The most widely used flat-plate collectors consist of a blackened metal plate, covered with one or two sheets of glass, that is heated by the sunlight falling on it. This heat is then transferred to air or water, called carrier fluids, that flow past the back of the plate. The heat may be used directly, or it may be transferred to another medium for storage. Flat-plate collectors are commonly used for hot-water heating and house heating. The storage of heat for use at night or on cloudy days is commonly accomplished by using insulated tanks to store the water heated during sunny periods. Such a system can supply a home with hot water drawn from the storage tank, or, with the warmed water flowing through tubes in floors and ceilings, it can provide space heating. Flat-plate collectors typically heat carrier fluids to temperatures ranging from 66 to 93 °C (150 to 200 °F). The efficiency of such collectors (i.e., the proportion of the energy received that they convert into usable energy) ranges from 20 to 80 percent, depending on the design of the collector. (See also solar heating.)

When higher temperatures are needed, a concentrating, or focusing, collector is used. These devices concentrate sunlight received from a wide area onto a small blackened receiver, thereby considerably increasing the light's intensity in order to produce high temperatures. The arrays of carefully aligned mirrors or lenses used in these so-called solar furnaces can focus enough sunlight to heat a target to temperatures of 2,000 °C (3,600 °F) or more. This heat can be used to study the properties of materials at high temperatures, or it can be used to operate a boiler, which in turn generates steam for a steam-turbine–electric-generator power plant. The solar furnace has become an important tool in high-temperature research. For producing steam, the movable mirrors are so arranged as to concentrate large amounts of solar radiation upon blackened pipes through which water is circulated and thereby heated.

Solar radiation may be converted directly into electricity by solar cells (solar cell) (photovoltaic cells (photovoltaic effect)). In such cells, a small electric voltage is generated when light strikes the junction between a metal and a semiconductor (such as silicon) or the junction between two different semiconductors. (See photovoltaic effect.) The power generated by a single photovoltaic cell is typically only about two watts. By connecting large numbers of individual cells together, however, as in solar-panel arrays, hundreds or even thousands of kilowatts of electric power can be generated in a solar electric plant. The energy efficiency of most present-day photovoltaic cells is only about 15 to 20 percent, and since the intensity of solar radiation is low to begin with, huge and costly assemblies of such cells are required to produce even moderate amounts of power. Consequently, photovoltaic cells that operate on sunlight or artificial light have so far found major use only in low-power applications—as power sources for calculators and watches, for example. Larger units have been used to provide power for water pumps and communications systems in remote areas and for weather and communications satellites.

The potential for solar energy is enormous, since about 200,000 times the world's total daily electric-generating capacity is received by the Earth every day in the form of solar energy. Unfortunately, though solar energy itself is free, the high cost of its collection, conversion, and storage still limits its exploitation.