multiple panels collectively, one microinverter is assigned to each panel in the PV system.

Microinverters are the second most common solar inverter type after string inverters. The benefits of microinverters include increased efficiency and energy production, improved safety and optimization features, and longer warranties. Microinverters are more efficient than other types of solar panel inverter, with typical maximum efficiency ranging between 95- 97%. The use of microinverters allows homeowners to monitor individual panels and identify any issues like soiling or shading, which tend to cause a drop in production. The warranties for microinverters are significantly longer than those for other types of inverters, often ranging between 20 and 25 years.

The risks of microinverters include increased installation costs, maintenance issues, and increased failure rate. The up-front cost of installing a microinverter system is usually higher compared to traditional string inverters because the requirements are more complex. Rather than installing one inverter for the whole PV system, with microinverters, a small inverter is attached to each solar panel, which is more time-consuming and costly to set up. Because there are as many micro-inverters as solar panels, maintaining microinverters is more difficult, and any issues are harder to track and diagnose.

Microinverters come with an increased failure rate than standard solar inverters like string inverters because more components are susceptible to technical issues. On the plus side, only one solar panel is affected if a microinverter fails, unlike the whole PV system. This is further mitigated by the fact that most solar microinverter brands offer warranties for repairs.

Enphase is considered by many owners of solar panel systems to be the best brand of solar panel inverters, particularly their microinverters, as evidenced by high-quality technology, a low failure rate, and good customer service.

2. Hybrid Inverters

A hybrid inverter, sometimes called a multimode, battery inverter, or “battery ready” inverter, is a device that combines a solar inverter and a battery inverter into a single unit. This allows the unit to perform the primary functions of both by A) converting the DC generated by solar panels into AC for direct use in homes and on the grid and B) facilitating the conversion of current needed for using stored electricity from solar batteries.

There are two main advantages of hybrid solar inverters. The first is that the hybrid inverter combines the function of solar inverters and battery inverters into one device, making solar energy systems more streamlined and efficient. The second advantage is that they are “battery ready”, meaning that you have the option to install solar batteries at any time, without having to upgrade your existing inverter.

Another benefit of hybrid inverters compared to other inverter types is that they improve efficiency by reducing “conversion losses”, referring to the heat energy which is lost when current is converted by an inverter. Hybrid inverters are able to optimize these processes more efficiently than other inverter types. Hybrid inverters are 93% to 96% efficient, depending on the make and model.

The risks of installing a hybrid solar inverter include the fact that they are more technologically complex and, therefore, more costly to purchase and later repair. In many cases, a hybrid inverter costs between $3000-5000, which is almost twice as expensive as a standard inverter. Due to the sophisticated technology used within hybrid inverters, they are more costly to repair because this requires more expertise from the electrician, and in some cases, parts aren’t as available.

General Electric, licensed by GoodWe, offers a hybrid inverter with four MPPT modules, a power capacity ranging from 5Kw to 10Kw, and compatible with high voltage batteries. Hybrid inverters are compatible with a variety of battery storage systems. However, the stored excess power cannot be used in the event of an outage which decreases the number of emergencies in which the device is helpful.

3. String Inverters

A string inverter is a device that converts direct current (DC) generated by groups of solar panels into alternating current (AC), to make it usable for powering appliances and feeding electricity back onto the grid. The name “string” inverter originates from the fact that multiple solar panels are connected in series to a single inverter. String inverts are available in a variety of sizes and are suited for small residential systems or large commercial systems.

There are three main benefits of string inverters. These are cost-effectiveness, high efficiency (up to 99%), and only requiring one unit for the conversion of solar electricity from DC to AC current, which makes them easier to troubleshoot. Other benefits include their reliability (given that they are the most common solar inverter type) and ease of wire compared to some other inverter types. String inverters have lower costs compared to newer inverter types, as they are the oldest inverter type on the market.

The main disadvantage of string inverters is that a single point of failure affects the whole system. In other words, the efficiency and production of the entire system are affected if one solar panel is negatively impacted by an issue such as panel malfunction, soiling, or lack of sunlight. Furthermore, it is difficult to get panel-level insights to diagnose such issues compared to other inverter types. Another drawback of string inverters is that, compared to new inverter types like microinverters, string inverters typically have shorter warranties. They are not easy to expand because string inverters are designed to work with a fixed number of outputs. Lastly, in some instances, string inverters need to be shut down quickly in emergencies, which requires a “rapid shutdown” box to be installed at the same time as the inverter.

