What is a Solar Cell Power Plant? Explore Types, Benefits, Limitations, Working, and Cost in 2025

A solar cell power plant, also known as a solar photovoltaic power plant, is a system that captures sunlight using solar PV panels and converts it into usable electricity, which can power homes, housing societies, as well as commercial buildings and industries. It’s of three main types: on-grid, off-grid, and hybrid. 

• An on-grid solar system is connected to the utility grid
• An off-grid solar system is connected to lithium batteries, not the utility grid
• A hybrid solar system is connected to both the grid and a lithium battery bank

Based on its location, a solar photovoltaic power plant can be further classified into a rooftop solar system or a ground-mounted solar photovoltaic power plant. The rooftop solar cell power plant saves a significant amount of land area and is more cost-effective. Hence, it’s the more preferred type for homes and housing societies. 

The size of a solar energy system usually decides where it fits best:

• 2 kW to 10 kW solar PV systems: They’re suitable as rooftop solar panel systems for homes
• 50 kW to 500 kW solar PV systems: They’re suitable as rooftop solar for housing societies
• Large solar PV systems, usually in megawatts, like a 1 MW solar system: They’re suited as commercial rooftop systems for offices and/or industries.

In this blog, we’ll walk you through the different types of solar cell power plants, how they work, what the cost of installing on-grid rooftop PV solar systems at homes is, why they’re the most preferred type, and the pros and cons of solar PV power plants.

TL;DR Summary Box: What is the Principle of Solar Photovoltaics?

The principle behind solar photovoltaics is that solar PV panels are made of silicon solar cells that can absorb photons present in solar radiation. These photons are energy packets, and when they’re absorbed, they transfer their energy to electrons present in solar cells, exciting them. 

Excited electrons leave their place and flow in one direction. This uni-directional flow of electrons is nothing but direct current (DC), which solar inverters convert to alternating current (AC). 

Here are the main topics covered in this blog in detail:

*Please note: The above-mentioned solar panel price is indicative as of 29th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change.

What is a Solar Cell Power Plant?

A solar cell power plant, also known as a solar photovoltaic power plant, is a solar energy system that converts sunlight into solar electricity using semiconductor-based solar cells through the photovoltaic effect. It uses multiple components to make the sunlight-to-electricity conversion even possible. 

• Solar panels are used to capture and convert sunlight into direct current (DC) output.
• Solar inverters are used to convert direct current (DC) to alternating current (AC), which is the usable form of electricity. 

Solar panels, solar inverters, solar mounting structures, and solar accessories are the main components of all types of solar systems. However, depending on the exact type of the system, the plant may also include:

• Battery bank
• Bidirectional net meter

What Are the Types of Solar Photovoltaic Power Plants?

The three main types of solar cell power plants in India are on-grid solar systems, off-grid solar systems, and hybrid solar systems. 

• On-grid systems are connected to the utility grid and use net metering to import or export electricity from the grid. 
• Off-grid solar systems are connected to a lithium battery bank, not the utility grid.
• Hybrid solar systems are connected to both the grid and a lithium battery bank.

Let’s check out all three types in detail.

On-Grid Solar Systems

These are the most popular types of solar cell power plants. They are connected to the utility grid through a bi-directional net meter. The net meter allows the exchange of electricity between the system and the grid. 

• When the solar system produces excess energy, the meter sends it to the grid. 
• At night, the net meter imports electricity from the grid to keep the load running.

The net meter in an on-grid solar system also keeps a record of the unit exchange. If your solar system supplies more units to the grid, your discom gives you credit. However, if you use more grid electricity than what’s supplied, you get a solar bill for the additional grid units you used.

Here are the key components of an on-grid solar cell power plant:

Off-Grid Solar Systems

Off-grid solar systems are also known as standalone solar PV power plants because they are not connected to the grid. Instead, they use a lithium battery bank to store excess power generated by the solar panels. 

• The solar inverter converts DC to AC during the daytime to keep the load running.
• A portion of the DC is sent to the built-in MPPT charge controller in the solar inverter to charge batteries safely.
• Solar energy stored in the lithium batteries is used at night or whenever needed to keep the load running.

Here are the key components of an off-grid solar cell power plant:

Hybrid Solar Systems

A hybrid solar cell power plant is connected to the grid as well as a lithium battery bank. It’s the most expensive and most complicated of the three types of solar photovoltaic power plants in India. 

• The solar panels function similarly to those in on-grid and off-grid systems.
• A portion of the DC power is directed to the built-in solar panel charge controller to charge the batteries.
• If there’s still excess charge remaining, the net meter sends it to the grid.
• Stored solar energy is used to keep the load running at night or during power outages. 

Here are the key components of a hybrid solar cell power plant:

How Does a Solar Cell Power Plant Work?

