How does a grid-tied solar system work?

What is a grid-tied solar system?

A grid-tied solar system is a type of photovoltaic (PV) system that is connected to the electric utility grid. It generates energy from the sun to power a home and/or sell it back to the utility when the system is producing more than the home needs.

‘Grid-tied, ‘on-grid, ‘grid-connected, and ‘grid-direct' terms are all the same thing used interchangeably to define a solar-power system that is tied to the electricity grid.

Grid-tied systems don't require batteries to store excess solar energy because the energy is sent back to the utility when it is not needed in the home. This makes them a simple solution for homeowners who want to use solar power without the large upfront cost of batteries.

Homeowners who plan to install a grid-tied solar system have to abide by certain laws and guidelines. Almost all grid-tied systems are required to be installed by a certified electrician and also have to be inspected before they can begin producing solar energy.

Sometimes, the electric utility company where the home is located may have requirements for how big a system can be, or they could require additional equipment to ensure grid stability (such as switches that allow power flow in only one direction).

The laws that affect homeowners who want to install grid-tie systems vary from state to state but are usually designed with safety in mind. It is important to check with your state and local governments before installing a grid-tied system to ensure you know what standards must be met for permitting purposes.

Advantages of grid-tied solar systems

Generally a safe investment

Grid-tied solar systems are generally a safe investment that doesn't require a large upfront investment since homeowners can install any amount of panels that meet a certain portion of their energy needs.

Doesn't require much tech knowledge

Grid-tied solar systems are installed by a professional solar company. These companies have the knowledge and training to install your grid-tied system so you don't need to worry about it being done properly.

Requires very little maintenance

Once installed, these systems require very little upkeep. Most grid-tied systems are equipped with smart technology that can communicate directly to your local utility company.

This technology is able to monitor how much electricity you are using and produce through your solar panels, which helps both the utility company optimize their system load balancing while also giving homeowners peace of mind with accurate information about how much energy they've produced throughout the day/week/year.

No need to worry about going over your energy production 

Using grid-tied solar energy systems homeowners don't have to worry about going over their energy production limits. Because they can draw energy from the grid if their energy needs more than their solar panels can produce.

No more limits on how much electricity you can make

You can initially install a few solar panels maybe covering a quarter of your energy needs. Then you can add more solar panels to your system when the money allows it or if your energy consumption increases.

If all of a sudden you need twice as much electricity because maybe you have invested in an electric car, well no problem! You never have to worry about overproduction since you can always send the excess energy to the grid.

It is cheaper

A grid-tied system is simpler and less expensive than off-grid systems because you do not have to store power for later use. A net-metering arrangement allows owners of these PV systems to receive credit from their local utility companies for excess power generation.

Since grid-tied systems send surplus energy to the grid you do not need batteries. This is a huge advantage since batteries are very expensive and they have limited lifespans, which means that over time your system will become less efficient if it has to rely on battery storage for part of its electricity needs.

Tax credits & Incentives

In most countries, people can get tax credits and incentives for installing grid-tied solar energy systems. By doing so, the required initial investment for a solar energy system is reduced.

Don't have to worry about the weather!

Since grid-tied systems do not rely on batteries, there is no need to be concerned with how much sunlight they are receiving or when that will happen. This means that a cloudy day and overcast skies will not impact the amount of electricity you will have in your home.

Continuous tracking

Grid-tied solar energy systems communicate with the grid continuously and track how much electricity is used in a home at all times. This can make it very easy to see if there are any changes in a home's energy usage habits.

Homeowners receive a detailed breakdown of their energy usage showing exactly when and how much power was drawn from the grid, how much send back to the grid, how it is priced, and how much it costs.

This can be very valuable for homeowners since they will be able to see exactly how much they are saving.

Disadvantages of grid-tied solar systems

Doesn't work when the grid is down

A grid-tied solar system can't be used if the grid is down because the system is designed to only work when the grid is up. There are a few good reasons for this, which we will go over further.

