If you think solar power is just for the super-eco-minded or people living so rurally they're off the grid, it's time to update your sun smarts. We're shining a light on this abundant, clean and healthily tax-incentivized power source. Learn what makes solar power an increasingly hot choice for many households.

Solar Panels: The Basics

The most common type of solar panels are photovoltaic (or "PV") panels. Photovoltaic panels absorb light particles, called photons, from the sun. These particles then flow through the semiconductive materials in the panels, creating an electrical current. If it all sounds very complicated, don't worry: It's really a very reliable system.

"One of the great things about PV panels is they are a solid-state technology, which means there are no moving parts," says Ric Evans, principal manager at Paradigm Energy Services in Ellsworth, Mich. Evans says one of the major benefits of a solid-state technology like this is that there are no moving parts to malfunction or break. "The first solar cell was made over 100 years ago, and it's still producing power today."

But PV panels aren't the only player in the solar-collecting game. Solar thermal collectors are another option. These collectors do just what their name indicates: They collect heat by absorbing sunlight. In residential applications, these types of collectors are most often used in conjunction with hot water heaters. In larger, more complex operations, the solar thermal collector's heated water may be used to produce steam; the steam then powers a turbine that runs electrical generators.

Solar thermal panels are generally less expensive, but they're also more difficult to use, since they have to move to track the sun. They also don't work as well on overcast days as PV panels, which are better able to collect diffused light.

Turning the Sun Into Power: Inverters

To make the current that juices our coffeemakers, computers and HVAC units, the power created at a solar panel has to run through a device called an inverter. Inverters take the direct current (DC) produced by solar panels and convert it into the alternating current (AC) that flows from your home's outlets.

Perry Cadman, president of New Town Builders a Denver-based homebuilder that outfits many of its homes with solar technologies, says while using a single inverter with an array of panels is a common design, he prefers panels that each have their own individual micro-inverters. "During the day, one or two of the panels may end up shaded," he says. "With traditional systems that have one inverter, the whole system's output will drop down to the level of the shaded panels. With individual inverters, that doesn't happen."

Solar Energy: Active vs. Passive

Watch Video Videos: Powering a Home With Solar Energy

Today most people associate solar power with photovoltaic panels. But that wasn't always the way the sun powered households.

Photovoltaic panels are an "active solar" technology — but so is any type of solar collector that uses fans, pumps or any electrical and/or mechanical equipment to increase efficiency or output. Active solar technology encompasses thermal collectors that use water-circulating pumps, as well as solar collection methods that require mechanical tilting to optimize exposure.

Passive solar technologies, on the other hand, are the most traditional method of using the sun to a household's advantage. Before the convenience of heating and air conditioning, most homes were designed to minimize summer sun heat while maximizing winter sun exposure. But even if your home doesn't soak up the sun in the smartest way, you can still use passive solar technology to boost your house's efficiency. Strategically placed vents that optimize air movement or energy-smart windows that minimize or maximize heat transfer depending on your climate are just a couple of examples of ways people use passive solar technology to increase their home's comfort levels.

Solar Energy: Direct vs. Indirect

Direct solar energy comes from solar panels and other similar devices that take the rays from the sun and convert them directly into useable energy. Indirect solar energy, on the other hand, has a more complex relationship between the sun and the eventual energy source. For example, a campfire would be an example of indirect solar energy. How? Because the sun provides the energy source for the plants and trees to grow (via photosynthesis). When you take fallen branches and dry grasses to create a fire, you're using sun-powered material to create your heat source, and that is a form of indirect solar energy.

Solar Power: Other Hot Topics

Here are a few other bright ideas to keep in mind when you're looking into solar power:

• Find out about tax incentives for solar power: Different states have different tax breaks for solar power, but the U.S. Department of Energy Database of State Incentives for Renewables & Efficiency — DSIRE for short — is a great place to find out what is available to you.
• Assess your energy and solar situation: Evans recommends a home energy audit before starting new construction or remodeling projects with solar power plans. "The cheapest and cleanest energy is the energy you never use," he says. Make sure you get a solar site assessment as well. You don't want to shell out for an array of panels only to discover your property doesn't really get enough sunlight to make it worthwhile.
• Don't go too big: Cadman says one of the biggest misconceptions he finds about solar power is people think they should put on the absolute biggest system they can afford and that if they don't need all that power, they'll get a check back from the utility company. Usually, that's just not the case, he says, primarily because of the way power is priced. "Up until you have a surplus of power, the utility company prices the power at the retail value," Cadman explains. "After you produce a surplus, though, you get the wholesale value. The cost-to-benefit just generally isn't worth it for most people."
• Figure out sensible payment plans: Cadman builds in sun-soaked Colorado, and the state offers generous financing incentives, he says. Your state may offer similar benefits.
• Talk to your insurance company: Make sure your new solar powered energy source will be covered under your homeowner's policy. If you do finance your system, the company providing the financing may also have specific insurance requirements you need to fulfill.
• Don't let shady solar contractors overcharge: Cadman says he's seen contractors charge extra for services like tilting panels when that really didn't increase the efficiency of the system enough to make it worthwhile. "If a contractor claims you'll get a lot more power if you do something, ask questions," Cadman says. "Always find out what the cost-to-benefit ratio will be."