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How solar power works, on-grid, off-grid and hybrid

Martin Newkirk

The three main types of solar power systems are:


1. On-grid - also known as grid-tie or grid-feed solar system

2. Off-grid - known as a stand-alone power system (SAPS)

3. Hybrid - Solar plus battery storage system with grid-connection

Simplified layout of a on-grid solar system

Simplified layout of a on-grid solar system

First we will discuss the common components of the three systems before getting into more detail about the different system types and how they work.

All systems

  • The solar panels: Solar panels or solar modules are installed together in what is known as a solar array. Modern solar panels are made up of many solar cells or photovoltaic (PV) cells which generate direct current (DC) electricity from sunlight or energy from the sun.  Note: It is light energy or irradiance, not heat, which produces electricity in photovoltaic cells.
  • The solar inverter: DC electricity needs to be converted to alternating current (AC) electricity for use in our homes and businesses. This is the role of the solar inverter. In a string inverter system, solar panels are strung together in series and the DC electricity is brought to a single inverter which converts the DC electricity to AC. In a micro inverter system, each panel, or every two panels, has it’s own micro inverter attached to the back side of the panel. The panel still produces DC, but is converted to AC on the roof, and is fed straight to the electrical switchboard.
  • The switchboard: (electricity consumption.) AC electricity is sent to the switchboard where it is directed to the various circuits and appliances in your house that are using electricity at the time. Any excess electricity is sent to either a battery storage system if you have a off-grid or hybrid system, or to the electricity grid if you have an on-grid system. 


On-grid solar systems are by far the most common. These are grid-tie systems which are connected to the public electricity grid and have no battery storage. Any solar power that you generate from an on-grid system (and do not use in your house) is exported onto the electricity grid. You will usually get paid a feed-in-tariff (FiT) for the energy that you export to the grid.

Grid-tie systems are not able to function or provide electricity to the home during a blackout or power outage. This is for safety reasons as a blackout usually occurs when the electricity grid is damaged, if the solar inverter was generating electricity then it would risk the safety of the people repairing the fault/s in the electricity network. However most hybrid solar systems with battery storage are also able to automatically isolate from the grid and continue to operate during a blackout.

how on-grid or grid tie solar power system work

In an on-grid system, this is what happens after electricity reaches the switchboard:

  • The meter. Excess solar energy runs through the meter, which calculates how much power you are either exporting or importing (purchasing).
  • Metering systems work differently in many states and countries around the world. In this description I am assuming that the meter is only measuring the electricity being exported to the grid, as is the case in most of Australia. In some states, meters measure all solar electricity produced by your system, and therefore your electricity will run through your meter before reaching the switchboard and not after it. In some areas (currently in California), the meter measures both production and export, and the consumer is charged (or credited) for net electricity used over a month or year period. I will explain more about metering in a later blog. 
  • The electricity grid. Electricity that is sent to the grid from your solar system can then be used by other consumers on the grid (your neighbours). When your solar system is not operating, or you are using more electricity than your system is producing, you will start importing or consuming electricity from the grid. 


An off-grid system is not connected to the electricity grid and therefore requires battery storage. In an off-grid system a solar technician needs to design a system that has enough power generation and battery storage to meet the home’s requirements even in the depths of winter when there is little sunlight. The high cost of batteries means that off-grid systems and comparatively more expensive than on-grid systems and so are usually only found in remote areas that are far from any electricity grid. However battery costs are coming down quickly, so there is a growing market for battery storage. 

how off-grid solar systems work.png

There are different types of off-grid systems which we will go into more detail later, but for now I will keep it simple. This description is for an AC coupled system, in a DC coupled system power is first sent to the battery bank, then sent to your appliances. To understand more about building and setting up an efficient off-grid home see our sister site go off-grid/hybrid

  • The battery bank. In an off-grid system there is no public electricity grid. Once solar power is used by the appliances in your property, any excess power will be sent to your battery bank. Once the battery bank is full it will stop receiving power from the solar system. When your solar system is not working (night time or cloudy days), your appliances will draw power from the batteries.
  • Backup Generator. For times of the year when the batteries are low on charge and the weather is very cloudy you will generally need a backup power source, such as a backup generator or gen-set. The size of the gen-set (measured in kVA) should to be adequate to supply your house and charge the batteries at the same time.


Due to the decreasing cost of battery storage, systems that are already connected to the electricity grid can start taking advantage of battery storage as well. This means being able to store solar energy that is generated during the day and using it at night. When the stored energy is depleted, the grid is there as a back up, allowing consumers to have the best of both worlds. Hybrid systems are also able to charge the batteries using cheap off-peak electricity (usually after midnight to 6am).

how hybrid solar power system work

There are also different ways to design hybrid systems but we will keep it simple for now.

  • The battery bank. In hybrid system once solar power is used by the appliances in your property, any excess power will be sent to your battery bank. Once the battery bank is full, it will stop receiving power from the solar system. 
  • The meter and electricity grid. Depending on how your hybrid system is set up and whether your utility allows it, once your batteries are fully charged excess solar power not required by your appliances can be exported to the grid via your meter. When your solar system is not in use, and if you have drained the usable power in your batteries your appliances will then start drawing power from the grid. 


Go off-grid or hybrid? 

For many people the dream of becoming completely energy independent may be very difficult and expensive. To help you understand whether it is cost effective and what you should know before you decide to build or go off-grid refer to our related off-grid design guide.

For a more detailed explanation of the different hybrid systems and battery options now available see the hybrid/off-grid energy storage review here

hybrid solar inverter battery systems