The term "solar panel" can refer to two very different technologies. One of these refers to solar photovoltaic modules, which turn sunlight into electricity; the other refers to solar heat collectors that transmit the sun's heat to water, which you can then use for domestic hot water or for heating your house. Most people refer to solar hot water heating panels as "solar thermal" and to solar electricity producing panels as "solar panels" or "pv panels".
On a clear day, the sun broadcasts about 1,000 watts of energy per square meter of the planet's surface. If we could collect all of that energy and convert it into electricity, we could easily power our homes and offices for free. With the development of the solar cell by Edmund Becquerel in 1839, we have begun that journey.
The solar panel pictured at the right is made of 72 mono-crystalline, or single crystal, solar cells. When sunlight strikes the cells, a certain portion of the light is absorbed within the semiconductor material. The energy knocks electrons loose and allows them to flow freely. Voila: electricity! DC electricity, to be exact.
Photovoltaic cells (another term for solar cells) all have one or more electric fields that force the freed electrons to flow in a certain direction. This flow is a current. By placing metal contacts on the top and bottom of the cell, electrical current can be drawn off to use to power a calculator, or a computer, or a house, for instance. This electrical current, along with the cell's voltage, defines the wattage that the solar cell can produce.
Solar thermal is about heating water with the sun. Usually a fluid system is used to move the heat from the sun to a collector. If the fluid is water, it can be drawn directly from the collector to be used in your home. Or heat exchangers may be incorporated to transfer heat from the fluid in the collector to water, which can then be pumped for domesic hot water use. The collector is what may looks similar to a solar electric panel, but the technology and purpose are different. See solar thermal hot water collector to the right.
In many climates, a solar thermal system can provide up to 85% of domestic hot water energy. In many northern European countries, solar hot water systems are used to provide domestic hot water and space heating, a substantial amount of the entire home energy requirement.
Americans have been slow to incorporate this solar thermal into their homes because we've had seemingly cheap sources of energy. As the true costs of energy become more apparent—government subsidy of coal mining and burning, environmental cleanup costs, military costs for protecting access to foreign oil—Americans are looking more carefully at this technology which is much more efficient than solar electric power.