How Does Solar Grid-Tie Work?

Grid-Tie Solar Photovoltaic (PV)  is a relatively simple way of producing electricity for you to use in your home or business.  The price of systems has fallen considerably over the last decade, making the investment in a solar PV system more attractive to householders and businesses alike.  Solar PV is an established technology, offering quality components and a system that will produce power for 20–30 years, and beyond.


Who Can Benefit From a Solar PV Installation?

Grid-Tie Solar PV is a versatile, scalable technology that can beneficial to most grid-connected electricity users.   Anyone who uses power during the daytime can benefit from a solar PV system.

What are the components of a solar grid-tie system?

Solar Panels

Also referred to as PV modules, produce DC electricity when the sunlight falls upon them.  Solar PV panels are generally made of a black crystalline silicon material that reacts to sunlight by producing electricity, which is collected by conductor strips to connecting leads at the rear of the panels.  Each panel can be connected to other panels by the leads, to form an “array”.   At this point, the electricity is still in DC form, which can’t be connected to standard household/commercial circuitry.

The amount of electricity produced by the panels is dependent  on a number of factors, namely:
  • The angle of the sun
  • The angle and orientation of the panels
  • The location of the installation, i.e. how far North or South the installation is
  • How cloudy/hazy the atmosphere is


An inverter is required to convert DC electricity into AC electricity, whereby it can be connected to standard household circuitry. When converted to AC form, the electricity generated by the solar array can be utilised by electrical appliances, e.g. fridges, washing machines, TV’s, computers etc.  The inverter is the “brains” of a solar PV installation, converting a varying input of solar PV generated AC electricity, into grid-quality AC electricity.

How does an inverter connect to your building’s circuitry?  This is simply to your distribution or fuse board, using standard electrical components.

Most inverters provide a display facility so that you can see how much power you’re producing.  Some even connect to your router or network so that you can view historical information, which is good when comparing the power produced in winter versus summer production at your location.

Import/Export Meter

With any Grid-Tie Solar PV system, the aim is to use as much of the generated electricity yourself. There will always be some point where the production of the solar PV system will be greater than your consumption.

So, what happens to this excess generated electricity?  This is fed through an export meter to the electricity network, whereby a power retailer will pay you an agreed rate for your excess.  Only certain retailers purchase the excess electricity, so you will have to be a customer of one of those retailers.

The Financials

Is A Grid-Tie Solar PV System Worth The Investment?

In most cases, absolutely.  The key to gaining the most $ benefit out of your solar PV system is to use as much of the generated electricity  yourself. The more you use your own electricity, the less you draw from the electricity network, and hence your electricity bill is lowered in line with self-usage.  For example, if you use 200 kWhrs (standard unit of electricity on your bill) of your own generated electricity, and you normally pay $0.26 per kWhr, you will save $52 from your bill.

What about the value of the exported electricity? This depends on how much your electricity retailer has agreed to pay for this.  Let’s take Mercury’s buy back scheme as an example. Mercury's buy-back rate pays $0.08 per kWhr (subject to change). If 200kWhrs are exported over the billing period, that equates to a credit of $16.00 on your bill.

From the above you can see that it is better value to use as much of the electricity yourself, rather than thinking of your solar PV system as a cash generator.

In most cases, a grid-tie Solar PV system will provide a return of investment of between 8% – 12%, and pay for itself within 8.5 – 12.5 years.

How to get the best return?

General Hints & Tips

We’ve established that using as much of your generated electricity yourself is the best way of making your investment pay for itself. Here are a few hints and tips to enable you to do this for a standard household:
  • Ensure that the solar PV system is sized correctly for your needs. What Power Crisis will go through a sizing exercise with you prior to installing the system.
  • Fit a timer to your hot water cylinder to heat during daylight hours. You may need to ask your electrician about moving the hot water cylinder from the controlled circuit to your regular circuit.
  • Similarly, fit timers to mechanically controlled appliances such as washing machines, dishwashers, tumble dryers.
  • Most digitally controlled appliances have delay functions so you can set them to operate during daylight hours.
  • Think about what other electrical appliances you could use during the day.

These general principles also apply to commercial installations. For these situations, the level of self-usage is  often greater, due to the majority of electrical consumption being during the day time, when the solar PV system is producing electricity.

 How Does SGT Work Flow Diagram 780px