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SOLARPOWER

The short explanation:

solar panels use photovoltaic cells which convert light into electricity. Photovoltaic (PV) cells are made of semiconductors (such as silicon). When light strikes the cell, a certain portion of it is absorbed within the semiconductor material. The energy of the absorbed light is transferred to the semiconductor, which knocks electrons loose, allowing them to flow freely. PV cells also have one or more electric fields that make sure the electrons freed by light flow in a certain direction. This current can be used as a source of power in electric circuits.

HowStuffWorks - thorough explanation about how solar cells work.

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