No backup power

Grid-tied systems don't provide backup power in case of a blackout. You will invest in a reliable uninterruptible power supply (UPS) if you are particularly concerned with blackouts.

Must be grid-tied

A grid-tied solar system must remain tied to the electric grid at all times, even when you are not using any energy at all. You will not be able to completely disconnect the system from the grid because it needs to remain active.

Grid buys back at a cheaper rate

The energy produced by grid-tied solar power systems is sold back to utility companies at a lower rate than what they sell to consumers. It is annoying but this is how utility companies stay profitable all the time.

Owners of grid-tied systems have the option of relying on their own energy production while having the backup of the grid if their system is unable to meet all of their energy needs.

If the grid-tied system is sufficiently sized and allows for excess energy generation, homeowners can actually receive credit by sending their extra energy to the grid. This process is called net metering. With net metering, homeowners can offset their monthly bill with credits from their utility company at the same rate they would have paid for electricity.

Feed-In Tariff (FIT)

In some jurisdictions, utilities pay for the excess energy sent to the grid over the market price. This arrangement is called “feed-in tariff.” A feed-in tariff (FIT) is a policy that encourages the development of renewable energy sources by providing producers with a guaranteed, above-market price.

Feed-in tariffs are more common in Europe than they are in North America but many U.S. states have established their own incentive programs.

When you connect your system to the grid using a single electric meter, your meter may actually run backward as you provide excess energy to the grid.

Here is how it looks like:

Generally, extra energy produced is credited to you at the same retail rate as you buy energy from the grid. However, this is not always the case.

Your utility may demand the use of two meters, one to measure your energy use from the grid and the other to measure your contribution to the grid. Depending on the utility, your extra solar energy may be credited at the retail rate or at a cheaper wholesale rate.

Also, some utility companies bill their consumers based on a “time-of-use” tariff system. In this system, customers are billed at a higher rate during particular times of the day, such as during the hottest days of summer, when air conditioners are running most actively.

In such a case, you may be able to “swap” your excess energy to the utility at these similar prices. As a result, you can take advantage of the fact that your solar power system generates the maximum electricity during hot summer days.

The tariff will be generally lower when you will need power from the grid during off-peak hours, such as in the evening.

Even if your grid-tied solar power system generates enough energy in any given month to avoid drawing from the grid, you may still be charged a small monthly bill. This is due to the fact that many utilities demand monthly fees for reading meters. You should check with your utility to see if this applies, and for how much.

How do solar panels get connected to the grid? 

In order to connect your home solar system to the grid, you should plan with the local utility company. The solar panels will be installed in such a way that they can connect to existing electrical infrastructure with ease, and you should not have any problems getting your meter changed over by an electrician or power engineer.

While most meters are used for charging customers based on how much energy is consumed (and perhaps the time of day), grid-tied solar energy meters operate differently.

Instead, they measure how much excess power is generated by the home or business solar system and feed it back into the grid. The homeowner should still be billed for their total consumption of electricity based on readings from their other meter, but this should not change substantially if you have a net metering agreement in place.

Every state has a slightly different approach to how they deal with homeowners who have solar panels, so it's important you know exactly what rules govern your situation before going ahead with the installation of new meters.

You should also be aware that some states may offer you only the specific model of meter that their local utility's needs are currently looking for.

They may charge you a fee to cover the costs of purchasing and installing this meter, or they may insist that if your solar panels generate more power than you need at any given time then you must feed it back into the grid and will be paid accordingly. What that means is you will not be able to invest in any kind of energy storage system.

Every utility also has different net metering rules when it comes to regulations on how net metering actually works.

Once you decide to have a grid-tied solar power system you will need to work with a good provider that has experience in the area and knows your utility company’s regulations.

A competent provider with a fully licensed electrical contractor and enough years of experience in the industry can be a great help in making sure you get what it is that you need out of your system.