A solar photovoltaic power plant uses the photovoltaic effect to convert sunlight into electricity. With the help of multiple components, it then distributes the electricity to the home, the grid, or batteries, as needed.

Here’s a step-by-step, clear breakdown of how a solar cell power plant works:

• Step 1 – Solar cells in solar panels absorb sunlight: Solar cells are made of doped semiconductor material (usually silicon) that absorbs sunlight made up of tiny energy packets called photons.
• Step 2 – Photons transfer their energy to electrons: Once energized, electrons in the solar cells leave their place. The empty place left behind is called a hole. It’s positively charged.  
• Step 3 – Electron-hole pair is generated: Every photon that displaces an electron results in the formation of an electron-hole pair.
• Step 4 – The built-in electric field at the p-n junction separates electrons and holes: This field pushes the charges in opposite directions, ensuring they don’t recombine immediately. This results in the flow of electrons in one direction and holes in the other direction.
• Step 5 – Electrons always flow in one direction: This unidirectional flow of electrons is direct current (DC).
• Step 6 – The DC output flows into the solar inverter: The solar inverter converts direct current into alternating current. 
• Step 7A – Excess energy transfer in on-grid systems: The bidirectional meter transfers any excess current to the grid. At night, this same meter draws power from the grid to keep appliances running.
• Step 7B – Excess energy transfer in off-grid systems: In off-grid systems, excess DC power flows through MPPT charge controllers to safely charge the batteries. The stored energy is used at night or during blackouts to run appliances.
• Step 7C – Excess energy transfer in hybrid systems: In hybrid systems, excess solar energy first charges the battery bank. Once the batteries are fully charged, any remaining electricity is sent to the grid via the bi-directional net meter.

Rooftop Solar PV Power Plant vs Ground-Mounted Solar Systems

Although the three primary types of solar cell power plants are on-grid, off-grid, and hybrid, solar photovoltaic power plants can also be classified into ground-mounted and rooftop systems based on whether they’re installed in open land areas or unused areas on a rooftop. 

As the name suggests, a rooftop solar PV power plant is installed on the roofs of homes, housing societies, and commercial/industrial buildings. On the other hand, a ground-mounted solar cell power plant is installed on land. 

Rooftop solar photovoltaic power plants are preferred for residential and commercial installations because they’re cheaper and don’t require capital investment to buy land. 

Here’s a snapshot of how these two types of solar cell power plants differ and why rooftop solar systems are better options:

On-Grid vs Off-Grid vs Hybrid Rooftop Solar Systems, Which is Better?

On-grid solar systems are considered better than off-grid and hybrid solar cell power plants for residential installations because they are more cost-effective, have a shorter payback period, are easier to maintain, and the government offers a subsidy for their installation, further reducing their cost. 

Here’s a quick summary table citing the differences between the three types:

What Makes On-Grid Rooftop Solar Systems Better?

Homeowners and housing societies that install on-grid rooftop solar systems are eligible to receive a subsidy under the PM Surya Ghar Muft Bijli Yojana. Moreover, since batteries are not involved, it’s simpler to install and maintain on-grid solar cell power plants. 

You should opt for on-grid rooftop solar systems because: 

• There’s no limit on transferring surplus power to the grid: If you’re thinking that the excess energy your solar system will produce will go to waste, you don’t need to worry about that. The government does not impose any limit on the amount of electricity a solar system can send to the grid. Any excess electricity is exported, and you earn credits on your bill through net metering. This eliminates the need to invest in costly battery banks.
• The cost of installing on-grid solar is the lowest: The credit goes to installation simplicity and no involvement of batteries. Keep in mind that batteries are not only expensive to install, but they also require replacement from time to time. All these factors make off-grid and hybrid solar systems very expensive.

You can opt for off-grid solar cell power plants if you live in remote or rural areas where the grid supply is either very unreliable or unavailable. But if you live in areas with a reliable grid connection, you don’t need to make a double investment in buying batteries. An appropriately-sized on-grid solar system can meet all your energy needs. 

What Are the Advantages of a Solar Cell Power Plant?

A solar cell power plant can generate a substantial amount of green solar electricity, tackling India’s problems of air pollution and energy reliance on imported oil and fossil fuels. Going solar can make the country truly energy independent. 

Let’s check out all the benefits of a solar cell power plant in detail:

• It can reduce the carbon footprint and help resolve the problem of air pollution in India: Installing even something as small as a 2 kW solar system is equivalent to planting 78 full-grown trees, which can offset 51,744 kg of carbon dioxide from the air. If the entire country adopts solar energy, air pollution will no longer be a concern.
• It can make homes and societies truly energy-independent: Installing solar systems for residential purposes not only reduces electricity bills by 90% or more, but also reduces dependence on expensive grid electricity.  
• On-grid solar offers a stunning ROI: An on-grid solar system for homes has a payback period of 3 to 5 years. For housing societies, this payback period is even shorter, ~1.5 years. After the cost breaks even, the solar system saves tens of lakhs of rupees over its 25-year lifespan by generating free solar electricity. 

