1. Home
  2. Solar

Grid-Tied Solar Panels (A Quick Guide)

The words "Grid-Tied Solar Panels" over an image of power lines at sunset, representing what grid-tied solar means, how grid-tied solar panels work, and the components, price, and payback period for a grid-tie solar system.
PublishedJuly 13, 2023
UpdatedMay 17, 2024
AuthorBrian ChurchWriterEditorCory O'Brien HeadshotCory O'BrienSenior Director - Growth Marketing
In this article
What does grid-tied solar mean?
How do grid-tied solar panels work?
Your Home and Grid-Tied Solar Panels

From rooftops to rolling fields, grid-tied solar panels are everywhere.

Although solar panels have long been associated with “going off the grid,” most solar energy systems today are connected to power lines and rely on local infrastructure to maximize the value of renewable energy generation.

In this quick guide, we will walk through what it means to be “tied to the grid,” explain how grid-tied solar panels work, and demonstrate the value of an interconnected home solar energy system related to your utility bills.

See how much you can save by going solar with Palmetto

Step 01
Step 02
My electric bill is $290/mo

What does grid-tied solar mean?

Also known as “grid-tie,” “on-grid,” or "utility-interactive,” grid-tied solar panels can be classified as any photovoltaic (PV) energy system that is connected to the electric grid.

Although you may have used or seen thermal solar panels before (which collect the sun’s thermal energy primarily for heating water), grid-tied solar panels produce electricity and transmit it through the power lines connected to your home.

In conjunction with the millions of miles of power lines in the US, nearly all solar panels for residential properties are grid-tied. Except for entirely off-grid installations in remote locations and “hybrid” solar systems where solar panels can temporarily pivot off-grid and send energy to battery storage, most solar systems installed today are grid connected.

How do grid-tied solar panels work?

For a grid-tied solar system to work, your panels must be permitted and installed up to the locally enforced building and electrical codes. Once approved for interconnection by the utility, your solar panels and the grid then work together to create new electricity and efficiently process it for safe local use.

While your grid-tied solar panels are generating significant amounts of electricity during peak sun hours, any excess power produced by your system can usually be sent through the grid and distributed by the utility.

Through net metering (which we will talk about a little more later), your utility can keep track of the solar power sent to the utility grid from your system so that, in some cases, your electricity bills are credited according to local policies.

Grid-Tie Solar System Components:

All wired together by a licensed electrician, here are the five most important components of a grid-tied solar energy system besides the grid itself.

Component Function
Solar Panels Solar panels, or solar collectors, are used to harness sunlight and generate direct current electricity within photovoltaic (PV) cells.
Mounting Equipment Every solar energy system requires mounting materials to safely secure the panels in place and receive direct sunlight, with unique considerations for both roof-mounted and ground-mounted systems.
Inverter System To convert solar electricity into its final form, an inverter system converts the direct current (DC) into alternating current (AC). Grid-tie systems require a high-voltage grid-tie inverter (GTI) to export power to the utility lines.
Smart Utility Meter While traditional utility meters only track electricity consumption, bi-directional smart meters monitor energy produced on your property and sent to the grid.
Power Disconnects In case of an emergency or a necessary system repair, AC and DC power disconnects are a legally required safety feature for all grid-tied solar panel installations.

Grid-Tie Solar System Price

The total price of your grid-tie solar system will depend on many individual factors associated with your unique installation, including the system size, the components used, and how you choose to pay for your home upgrade. Critically, grid-tied solar systems eliminate the need for an expensive solar battery backup to provide power in case of grid outages.

With all that in mind, the average cost of solar panels in the United States is around $3.30 per watt (excluding financing) for project hardware, permitting, labor, overhead, and more. While solar prices vary across the country, and your gross costs can be significantly lowered through incentives like the federal solar tax credit, an average American 8 kW solar energy system costs around $26,400 ($3.30 per watt x 5,000 watts) in 2023.

Grid-Tie Solar System Payback Period

Although you may find the price of solar panels to be a bit shocking, the value of a grid-tied solar power system may surprise you even more.

With net metering or net billing, if provided by your utility provider, compensation for grid-shared solar energy allows you to offset more of the money you pay for your power at home. While spending significantly less on electric bills with solar, eventually you will hit a break-even point where the amount of money you have saved on energy bills is equal to the total cost of your solar system.

With a typical solar payback period clocking in between 6 and 10 years, solar panels that last for 25 years and more have the potential to pay for themselves many times over.

Your Home and Grid-Tied Solar Panels

To put it simply, the majority of solar panels in the United States are tied to the electricity grid, helping homeowners and communities go green and save money on energy costs.

Working together with the sun, your utility company, and net metering, grid-tied solar panels can significantly lower your electricity expenses with emission-free power production right on your roof.

If you are interested to see how much you can save with a grid-tied solar energy system, you can calculate your solar savings using nothing more than your average electricity bill and address.

See how much you can save by going solar with Palmetto

Step 01
Step 02
My electric bill is $290/mo
About the AuthorBrian ChurchWriter

Brian is a writer, NABCEP PV associate and outdoor enthusiast living in Denver, Colorado. As a freelancer, Brian has written hundreds of articles to help individuals, businesses and our planet benefit from solar power and sustainable energy systems.

Subscribe to our newsletter

Get the latest insights on solar, clean energy, climate change, and sustainable living—delivered right to your inbox every month.

Read More From The Clean Energy Learning Center

Palmetto is your go-to resource for news, updates, and questions. Knowledge is power. Invest with confidence.

Solar Lease vs Solar PPA on a blue background.

Solar Leases vs. PPAs: Understanding the Difference

The two options are similar, but have key differences. Here's what you need to know.
The words Step By Step: The Switch to Solar on a blue background showing a solar panel installation.

Making the Switch to Residential Solar: A Step-by-Step Guide

Here's how solar panels go from an idea to producing energy on your roof.
"How Solar Incentives Maximize Your Savings" on a green background with stacks of coins getting larger left to right.

Maximizing Your Solar Investment with Energy Policy Incentives

Solar panels can reduce your energy costs. Solar incentives can help you save even more.

See how much

you can benefit

going solar with Palmetto

What's your monthly electric bill amount?