Spacecraft operating in the inner Solar System usually rely on the use of power electronics-managed photovoltaic solar panels to derive electricity from sunlight. Outside the orbit of Jupiter, solar radiation is too weak to produce sufficient power within current solar technology and spacecraft mass limitations, so radioisotope thermoelectric generators (RTGs) are instead used as a power source.^{[obsolete source]}

The first practical silicon-based solar cells were introduced by Russell Shoemaker Ohl, a researcher at Bell Labs in 1940. It was only 1% efficient. On April 25, 1954 in Murray Hill, New Jersey, they demonstrated their solar panel by using it to power a small toy Ferris wheel and a solar powered radio transmitter. They were initially about 6% efficient, but improvements began to raise this number almost immediately. Bell had been interested in the idea as a system to provide power at remote telephone repeater stations, but the cost of the devices was far too high to be practical in this role. Aside from small experimental kits and uses, the cells remained largely unused.

This changed with the development of the first US spacecraft, the Vanguard 1 satellite in 1958. Calculations by Dr. Hans Ziegler demonstrated that a system using solar cells recharging a battery pack would provide the required power in a much lighter overall package than using just a battery. The satellite was powered by silicon solar cells with ≈10% conversion efficiency.

A few weeks after the US launched Vanguard 1, Sputnik 3 was launched by the Soviet space program outfitted with Silver zinc batteries with experimental silicon solar cells. The purpose of the batteries was both to power the transmitter and other equipment, but also to test the long term effects of radiation and micrometeorite damage on solar batteries. Some of the batteries were covered with protective glass while others were left exposed. The batteries were able to power the 20 MHz Mayak transmitter and Sergei Vernov's Scintillation counter, and these functioned for the entire lifetime of the satellite; until it reentered the Atmosphere nearly two years later.

The success of the Vanguard system inspired Spectrolab, an optics company, to take up the development of solar cells specifically designed for space applications. They had their first major design win on Pioneer 1 in 1958, and would later be the first cells to travel to the Moon, on the Apollo 11 mission's ALSEP package. As satellites grew in size and power, Spectrolab began looking for ways to introduce much more powerful cells. This led them to pioneer the development of multi-junction cells that increased efficiency from around 12% for their 1970s silicon cells to about 30% for their current gallium arsenide (GaAs) cells. These types of cells are now used almost universally on all solar-powered spacecraft.

Solar panels on spacecraft supply power for two main uses:

For both uses, a key figure of merit of the solar panels is the specific power (watts generated divided by solar array mass), which indicates on a relative basis how much power one array will generate for a given launch mass relative to another. Another key metric is stowed packing efficiency (deployed watts produced divided by stowed volume), which indicates how easily the array will fit into a launch vehicle. Yet another key metric is cost (dollars per watt).

To increase the specific power, typical solar panels on spacecraft use close-packed solar cell rectangles that cover nearly 100% of the Sun-visible area of the solar panels, rather than the solar wafer circles which, even though close-packed, cover about 90% of the Sun-visible area of typical solar panels on Earth. However, some solar panels on spacecraft have solar cells that cover only 30% of the Sun-visible area.