A photovoltaic system, also PV system or solar power system, is an electric power system designed to supply usable solar power by means of photovoltaics. It consists of an arrangement of several components, including solar panels to absorb and convert sunlight into electricity, a solar inverter to convert the output from direct to alternating current, as well as mounting, cabling, and other electrical accessories to set up a working system. It may also use a solar tracking system to improve the system’s overall performance and include an integrated battery.
PV systems convert light directly into electricity, they are not to be confused with other solar technologies, such as concentrated solar power or solar thermal, used for heating and cooling. A solar array only encompasses the ensemble of solar panels, the visible part of the PV system, and does not include all the other hardware, often summarized as balance of system (BOS).
PV systems range from small, rooftop-mounted or building-integrated systems with capacities from a few to several tens of kilowatts, to large utility-scale power stations of hundreds of megawatts. Nowadays, most PV systems are grid-connected, while off-grid or stand-alone systems account for a small portion of the market.
Operating silently and without any moving parts or environmental emissions, PV systems have developed from being niche market applications into a mature technology used for mainstream electricity generation. A rooftop system recoups the invested energy for its manufacturing and installation within 0.7 to 2 years and produces about 95 percent of net clean renewable energy over a 30-year service lifetime.: 30 
Due to the growth of photovoltaics, prices for PV systems have rapidly declined since their introduction. However, they vary by market and the size of the system. In 2014, prices for residential 5-kilowatt systems in the United States were around $3.29 per watt, while in the highly penetrated German market, prices for rooftop systems of up to 100 kW declined to €1.24 per watt. Nowadays, solar PV modules account for less than half of the system’s overall cost, leaving the rest to the remaining BOS-components and to soft costs, which include customer acquisition, permitting, inspection and interconnection, installation labor and financing costs.: 14
Diagram of the possible components of a photovoltaic system
A photovoltaic system converts the Sun’s radiation, in the form of light, into usable electricity. It comprises the solar array and the balance of system components. PV systems can be categorized by various aspects, such as, grid-connected vs. stand alone systems, building-integrated vs. rack-mounted systems, residential vs. utility systems, distributed vs. centralized systems, rooftop vs. ground-mounted systems, tracking vs. fixed-tilt systems, and new constructed vs. retrofitted systems. Other distinctions may include, systems with microinverters vs. central inverter, systems using crystalline silicon vs. thin-film technology, and systems with modules.
About 99 percent of all European and 90 percent of all U.S. solar power systems are connected to the electrical grid, while off-grid systems are somewhat more common in Australia and South Korea. PV systems rarely use battery storage. This may change, as government incentives for distributed energy storage are implemented and investments in storage solutions gradually become economically viable for small systems. A typical residential solar array is rack-mounted on the roof, rather than integrated into the roof or facade of the building, which is significantly more expensive. Utility-scale solar power stations are ground-mounted, with fixed tilted solar panels rather than using expensive tracking devices. Crystalline silicon is the predominant material used in 90 percent of worldwide produced solar modules, while its rival thin-film has lost market-share. About 70 percent of all solar cells and modules are produced in China and Taiwan, only 5 percent by European and US-manufacturers. The installed capacity for both small rooftop systems and large solar power stations is growing rapidly and in equal parts, although there is a notable trend towards utility-scale systems, as the focus on new installations is shifting away from Europe to sunnier regions, such as the Sunbelt in the U.S., which are less opposed to ground-mounted solar farms and cost-effectiveness is more emphasized by investors.
Driven by advances in technology and increases in manufacturing scale and sophistication, the cost of photovoltaics is declining continuously. There are several million PV systems distributed all over the world, mostly in Europe, with 1.4 million systems in Germany alone – as well as North America with 440,000 systems in the United States. The energy conversion efficiency of a conventional solar module increased from 15 to 20 percent since 2004 and a PV system recoups the energy needed for its manufacture in about 2 years. In exceptionally irradiated locations, or when thin-film technology is used, the so-called energy payback time decreases to one year or less. Net metering and financial incentives, such as preferential feed-in tariffs for solar-generated electricity, have also greatly supported installations of PV systems in many countries. The levelized cost of electricity from large-scale PV systems has become competitive with conventional electricity sources in an expanding list of geographic regions, and grid parity has been achieved in about 30 countries.
As of 2015, the fast-growing global PV market is rapidly approaching the 200 GW mark – about 40 times the installed capacity in 2006. These systems currently contribute about 1 percent to worldwide electricity generation. Top installers of PV systems in terms of capacity are currently China, Japan and the United States, while half of the world’s capacity is installed in Europe, with Germany and Italy supplying 7% to 8% of their respective domestic electricity consumption with solar PV. The International Energy Agency expects solar power to become the world’s largest source of electricity by 2050, with solar photovoltaics and concentrated solar thermal contributing 16% and 11% to the global demand, respectively.
A grid connected system is connected to a larger independent grid (typically the public electricity grid) and feeds energy directly into the grid. This energy may be shared by a residential or commercial building before or after the revenue measurement point, depending on whether the credited energy production is calculated independently of the customer’s energy consumption (feed-in tariff) or only on the difference of energy (net metering). These systems vary in size from residential (2–10 kWp) to solar power stations (up to 10s of MWp). This is a form of decentralized electricity generation. Feeding electricity into the grid requires the transformation of DC into AC by a special, synchronising grid-tie inverter. In kilowatt-sized installations the DC side system voltage is as high as permitted (typically 1000 V except US residential 600 V) to limit ohmic losses. Most modules (60 or 72 crystalline silicon cells) generate 160 W to 300 W at 36 volts. It is sometimes necessary or desirable to connect the modules partially in parallel rather than all in series. An individual set of modules connected in series is known as a ‘string’.