STEP-BY-STEP ANSWER:
Step 1: Absorb light energy using chlorophyll pigments located in the thylakoid membranes.
Step 2: Use the absorbed energy to drive the movement of electrons through the electron transport chain.
Step 3: Establish a proton gradient across the thylakoid membrane via redox reactions.
Step 4: Synthesize ATP by harnessing the proton gradient through chemiosmosis.
Step 5: Reduce NADP+ to NADPH using the electrons from the electron transport chain.
Final Answer: ATP and NADPH are generated in the thylakoid membranes through the absorption of light energy, redox reactions which create a proton gradient, and subsequent chemiosmosis and electron transfer processes.