Understanding Solar Power Systems: Off-Grid Vs Grid-Tied

When considering power generation solely from the sun, there are two primary types of solar panel systems: grid-tied (on-grid) and off-grid.

Each system possesses unique traits that impact the equipment used, installation complexity, and, significantly, potential costs and savings.

To identify the most suitable system for your needs, it’s crucial to analyze the advantages and disadvantages of grid-tied and off-grid solar systems.

Grid-Tied Solar Systems

Grid-tied, on-grid, utility-interactive, grid intertie, and grid back feeding are interchangeable terms referring to a solar system connected to the utility power grid.

In this setup, DC electricity generated by the solar panels is directed to the inverter, which transforms it into AC electricity. Initially, this electricity powers the home’s loads, with any excess energy exported to the grid in exchange for credits on the electric bill.

Advantages of Grid-Tied Systems

There are three main benefits enjoyed under a grid-tied system:

  • Net Metering
  • Power Efficiency
  • Cost of Installation

Net Metering Saves Money

Solar panels frequently generate surplus electricity beyond the homeowner’s consumption needs. Net metering allows homeowners to feed this excess electricity back into the utility grid rather than storing it with batteries.

Numerous utility companies offer to purchase surplus electricity from homeowners at the same rate they sell electricity themselves. Homeowners can utilize these payments from the utility to offset their electricity usage charges, potentially canceling them out entirely, up to 100%.

The Utility Grid is More Efficient

Energy storage often involves notable losses, meaning more electricity and money are wasted with conventional battery systems.

According to data from the Energy Information Administration (EIA), annual electricity transmission and distribution losses average about 7% of transmitted electricity in the United States.

Lead-acid batteries, frequently utilized with solar panels, are only 80-90% efficient at storing energy, and their effectiveness diminishes over time.

Cheaper Installation

Grid-tied solar systems are the sole type of solar system that doesn’t necessitate a battery for operation. This characteristic renders grid-tied systems more affordable and straightforward to install and also results in reduced maintenance requirements.  

Equipment for Grid-Tied Solar Systems

Standard grid-tied solar systems typically rely on the following components:

  • Grid-Tie Inverter (GTI)
  • Micro-Inverters
  • Power Meter

Grid-Tie Inverter (GTI)

The primary function of a solar inverter is to convert the voltage and current received from solar panels. It transforms direct current (DC) from the solar panels into alternating current (AC), which is the standard type of current used by most electrical appliances.

In addition to this, grid-tie inverters, also known as grid-interactive or synchronous inverters, synchronize the phase and frequency of the current to match the utility grid (typically 60Hz). They also adjust the output voltage slightly higher than the grid voltage to enable excess electricity to flow outwards to the grid.


Micro-inverters are installed individually on the back of each solar panel, unlike central (string) inverters, which typically handle the entire solar array.

The ongoing debate centers on whether micro-inverters outperform central inverters.

Although micro-inverters come with a higher price tag, they often offer higher efficiency rates. For homeowners facing shading issues, micro-inverters may be a preferable option, as they can mitigate the impact of shading on individual panels.

Therefore, homeowners should carefully consider their specific circumstances and shading concerns when deciding between micro-inverters and central inverters.

Power Meter

This device, commonly referred to as a net meter or a two-way meter, can measure power flow in both directions: from the grid to your house and vice versa.

For net metering to function effectively, most homeowners will need to replace their existing power meter with one that is compatible with this two-way measurement capability.

Off-Grid Solar Systems

For homeowners connected to the grid, off-grid solar systems are often not feasible due to several reasons.

Firstly, off-grid solar systems necessitate high-capacity battery storage and a backup generator to guarantee access to electricity at all times.

Additionally, maintaining a battery bank can be costly and complex, with batteries typically needing replacement every 10 years. This not only adds to the overall expense but also reduces the system’s efficiency.

Moreover, off-grid systems demand substantial energy storage capacity since there is no option to import power from the electric grid.

Advantages of Off-Grid Solar Systems

Off-grid solar systems have two main benefits:

  • Energy Sufficiency
  • Unlimited by Grid Access

Energy Self Sufficiency

For some people, the sense of independence is more valuable than monetary savings. Energy self-sufficiency, provided by off-grid solar systems, offers a form of security. Unlike grid-tied systems, off-grid setups remain unaffected by power failures on the utility grid.

