On-Grid vs Off-Grid Solar Systems: Which One Is Right for You?

05-Aug-2025 / by Enernew

Comparison of Captive and Third-Party PPAS

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Types of Solar Energy Solutions

As more businesses shift toward clean and cost-effective energy sources, many are evaluating whether an on-grid or off-grid solar system better fits their operational needs. According to the International Energy Agency (IEA), solar PV continued to dominate the global renewable energy landscape in 2024, accounting for nearly 80% of the world’s record-breaking 700 GW in new renewable capacity additions. India alone installed a record 24–25 GW of solar capacity in 2024, significantly outpacing the previous year. This surge was largely fueled by the commercial and industrial (C&I) sector, which is increasingly turning to solar energy to reduce operational costs and enhance energy independence.

With rising grid prices, power reliability concerns, and ESG commitments, solar energy adoption is becoming a strategic decision for companies across industries. While both on-grid and off-grid systems offer significant benefits, they function in different ways and suit different business use cases.

This blog breaks down the differences between on-grid and off-grid solar systems, outlines their key components and advantages, and helps you identify which system aligns best with your business requirements.

What Is an On-Grid Solar System?

An on-grid solar system is directly connected to the local electricity grid. It is one of the most common types of solar systems used in offices, factories, and commercial buildings.

Key Components of an On-Grid System

Solar panels: These are installed on the rooftop or open spaces and are responsible for capturing sunlight and turning it into direct current (DC) electricity.

Grid-tied inverter: This device converts the DC electricity from the panels into alternating current (AC), which is what your machines, lights, and other equipment use.

Bidirectional meter: It tracks how much electricity your system sends to the grid and how much you draw from it, helping calculate your final bill under net metering.

Grid connection: The system stays connected to the local power grid, which provides backup power when solar generation is low, such as during cloudy days or at night.

How On-Grid Solar System Works

During the day, the solar panels generate electricity. If your system produces more power than you use, the excess is sent to the grid. This can earn you credit through a system called net metering. At night or when solar output is low, your power needs are met from the grid.

Advantages of On-Grid Solar

1. Lower upfront costs
On-grid systems don’t need batteries, reducing the initial investment and making them more cost-effective for businesses planning solar adoption.

2. Savings through net metering
Excess electricity is sent back to the grid, and businesses receive bill credits, which helps lower monthly energy expenses over time.

3. Easier to maintain
With fewer components and no batteries, on-grid systems are simpler to maintain, requiring only basic checks and occasional inverter servicing.

4. Suitable for stable grid locations
On-grid systems are ideal for areas with reliable power supply, where the grid can support operations during low solar generation periods.

What Is an Off-Grid Solar System?

An off-grid solar system is not connected to the electricity grid. It works independently and requires a battery setup to store energy for use when sunlight is not available. This type of system is ideal for remote areas where the grid is unreliable.

Key Components of an Off-Grid System

Solar panels: Installed on rooftops or open land, these panels capture sunlight and generate electricity to power your operations.

Battery bank: Stores excess solar energy produced during the day so it can be used at night or when sunlight is limited.

Off-grid inverter: Converts the stored DC power from the batteries into usable AC power and manages how energy is distributed across the system.

Charge controller: Protects the batteries by controlling how much and how fast they are charged, preventing overcharging or damage.

Backup generator (optional): Used as an additional power source during extended periods of low sunlight or when battery storage runs low.

How Off-Grid Solar System Works

Solar panels charge the batteries during the day. The stored energy is used to run appliances when solar power is not available. Since there’s no grid support, the system must be designed to meet all energy needs throughout the day and night.

Advantages of Off-Grid Solar

1. Full energy independence
Off-grid systems work without any grid support, giving businesses full control over their power supply, especially in isolated or underserved areas.

2. Useful in remote areas with no grid access
Ideal for businesses in rural or off-site locations where connecting to the electricity grid is not possible or cost-effective.

3. Avoids rising grid electricity costs
By generating and storing their own power, businesses can avoid fluctuations and increases in grid electricity prices over the long term.

4. Protection from power cuts
Off-grid systems ensure uninterrupted operations by using stored battery power, especially useful in areas with frequent outages or unstable supply.

On-Grid and Off-Grid Solar: What Sets Them Apart?

Feature	On-Grid Solar	Off-Grid Solar
Grid Connection	Yes	No
Battery Requirement	Not required	Mandatory
Power Backup	Uses electricity from the grid	Uses stored battery power
Initial Cost	Lower (no battery needed)	Higher (due to batteries and storage system)
Best For	Areas with stable grid, businesses using net metering	Remote sites, areas with unreliable or no grid

How to Select the Right One for You

Choosing between an on-grid and off-grid solar system depends on a few practical factors:

Grid availability: If your site has access to stable grid power, an on-grid system is typically the most practical and cost-effective option.

Power reliability needs: If your business cannot afford downtime, off-grid or hybrid solutions provide backup during outages.

Budget: On-grid systems are affordable and easier to install. Off-grid requires batteries, which adds to the cost.

Energy independence: If you want to rely completely on solar, off-grid is the better option.

Make The Right Solar Choice with Enernew Today!

Both on-grid and off-grid solar systems have their purpose. On-grid systems are cost-effective and suitable for commercial and industrial zones where grid electricity is accessible. Off-grid systems provide energy independence and are ideal for remote areas or locations with frequent power outages.

At Enernew, we help you choose the right system based on your specific needs. Whether you’re planning to reduce your electricity bills through an on-grid setup or looking to go completely off the grid, our team offers end-to-end support, from system design and installation to maintenance and monitoring.

Looking to cut energy costs and support India’s 2070 net-zero mission? Schedule a consultation with us and let’s find the right solar solution together.

Frequently Asked Questions (FAQs)

1. What is the main difference between on-grid and off-grid solar systems?

The primary difference is that an on-grid solar system is connected to the local electricity grid, while an off-grid system operates independently with battery storage. On-grid systems rely on the grid for backup, whereas off-grid systems store excess energy for later use.

2. Which is better for businesses: on-grid or off-grid solar systems?

It depends on your business location and energy needs. On-grid solar systems are ideal for businesses in areas with stable electricity supply and net metering. Off-grid systems are better suited for remote areas with unreliable or no grid access, offering complete energy independence.

3. Are off-grid solar systems more expensive than on-grid systems?

Yes, off-grid solar systems usually have a higher upfront cost due to the need for batteries and storage infrastructure. On-grid systems are generally more affordable as they don’t require batteries and can benefit from net metering.

4. Can a business switch from on-grid to off-grid solar later?

Yes, it is possible to upgrade from an on-grid to an off-grid or hybrid system, but it involves additional equipment such as batteries, compatible inverters, etc. A professional solar company can help you assess feasibility and costs based on your energy consumption and infrastructure.

5. How do I choose between an on-grid and off-grid solar system for my business?

To choose the right solar system, evaluate your grid access, energy consumption, need for backup power and budget. Consulting with a solar energy solutions provider like Enernew ensures you get a customized solution aligned with your business requirements.