When sunlight hits a solar panel, the light energy is converted into electricity.  

This process is known as the photovoltaic (PV) effect, which is why solar panels are also called photovoltaic panels, PV panels or PV modules.

Solar panels respond to both direct sunlight coming straight from the sun and diffuse sunlight reflected from particles in clouds and the atmosphere. Solar panels are usually able to generate some electricity even on a cloudy day. However, most electricity is produced on clear days when direct sunlight hits the panels.