What are the Disadvantages of Solar Photovoltaic Power Plants?

The initial investment cost used to be a limitation some years ago. However, the prices of solar panels have decreased over the last decade. Moreover, the government also offers homeowners and housing societies a subsidy, which further brings down the cost.  

Let’s check out the two main limitations and how they’ve been addressed in multiple ways already:

• Initial investment cost: The government offers a substantial subsidy to reduce the cost of solar installation in India. Moreover, as technology progressed, the cost of solar has come down drastically from what it used to be a decade ago or so. Lastly, for those unwilling to invest out of pocket upfront, solar loans are also available. Even SolarSquare offers its customers a zero-investment scheme. Going solar is no longer unaffordable for anyone.
• Output depends on weather conditions: Shading and cloud cover were once major concerns some years ago. However, advanced high-efficiency solar panels with half-cut cells and modern MPPT solar inverters effectively address the issue of partial shading. Their output is superior to that of primitive technology panels and inverters. Moreover, even if the output drops in one season, it is automatically compensated for during the winter and summer seasons when sunlight is abundant and stronger.  

Does the Government Offer a Subsidy for Installing Solar PV Power Plants?

The Indian government offers homeowners and housing societies installing on-grid rooftop solar systems a subsidy under the PM Surya Ghar Muft Bijli Yojana. However, this subsidy is not provided for commercial purposes. 

Here’s the solar subsidy that homeowners receive under the PM Surya Ghar Muft Bijli Yojana:

Please note: The central government has capped the subsidy for homeowners at a maximum of Rs. 78,000. 

Here’s the solar subsidy that housing societies receive under the PM Surya Ghar Muft Bijli Yojana:

Please note: Group housing societies (GHS) receive a subsidy of Rs. 18,000 per kW in India up to 500 kW (@3 kW per house) for common facilities, including EV charging.

What’s the Cost of Installing an On-Grid Rooftop Solar Cell Power Plant At Homes?

Installing an on-grid rooftop solar system at home after availing of a subsidy can range from ~Rs. 90,000* in Lucknow for a 2 kW solar system to ~Rs. 5.62 lakh* in Bengaluru for a 10 kW solar system.

*Please note: The above-mentioned solar panel price is indicative as of 29th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. 

Here’s a before-and-after subsidy solar system price list in India in 2025:

*Please note: The above-mentioned solar plate price is indicative as of 29th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. 

Installation Cost vs Solar Savings in 25 Years for Homes

You can use SolarSquare’s free solar rooftop calculator to estimate solar savings from an on-grid solar system in your city. 

For demonstration purposes, we’ve made a comparison table between the solar system installation cost in Nagpur vs the savings you can get in 25 years of the system’s life:

*Please note: The above-mentioned solar panel price is indicative as of 29th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. Additionally, while calculating savings, we have considered the annual tariff escalation at 3% and the annual degradation at 1%. The actual final savings from solar panel installation depend on the types of solar panels you’ve installed and their efficiency, intensity of sunlight your rooftop receives, orientation of the panels and tilt angle, the pollution level and weather conditions in your city, the temperature, shadow on the roof, impact of dirt/dust, and how well you maintain your panels after installation.

Conclusion 

Solar cell power plants use photovoltaic technology to turn sunlight into electricity. Unlike concentrated solar power plants, which use mirrors and lenses to generate heat and then steam and then electricity by rotating a turbine, solar photovoltaic power plants convert sunlight into electricity directly. 

Out of the three main types of solar PV power plants, on-grid rooftop solar systems are the most cost-effective options for both residential and commercial installations. If you have any further questions about installing rooftop solar at your place, book a free solar consultation call with SolarSquare.

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FAQs

Q1. How much land is required for a solar power plant?

Ans. A 1 kW solar system requires 100 square feet of shadow-free area for proper installation. You can use this as a benchmark to calculate the estimated space needed based on the capacity of the solar system in question. For instance, a 1 MW solar system would require at least 1,00,000 square feet of shadow-free space.

Q2. Which companies make solar panels in India?

Ans. Some of the most reputable solar panel manufacturing companies in India include Rayzon, Renew Solar, and Premier Energies.

Q3. Do solar panels work at night?

Ans. No. Solar panels do not work at night. In on-grid systems, the electricity is drawn from the grid to keep the load running at night. During a power outage, an on-grid solar system doesn’t supply electricity. This is an intentional safety feature known as anti-islanding. It’s incorporated to ensure that any lineman working to repair a faulty line during a power cut doesn’t get an electric shock.