Ask your provider if they are familiar with the net metering rules of your utility company and if they have experience with installing grid-tied solar power systems. You can also request customer references who were pleased with their products and services.

A good provider will be able to provide you proper documentation on the net metering status of your system so that there are no issues with your utility company.

Most of the time, grid-tied solar energy systems are connected to the power supply system through an electrician that is familiar with safe installation practices and knows how to adhere to local electrical codes.

An experienced provider should be able to provide you this kind of service as well so make sure they have done it before.

Make sure to ask for a warranty on their workmanship, as well as if they have any kind of insurance to cover any damage that may occur during the installation or maintenance of your grid-connected solar energy system.

This will protect both you and them if there are any damages caused by accidents, third-party interference, fire, and so on during the system's lifetime.

How does a grid-tied solar energy meter work?

A grid-tied solar energy meter is a device that measures both how much electricity your home or business produces and consumes through net metering. It calculates your total usage by subtracting any excess power you’ve generated from what was used onsite at that time.

What is net metering?

Net metering is a billing arrangement where your local utility company credits you for any extra electricity produced by your solar energy system.

For example, if on a sunny day the meter shows that you've used more power than you’ve generated through solar panels, it will subtract those kilowatt-hours from what was consumed at other times.

Using a net metering agreement, your electricity meter will run backward when you’re generating more power than is being used in your home or business. The meter will record the difference, and this credit may be applied to future usage at any time.

Conventional net metering

Conventional net metering, also known as individual net metering allows connecting a generating source to a single meter, such as a house or building. Because of the rapid development of net metering policies, generating sources can today be linked to multiple meters or properties.

Net Metering previously only applied to electrical usage measured on a single meter tied to a solar installation. That means each meter needed its own solar system.

Net Energy = The Energy You Produce – The Energy You Consume

Aggregate net metering

“Aggregate net metering” is a net metering modification that solves the problem by allowing consumers to offset their energy utilization at all meters or buildings with solar at any meter or building.

According to NCSL, the following 17 states in the US have approved aggregated net metering programs:

  1. Arkansas
  2. California
  3. Colorado
  4. Connecticut
  5. Delaware
  6. Maine
  7. Maryland
  8. Minnesota
  9. Nevada
  10. New Jersey
  11. New York
  12. Oregon
  13. Pennsylvania
  14. Rhode Island
  15. Utah
  16. Washington
  17. West Virginia

What happens to a grid-tied system if the grid goes down?

A lot of people believe that just because they have solar panels installed in their homes, they will be able to run on solar power 100% of the time. This is not the case with grid-tied solar power systems. If the power grid goes down everything shuts off.

Grid-tied solar inverters aren't designed to feed power back into the grid, which is a safety feature for lineman working on the grid when it's down.

This also reduces the installation costs of these systems. Because there will be no need for transfer switches or automatic changeovers that occur when the power grid fails.

This is one of the biggest drawbacks of grid-tied solar energy systems. Because there is no way to guarantee the power grid will stay up 100% of the time. Therefore a lot of grid-tied solar owners find value in investing in a backup generator as well.

Equipment Required to set up Grid-Tied Systems

Aside from the principal small renewable energy system components, you will need to acquire some extra equipment (known as “balance-of-system”) in order to properly transmit electricity to your loads and comply with your power provider's grid-connection regulations.

You will need the following items:

  • Power conditioning equipment
  • Safety equipment
  • Meters and instrumentation

Since grid-connection requirements vary, before purchasing any component of your renewable energy system, you or your system supplier/installer should contact your power provider to learn about its unique grid-connection needs.

Contact Your Provider To Learn Connection Requirements

Since grid-connection requirements vary, before purchasing any component of your renewable energy system, you or your system supplier/installer should contact your power provider to learn about its unique grid-connection needs.

Your power company can tell you what equipment and procedures they require for a safe and proper connection with their system.

