Solar panels are panels capable of collecting energy from sunlight. They are usually made of silicon based semiconductor devices that are based on Albert Einstein's Nobel award winning photovoltaic effect. (Basically, light is made up of particles called 'photons'- when they strike the semiconductor they knock an electron out of the matrix, and this is collected- the flow of electrons forms an electrical current which can be used to power things.)

Solar panels are one way to generate Solar Power, and are used extensively in Space applications.

Though solar power is often proposed as a clean power source to solve all our power problems, there are several disadvantages that prevent us from using solar panels for powering our cities.

One hurdle is that currently solar panels are rather expensive to make. We've tried to make them dirt cheap out of plastic but can't get plastics to produce energy with a decent efficiency, generally getting around one percent.

Another problem is that even non-plastic panels only get around 20% efficiency. Because of this, they require over 3,700 square metres to produce one megawatt of power. That's a lot of land.

(Also, it's annoying when you get massive blackouts whenever it's overcast for a long time.)

Because of these problems, until we get dirt cheap solar panels or a bigger planet, solar power isn't a perfect solution.

Solar power is a really good power solution, but not so much for production of electricity. Electricity isn't good for heating, which is our primary use for energy. Solar energy is good for space heating (and cooling) and low-temperature water heating. But that's not from solar panels, so much as good house design. Well-placed windows and such.

Sources:

http://www.prospace.org/issues/spss/mankin.htm
An article I read last year.
An english paper I wrote last semester.

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