Feasible Even With No Grid Access

Off-grid solar systems can offer cost savings compared to extending power lines in remote areas.

If you’re located more than 100 yards from the grid, it may be worth considering an off-grid solution. 

The expenses associated with installing overhead transmission lines vary significantly, ranging from $174,000 per mile for rural construction to as much as $11,000,000 per mile for urban construction.

Equipment for Off-Grid Solar Systems

Typical off-grid solar systems require the following extra components:

  • Solar Charge Controller
  • Battery Bank
  • DC Disconnect
  • Off-Grid Inverter
  • Optional Backup Generator

Battery Bank

Without a battery bank or a generator, an off-grid solar system will cease to provide electricity once the sun sets. A battery bank, essentially a collection of batteries interconnected, stores excess solar energy generated during the day for use during periods of low or no sunlight, ensuring continuous power supply even after sunset.

Solar Charge Controller

High-quality charge controllers play a critical role in maintaining the health of batteries, thus maximizing the lifespan of a battery bank. Solar battery chargers regulate the flow of current to the battery bank, preventing overcharging and safeguarding the batteries.

In systems equipped with a battery-based inverter, the charge controller is typically integrated into the inverter unit.

DC Disconnect Switch

AC and DC safety disconnects are essential components for all solar systems, ensuring safety and facilitating maintenance.

In off-grid solar systems, an additional DC disconnect is installed between the battery bank and the off-grid inverter. This disconnect is utilized to interrupt the current flow between these components.

This additional DC disconnect is crucial for maintenance, troubleshooting, and protection against electrical fires, providing a means to safely isolate the battery bank and the inverter when needed.

Off-Grid Inverter

To power electrical appliances, an inverter is necessary to convert DC (direct current) to AC (alternating current). Unlike grid-tie inverters, off-grid inverters do not need to synchronize with the utility sine wave.

In an off-grid system, electrical current flows from the solar panels through the solar charge controller and the battery bank before being converted into AC by the off-grid inverter. This AC electricity is then utilized to power household appliances.

Battery Bank

Without a battery bank or a generator, an off-grid solar system would not be able to provide electricity once the sun sets.

DC Disconnect Switch

AC and DC safety disconnects are essential components of all solar systems, serving to ensure safety and facilitate maintenance.

In off-grid solar systems, an extra DC disconnect is installed between the battery bank and the off-grid inverter. This disconnect allows for the interruption of current flow between these components. 

It plays a vital role in maintenance, troubleshooting, and safeguarding against electrical fires by providing a means to safely isolate the battery bank and the inverter when necessary.

Backup Generator

Preparing for prolonged periods without sunlight or access to the grid requires significant investment in large batteries. However, backup generators offer a viable solution to this challenge.

In many scenarios, installing a backup generator, often fueled by diesel, proves more practical than investing in an oversized battery bank that may rarely operate at its full potential. 

Backup generators typically produce AC output, which can be directly utilized through the inverter or converted into DC for battery storage, offering flexibility in energy management for off-grid solar systems. 

Grid-Tied vs. Off-Grid Solar: Which is Right for You?

Storing electricity in the grid doesn’t incur additional costs. However, integrating batteries into an off-grid system constitutes a significant additional expense.

Batteries are, in fact, the costliest component of a solar system, accounting for as much as 30-40% of the total cost of an off-grid system. They typically represent a four to five-figure investment.

Given the substantial expense of batteries, it’s advisable to opt for a grid-tied system if it’s available. 

Why invest thousands of dollars in batteries if they’re unnecessary for your energy needs?

Solar Power Systems in a Nutshell

While off-grid and grid-tied solar systems have distinct differences, the best option for you depends on your specific circumstances. Off-grid systems offer complete independence from the utility grid but are typically more costly.

On the other hand, grid-tied systems combine substantial electricity savings with reliance on the grid, ensuring a constant power supply for your home or business.

By collaborating with a reputable solar installer, you can receive guidance tailored to your needs and preferences. Nonetheless, conducting some research beforehand can also be beneficial in making informed decisions.