First, the naming

Every solar panel produces direct current (DC). The "AC vs DC panel" question is really about where the conversion to AC happens. A DC module sends its DC down to a shared string inverter that converts the whole array at once. An AC module has a small microinverter attached to each panel, so it outputs grid-ready AC at the panel itself.

A note on the history

The distinction goes back to the 1880s "War of the Currents". Edison backed DC, which flows in one direction; Tesla and Westinghouse backed AC, whose great advantage was that transformers could easily step it up and down for efficient long-distance transmission. AC won the grid, but DC never left: it powers electronics, LEDs, EVs, batteries, and the solar cells themselves. Modern high-voltage DC (HVDC) links even carry power over long distances again.

AC modules (microinverters)

An AC module integrates a microinverter behind each panel, converting DC to AC on the spot. Because every panel is independent, the system behaves very differently from a single-string design.

• No single point of failure. If one microinverter or panel fails, only that unit drops out. The rest keep producing.
• Per-panel MPPT. Each panel runs at its own optimum, so shading or a dirty panel doesn't drag down the whole string. Mismatch losses are minimal.
• Easy to expand. The minimum system is a single module, and you can add panels later without re-engineering a string.
• Safer wiring. No high-voltage DC running across the roof, which reduces DC arc and fire risk.
• Panel-level monitoring. You can see the output of each individual panel.

The trade-offs are a higher up-front cost (you're buying many small inverters instead of one) and more electronics on the roof to maintain over the system's life.

DC modules (string inverters)

DC modules feed a single string (or hybrid) inverter. This is the long-standing mainstream design: typically cheaper per watt, with one accessible inverter to service. Its weaknesses are the mirror image of the AC module's strengths: a fault or heavy shading on one panel affects the string, and there's high-voltage DC cabling on the roof.

Crucially, DC is what batteries store. A battery charges and discharges in DC, so DC-coupled systems (string/hybrid inverter plus battery) avoid an extra AC↔DC conversion. AC-coupled storage is possible but adds conversion steps and losses.

A rule of thumb

As a rule of thumb:

• Panels only, complex roof or shading: AC modules (microinverters) are often the better fit, independence, per-panel MPPT, and safety outweigh the cost premium.
• Planning a battery now or later: a DC-coupled string/hybrid inverter is usually preferable, because the battery and panels share DC and the inverter is already sized for storage.
• Simple unshaded roof, tight budget: a string inverter is hard to beat on cost per watt.

There's no universal winner. It depends on the roof, the shading, and whether storage is on the roadmap. Solar Analytica rates inverters across residential, small-commercial, and C&I tiers; see the methodology, or browse the scores on review.solar.