For instance, your power may require you to have a grid-tie inverter that has been certified by the Underwriters Laboratories (UL) for safety and quality assurance.

Before purchasing your renewable energy system, consider if you will need a backup battery bank in case of a prolonged outage or emergency. You can definitely do it. However, it is not as easy as simply hooking up a new battery bank to the system.

Grid-tie inverters convert DC (direct current) from solar panels to AC (alternating current), however, they are not designed to work with a battery bank. To make your inverter operate with your batteries, you'll most likely need to add new components.

Addressing Safety and Power Quality for Grid Connection

Power suppliers want to ensure that your grid-tied solar energy system has all the necessary components to run for safety and power quality.

Therefore, a typical grid-tied solar system will have switches to disconnect the system from the grid in the event of a power surge or power outage (to prevent repairmen from being electrocuted).

The system will also include power conditioning devices to ensure that your power matches the voltage and frequency of the electricity flowing through the grid.

There are several organizations that have been developing safety and power quality guidelines to address safety and power quality issues.

Your supplier/installer or power provider will know which standards apply to your situation and how you can implement them.

  • The Institute of Electrical and Electronics Engineers (IEEE) has developed a standard that applies to all grid-connected distributed generating systems, including renewable energy systems. The IEEE 1547-2003 standard specifies the technical criteria and tests for grid-connected operation.
  • Underwriters Laboratories (UL) created UL 1741 to approve inverters, converters, charge controllers, and output controllers for power-producing stand-alone and grid-tied renewable energy systems. UL 1741 certifies that inverters meet IEEE 1547 for grid-tied applications.
  • The National Fire Protection Association's (NFPA) National Electrical Code (NEC) addresses electrical equipment and wire safety.

Although states and electricity providers are not required by the federal government to adopt these codes and standards, a number of utility commissioners and legislatures currently require that regulations for distributed generating systems be based on the IEEE, UL, and NEC standards.

Furthermore, some governments are now “pre-certifying” specified models of equipment as safe to connect to the state power system.

Contractual Issues for Grid-Connected Systems

You will most likely need to sign an interconnection agreement with your power provider when connecting your small renewable energy system to the grid. Power providers may demand you to undertake the following as part of your agreement:

Carry liability insurance 

Liability insurance protects the power supplier in the event of an accident caused by your system's operation.

Most homeowners have at least $100,000 in liability coverage through their homeowner insurance policies (though you should double-check that your policy covers your system), which is usually plenty.

However, keep in mind that your electricity provider may ask you to carry more. Some power companies may also demand you to compensate them for any potential damage, loss, or injury incurred by your system, which can be excessively expensive at times.

Pay fees and other charges

You may also be asked to pay for permitting, engineering/inspection fees, metering charges (if a second meter is used), and stand-by charges (to cover the cost of your energy provider keeping your system as a backup power supply).

You need to learn all of these costs as early as possible so that you can figure out the actual cost of your system rather than be surprised when you receive your first bill.

Aside from insurance and fees, there may be a significant amount of paperwork you need to do. This will vary from region to region, but you may need multiple forms of ID and even a written affidavit that proves any system was installed prior to the current homeowner moving in (in some areas).

If your solar panel installer doesn't take care of this for you it is usually best handled by an attorney who specializes in real estate.

However, power providers in numerous jurisdictions are now working to accelerate the contracting process by simplifying agreements. If you are not familiar with the process of paperwork don't shy away from asking for help. Otherwise, you could end up wasting your time and money.

Metering and Rate Arrangements for Grid-Tied Systems

When your grid-tied solar energy system generates more electricity than you can consume at the time, the excess electricity is sent to the electric grid for use by your utility elsewhere.

The Public Utility Regulatory Policy Act of 1978 (PURPA) compels power providers to purchase excess power from grid-tied energy systems at a rate equivalent to the cost of producing the power.

