What Is the Difference Between Off-Grid and On-Grid Solar Panels?

Solar panels are a great way to save money on your utility bills, but what is the difference between off and on-grid systems?

On-grid solar panels are connected to a local power utility via the grid. They feed back any excess energy into the network, and the grid makes up any shortfall. Off-grid panels are not connected in any way to the grid, and 100% of the power produced is used or stored within the home system.

Both these systems have benefits and challenges, which you choose for your home should depend on your situation and preferences. To help you decide which is right for you, let’s take a closer look at the details.

Click here for my recommendations of the best off-grid solar equipment.

What are on-grid and off-grid solar panels?

The panels used in both on-grid and off-grid solar systems can be identical. What distinguishes them is the system they are part of:

On-grid solar systems

Most residential homes are tied to their local utility by a network of generators, substations, and power lines known as the grid. Each home’s complete electricity needs are met through these cables, and homes are billed based on how much they use. When a solar panel is fitted and connected to the grid, it forms an on-grid solar system.

The solar panel produces electricity when the sun shines, and supplies it to the appliances in the home. If it produces more electricity than they use, it automatically diverts the excess back to the grid. If the solar panels don’t produce enough power to meet all the home’s electricity needs, they draw electricity from the grid. 

In an on-grid system, there is always enough power to run all the electricity used in the home. These systems are often involved in ‘net metering’ schemes.

What is net metering?

Net metering is a system that allows a home to use the electricity it has generated at any time without having to store it in batteries. The excess power produced at any one time is fed back to the grid, and the utilities record the amount. Later, that same amount can be taken back from the network at no extra cost.

Net metering is managed differently in different areas. Monthly net metering means that utilities produce an account of the power used at the end of energy month. Annual net metering does the same at the end of each year. 

If during the allocated period the on-grid solar system produces more electricity than the home uses, one of two things can happen:

1. The utility pays the homeowner for the excess power supplied to the grid.
2. Utilities create credits so that the home can use that amount of power at no cost in a later billing period.

If the home’s power use is greater than the amount its solar panels produce, the homeowner is billed for the outstanding amount.

What is a grid-tie inverter?

Solar inverters convert (DC) electricity from panels or batteries into alternating current (AC). A grid-tie inverter is specially designed to work between solar panels and the power grid. It is not the same as an inverter used in an off-grid system because it needs to provide the AC in a form suitable for the grid. 

Benefits of an on-grid system

• Unless there is a power outage, you will always have enough power to run your home.
• If you produce more electricity than you need, you can earn money.
• There is no need for batteries to store excess power.
• Because you’re contributing to the grid, there may be subsidies or tax credits available as an incentive.
• Some cities provide loans to purchase on-grid systems that you can pay off in your utility bill.
• Most solar installation companies provide on-grid systems

Challenges of an on-grid system

• As the grid ages, blackouts and power outages are becoming more common.
• Because they connect to the grid, only officially certified electricians should install them.
• If your system doesn’t produce enough to run your home, you may still have to pay some bills. 

Off-grid solar systems

Off-grid solar panels supply your home with electricity when the sun is shining. Because they don’t work during the night or on cloudy days, it is necessary to use battery storage to keep excess energy for later use. When off-grid solar systems are designed, manufacturers calculate them to provide enough power to be stored for the times when they are not generating electricity. 

Most off-grid systems can switch between the solar panels and the storage batteries automatically. When the panels produce enough power to run the house, any excess is diverted to charge the batteries up. When the home appliances need more than is being supplied by the panels, it can be drawn from the batteries.

You may also like to read my article How many solar panels do I need to run my home off-grid?

What are off-grid battery banks and backup generators?

An off-grid solar power system should have enough storage to supply a home with its required electricity for short periods overnight and long periods of bad weather. Many people with off-grid systems either choose to have battery banks large enough to provide several days backup, or they also have a generator that can recharge the batteries if necessary. The most effective systems combine efficient battery storage and alternative power like generators or wind turbines.

The reliability of an off-grid system depends on its batteries. Most solar batteries need replacing after about 15 years, and some can lose their efficiency before that. Keeping batteries stored currently, properly maintained, and replacing old ones can put people off of off-grid systems. 

However, as interest in off-grid systems is increasing, more companies have developed their own battery systems. As a result, effective off-grid power storage solutions are growing in quality and reducing in price. Recently several single-unit battery power pack systems have been introduced, like the LG Chem Resu and the Tesla Powerwall 2. 

When adopting an off-grid solar system, many people also make broader changes to their home and lifestyle. By reviewing your current power use, you can find ways to reduce it and decrease the amount you need to produce from your panels.

Related reading: What is the best solar battery?

Off-grid solar inverters and charge controllers

An off-grid inverter converts the DC power from the solar panels into AC. It is designed to provide it in a form that can be used by the appliances in your home. 

Charge controllers are essential in an off-grid system because they control the electricity that is directed to the batteries. It controls when the batteries charge or discharge and ensures that they work in optimum conditions. This prevents the batteries from losing efficiencies earlier and can extend their life.

Related reading: Guide to off-grid solar inverter.

Benefits of an off-grid system

• They offer complete independence from power utilities
• You are no longer tied to steadily increasing energy costs
• Grid power outages won’t affect you
• Technology is continuing to improve and create more efficient solutions for off-grid homes.

The challenges of an off-grid system

• You must provide your own backup systems in case of electrical failure
• Solar panels only produce electricity when the sun is shining
• Solar batteries may need replacing every 10 to 15 years.

What is a hybrid solar system?

A hybrid solar system combines elements of both systems because it is connected to both a battery bank and the grid. A central hub controls the interactions between each element of the system. This system can be set up to send excess power back to the grid or to your battery bank. 

The main benefit of these systems is that you can use design your system to run from solar or battery power during times of peak use. In some areas, utilities charge higher prices at these times. By switching to an off-grid mode at these times, you can always avoid the higher rates while simultaneously keeping the security of having grid power as a backup.

Conclusion

There is a lot to choose from in all of these systems. Historically people have preferred the security of remaining attached to the power utility; however, as the grid ages, there are more blackouts, and the prices are higher. While the reliability of the grid erodes, the affordability and efficiency of off-grid systems continue to increase.

Check out my recommendations for equipment that will help you take your home off-grid.