String inverters convert energy with between 95-99% efficiency, which is considered slightly less efficient on average than microinverters. However, this largely depends on the specific string inverter system in question. The capabilities of string inverters have improved over time, with some premium string inverters now offering performance-tracking software to notify owners of a drop in solar production.

Fronius is the world’s leading manufacturer of string inverters based on quality, sales volume, and service. The Fronius Primo inverters are ‘single phase’ string inverters, meaning they are ideal for residential use and range from 3kW to 8.2kW. The integrated DC isolator stops electricity flowing through the system in emergencies or to allow for servicing. Additionally, the device has an active cooling system to ensure energy yield and long lifespan.

4. Central Inverter

A central inverter is a large device used in solar plants to convert the direct current (DC) electricity produced by solar panels into alternate current (AC) for distribution to the electrical grid or on-site consumption. The name “central” inverter originates from the fact that they are usually installed in a central location relative to the solar power system.

The advantage of central inverters is that they are able to produce high power density (a large amount of energy) at a relatively low cost. This makes them ideal for large-scale commercial uses like solar farms. Other benefits include their high rate of efficiency (up to 98%), their long lifespan, and easy reparability, as well as the advanced monitoring and cooling systems they usually come with.

The main disadvantage of central inverters is that they are a single point of failure in a solar power system. This means that the whole solar plant is affected if there is a technical issue with the central inverter. By the same token, panels are not able to be monitored on a per-panel basis, meaning the failure of a single solar panel potentially impacts the overall performance of the system. Central inverters are large, cumbersome systems that are more difficult to install than other inverter types. Due to their size and complexity, central inverters come with additional demands, such as cooling systems and advanced system monitoring. Qualified technicians are required to maintain central inverters.

Central inverters convert Direct Current (DC) electricity to Alternating Current (AC) at a highly efficient rate of 90-98% efficiency. This means that there is minimal conversion loss for central inverters even when used for utility-scale applications such as solar plants.

SMA Solar Technology is a highly respected brand of central inverters based in Germany. SMA produces what is widely considered to be some of the highest quality models of central inverters, including the Sunny Central UP. SMA’s most powerful solar inverter system, the Sunny Central UP, has a power output of up to 4,600 kVA. It offers the advantage of fewer inverters and comes with advanced features like an OptiCool™ cooling system and remote diagnostic features.

Fronius is the world’s leading manufacturer of string inverters based on quality, sales volume, and service. The Fronius Primo inverters are ‘single phase’ string inverters, meaning they are ideal for residential use and range from 3kW to 8.2kW. The integrated DC isolator stops electricity flowing through the system in emergencies or to allow for servicing. Additionally, the device has an active cooling system to ensure energy yield and a long lifespan.

5. Optimized String Inverters

Optimized string inverters operate via small optimizer units containing MPPT modules placed on the back of each panel. Optimized string inverters prevent drops in overall production caused by shading by maximizing each panel separately. The effect of panel debris is limited to the affected modules rather than compromising the entire string of panels. The performance of each panel is optimized, and the yield of the overall system increases. Optimized string inverters maximize inverter efficiency in areas with frequent shading, as the MMPT components account for different panels being exposed to different levels of sunlight.

They operate at an efficiency between 93% and 97%, depending on weather, temperature, and other device factors. SolarEdge offers a hugely popular optimized string inverter with an efficiency of 99.5% and performance tracking at the module level. It should be noted that optimized string inverters are difficult to handle due to their large size. As a result of the large number of electronic components they contain, the systems are sometimes overheated, resulting in shortened lifespans.

What is the best size (capacity) of solar inverter to buy?

Choosing the right solar inverter size is an important consideration when purchasing a solar inverter. The capacity of the solar inverter must be roughly matched to the power of the solar system. The rule of thumb for choosing the best solar inverter size for your system is that the solar panel capacity should never exceed 133% of the inverter capacity. For example, when installing a 6-kilowatt solar system, the inverter must not exceed 7,980 watts. The most common solar system size in the United States is 5kW, so most solar inverters are around 5kW.

