Grid-tied (or grid dependent or net metering)

This involves feeding power to the grid and using power from the grid, paying for only the difference. Notice from the diagram that there are no batteries and so no storage of power. If there is a power failure on the grid then the inverter stops supplying power, even though you still have solar panels.

- Grid-tied system -

Usually you do not receive any money for the power you put on the grid. Instead, when your bill arrives, if you used more electricity from the grid than you produced than you pay only for the excess. On the other hand, if you produced more electricity than you used from the grid then you pay nothing for the electricity from the grid and any excess that you produced is kept track of for some period of time. Note that there may still be charges on the electricty bill which will not be reduced.

Example: Ontario, Canada

In Ontario, the program is refered to as net metering. Any excess that you produced is kept track of and is used as a credit against future bills for up to one year. After that time, the excess is forgotten. If before the one year is up, you have a few cloudy months and end up using more from the grid than you produce, then the credits that you accumulated are applied to the excess to reduce or elminate it. So you still may pay nothing. If during that billing period you use up all of your accumulated amount, and then you produce an excess the next month, the one year accumulation period starts over.

In Ontario, there are charges on the bill that are never credited.

Solar backup (or grid interactive)

This involves getting power from the grid with solar power and other renewable energy sources, such as wind and microhydro, as backup. See the diagram below. The inverter is fed power both from the grid (through the main breaker panel) and from batteries. An extra breaker panel, refered to as a subpanel, is installed. The subpanel feeds the loads you need even when the grid goes down (essential loads). While the grid is up, the subpanel is fed through inverter from the grid. When the grid goes down, the subpanel is fed through the inverter from the batteries. This switchover is handled automatically by the inverter. The batteries are kept charged from the solar panels (through the charge controller) and from the grid (through the inverter, as it contains a charger too.)

- Solar backup system -

Off-grid

This involves getting power from solar power with an optional generator as backup. See the diagram below. Instead of a connection to the grid, there can be backup power from a generator for when there are too many cloudy days in a row. Optionally the generator can be started and stopped automatically based on the battery voltage. In the diagram below it is a feature of the inverter. If your inverter doesn't have this feature, separate automatic generator starter units are available. Automatically doing this is better than having to run out and start the generator manually when the batteries get too low for two reasons: convenience and you don't want your batteries to go below 50% (without an automatic starter, you'd have to constantly be checking the battery voltage.) As an aside, the diagram below also shows a separate display and control unit, often available depending on the manufacturer of the charge controller and inverter.

- Off-grid system -

Feed-in tarriff (or solar premium or standard offer contract)

This involves selling power to the grid exclusively. It is essentially being a mini-power utility. Due to the high cost of solar panels, the amount paid by the power company is usually above cost. For example, in Ontario the average consumer pays around $0.13 per kWh for electricity (total bill amount/kWh used) and the Ontario standard offer program pays $0.42 per kWh for the electricity from solar power.

The high cost of solar panels still plays a big part in the decision as to whether or not to go with this approach. The following is a quick back of the envelope calculation to illustrate this. A 2kW PV system costs around $16,000 (12 panels x 165W per panel at $1,000 each + $500 for rack + $3,500 for the inverter). Assuming an average of 4 hours of sunlight per day, it would generate 4 x 2kWh per day, which is 8kWh. 8kWh per day x 365 days in a year gives 2,920kWh per year of generated power. At $0.42 per kWh x 2,920kWh, that's $1,226 per year of income. Given the initial cost of $16,000 divided by $1,226 per year, it would take 13 years to cover the initial costs and start making a profit.

However, if grants or subsidies are available then they can reduce the initial cost, giving an earlier payback. Another approach is to have a leasing company purchase the solar panels and other hardware and then lease it to you, causing you to begin making money much sooner, though since you wouldn't own the hardware, you will always have the cost of paying the leasing company.