"Solar power" is the use of the energy of the sun to "do work" (provide electricity or heat) for the collector of the energy. There are many ways to collect solar energy, including thermal collectors, photovoltaic panels, and solar concentrators. Most residential and commercial applications where the user wants to supply a significant amount of his/her energy usage from the sun use photovoltaic panels to convert the sun's energy to electricity.If a user of solar energy just wants to eliminate a portion of his or her grid electricity usage, oftentimes they will invest in a solar thermal system to eliminate water heating or space heating costs. These systems are less of an investment in initial cost and do a lot to reduce energy costs in a household.
Solar Photovoltaic (PV) systems trace their origins back to the early days of the Space Program. Even further back than that, the origins of the first PV cell were derived from the development of the first transistor back in the late 40's and early 50's. Early PV cells were extremely expensive to manufacture and build, and efficiency of the cells was not very good. Today, efficiencies approach 20% (sunlight energy in watts/ square meter to electrical power in watts/square meter) at the cell level and close to 16% for some panels. While this seems like poor efficiency, it represents tremendous progress in engineering and design. PV panels used to cost upwards of $1000 per watt in the early days of the space program. Now $2.50 per watt and better for bulk purchases is routine. We have come a long way.A grid tied system is designed to "replace" grid-supplied electricity with electricity generated from the sun. If there are no batteries in the system, then the grid acts as the battery-- storing excess production over and above what the system owner needs for his own use-- in the form of an "energy credit" from the utility. You are selling your excess energy to the power company! If the user's PV energy production is less than what he or she needs at the moment, then the grid supplies the shortfall of energy, just as a battery would do.