It is common practice within the solar industry to ‘oversize’ the solar inverter, meaning that the inverter has a lower capacity compared to the energy production capability of the PV system. This is because solar PV systems are not usually operating at 100% efficiency due to issues like temperature, shading, orientation, and soiling. Oversizing the inverter accounts for these efficiency losses and ensures that the PV system operates close to its maximum potential.

Which type of Solar Panel Inverter is best for residential use?

The best type of solar panel inverter for residential purposes is a string inverter. String Inverters are cost-effective, easy to install, and are the most common inverter type for home use. Microinverters are an excellent choice but are generally more expensive. On the plus side, they usually have a longer warranty (25 years) compared to string inverters.

Two excellent brands for residential solar inverters are Fronius and SolarEdge. More information on the benefits of each is below.

• Fronius offers the Fronius Primo, a single-phase string inverter, with SnapINverter technology that allows easy installation, removal, and manipulation for servicing. Customers are able to monitor their system remotely from the accompanying mobile app. By registering a system on the Fronius website, the customer automatically receives an additional five years of warranty coverage.
• The SolarEdge Home Wave Inverter is another top choice for inverters, receiving excellent ratings across almost all aspects. It boasts the highest efficiency rating among residential inverters we've encountered, and it comes in various sizes, backed by a reliable warranty. The accompanying app enjoys commendable user review scores. It's worth noting, however, that SolarEdge inverters are on the higher end in terms of cost.

Which type of Solar Panel Inverter is best for commercial use?

Central inverters are widely considered the best solar inverter for commercial purposes, mainly due to their economic viability for larger installations. Commonly found on commercial buildings and industrial complexes, central inverters are easy to install at scale and produce a high rate of efficiency.

One of the best models of solar panel inverter for commercial use is the SolarEdge HD Wave inverter. The SolarEdge HD uses power optimizers to ensure efficiency in shaded areas, which means it maximizes energy production as sun rays move around the building. The device is available in sizes up to 10 kW, which means it is suitable for commercial and utility-scale applications. It has a significantly longer warranty than competing brands, lasting up to 12 years. GoodWe, a best-selling inverter brand, offers several commercial rooftop inverters that come highly reviewed. GoodWe inverters have high efficiency, monitoring capabilities, safety features, extensive warranty, and compatibility with a variety of solar systems.

Which type of Solar Panel Inverter is best for mobile use?

The best type of solar panel inverter for mobile use is the Huawei Sun2000 inverter. The Huawei Sun2000 is a three-phase smart solar inverter, which is only available in sizes up to 6kW, making it ideal for mobile use. It is a hybrid inverter, which means it is equipped to connect to a battery without the need for additional devices or retrofitting. The smart system monitors energy production at the module level and stores vital system data in the case of damage or malfunction.

Can I connect an inverter directly to a solar panel?

No, you cannot connect an inverter directly to a solar panel. Directly connecting an inverter to a solar panel without a controller or regulator between the two causes several issues, principally overloading the system, inefficient functioning, and electrical hazards. For this reason, it is vitally important to understand the principles of solar panel installation.

Is a solar panel inverter expandable?

Yes, solar panel inverters are expandable. The ease of expanding the inverter for a PV system depends on the type of solar inverter used and the specific models used. In general, microinverters are the best solar inverter type for expanding a PV system because they are able to be installed and connected on a per-panel basis. This makes it easy to add new panels without affecting the performance of the existing panels. String inverters are not particularly easy to expand because they are designed to work with a fixed quantity of strings, and upgrading to a larger size PV system is costly. This is because upgrading involves routing the new panels to a separate inverter.

One solution for those who prefer the string inverter type is to purchase an expandable string inverter, meaning purchasing the inverter with more capacity than is needed for the number of solar panels initially needed. This allows for future upgrades, without the purchase of a new inverter.

Are solar inverters waterproof?

Yes, solar inverters are waterproof, in some cases. To qualify as waterproof, the inverter is required to have an IP65-rated enclosure. This enclosure has anti-dust, waterproof, anti-grease and anti-corrosion properties. Solar inverters are able to function outdoors without an enclosure, but this makes them susceptible to corrosion from rain and other types of weather damage.