This obligation is often implemented by power companies through various metering solutions. The following are the most common metering arrangements:

Net purchase and sale

Under the net purchase and sale agreement, for every solar power system, two unidirectional meters are installed. One records electricity drawn from the grid and the other records excess electricity generated and fed back into the grid.

You pay retail rates for the electricity you use, and the power company buys your extra generation at a loss (wholesale rate). There could be a large discrepancy between the retail rate and the power provider's avoided cost.

Net metering

Net metering is the most beneficial to you as a consumer. A single, bi-directional meter is used in this configuration to record both the electricity you take from the grid and the excess electricity your system provides back into the grid.

When you draw electricity, the meter rotates forward, and when you feed extra back into the system, it spins backward.

If you use more electricity than your system produces at the end of the month, you must pay the retail price for that surplus electricity. If you produce more electricity than you consume, the power company will usually compensate you for the surplus electricity at the avoided cost.

The actual advantage of net metering is that the power company pays you retail price for the electricity you give back into the grid.

Some power providers will allow you to carry over the balance of any net additional electricity your system creates from month to month. This can be useful if there are strong seasonalities in your system's energy production.

If you have generated more energy than you have consumed at the end of the year, you forfeit the excess energy to your power provider.

How to maintain a grid-tied solar system?

As with any appliance or electronic device, it’s important to have regular maintenance done on a grid-tied solar energy meter so they continue to function properly for years after installation.

Your solar energy provider should offer you everything you need to maintain your system, including a grid-connected inverter, batteries (if you want backup power), and a dedicated electric meter.

Most grid-tied solar panel systems require very little maintenance. Things you may need to do include:

  • Clean the solar panels from leaves, dust, or bird droppings that may have collected on panels to ensure optimal system performance
  • Check the inverter regularly for any damage or wear and tear,
  • Checking the batteries (if you have them), and changing out any system fuses.
  • Check for shading, especially if you have trees near your system,
  • Watch out for animals that might try to eat wires or otherwise damage them,
  • Keep an eye on any corrosion due to salt or other elements that may be happening to your system components,
  • Maintain a proper distance between solar panels and other objects like cars, buildings, fences, etc., so they don't shade each other or interfere with one another's performance.

If you're beginning to notice a sharp decline in your system’s productivity, consult an electrician or your installer right away so they can investigate thoroughly and provide you with an accurate diagnosis.

Anytime you experience a change in your energy bills, contact a professional to diagnose the problem so you don't end up spending on something you’re not getting value for.

How many electricity meters are on a grid-tied solar system?

There may be one or two electricity meters on a grid-tied solar system depending on the program that local utility uses. Some utilities require system owners to have a single electric meter that goes forward and backward.

Other utilities require two different meters: one for incoming power and one for power generated by you and fed back into the system.

These meters are occasionally paid for by the utility, but they may also be included in the purchase of the system from your provider.

You'll need to sign an interconnection agreement with the utility company as part of the installation of your solar energy system.

Your solar power supplier may be able to manage the utility negotiations and paperwork, but this contractual arrangement is between you and your local utility.

Make sure to read the fine print in this contract, which may range significantly from one utility to the next. It might be anything from a one-page declaration to a big booklet.

In either scenario, the fine print may contain references to liability issues that you should thoroughly comprehend before signing the contract.

Also, contact your homeowner's insurance provider, as the solar power system will need to be added to your coverage. In many circumstances, a rider to your policy may be required for the grid-tied system.

In many states, if you want to sell your house you're required by law to tell any potential buyers about your agreement with the utility company.

The agreement is likely to have a clause about what happens in the event of a sale, and it's your responsibility as an owner to honor that commitment.

Catch the Next Solar Wave

Get First Alerts on Emerging Green Energy Opportunities

JOIN THE SOLAR REVOLUTION! 🌞 Lead the Charge! Tap YES for exclusive solar tech updates! No YES