Solar radiation can be harnessed in two ways, to produce electricity and to produce heat.
Photovoltaic cells (PV cells or solar cells) convert sunlight directly into electricity. When sunlight strikes the cell, it causes electrons to flow from one side of semiconductor material, through an external circuit and then back to another side of the PV cell. This direct current (DC) can be used to charge batteries or inverted to create alternating current (AC) to run household appliances.
The efficiency of existing solar panels currently averages around 20 - 30% (this has been steadily increasing - see article mentioned above). The remaining solar energy is turned into heat rather than electricity. Since the amount of generated current is still quite low, solar panels are relatively expensive compared to other generation technology (i.e. hydro, coal, nuclear). As the efficiency of solar cells increase and manufacturing techniques improve, solar panels will become more affordable for the average residential homeowner and thus become more widely used.
The warmth of the sun can be used to generate heated air that can be distributed throughout a building. The easiest application is to allow sunlight to stream threw a window where radiant heat warms the indoor air (passive heating). More sophisticated heaters use solar collectors such as walls, roofs and panels to gather the sun's heat and transfer it to a heat-collecting fluid (i.e. water, ethylene glycol).
In an active solar heater, a machine such as a ceiling fan is used to move the warm air from the collector and to other parts of the building. More elaborate and efficient methods use fluid systems in which a pump and tubes transport the warmed liquid to radiators. For large buildings, storage tanks collect the heated fluid throughout the day for later use.
The type of solar generator and how solar power works for your application depends on location, time of year and the amount of energy required. Since the space needed for solar panels is large, energy conservation may help reduce the energy requirement to within the amount of heat and power produced.