Difference Between On-Grid vs Off-Grid Solar Systems

When it comes to installing a solar system, you’ll primarily encounter two main types in India for residential installations: on-grid solar systems and off-grid solar systems. On-grid solar is the most popular type and is connected to the utility grid through a net meter. On the contrary, an off-grid solar system is not connected to the grid. Instead, it is connected to the battery bank to store the electricity generated by solar panels.

Did you know? The main difference between on-grid and off-grid solar systems is that the Indian government offers a subsidy for installing on-grid solar only, making on-grid solar much more affordable than off-grid solar.

There are many such differences between these two system types, and knowing those differences can help you make an ideal choice for your home. In this blog on on-grid vs off-grid solar, we’ve explained the key differences between the two types, their advantages and disadvantages, and the factors to consider when installing solar at your home.  

What Are On-Grid and Off-Grid Solar Systems? Key Differences Explained

While the primary function remains the same (sunlight falls on solar panels and is converted into electricity), the workings of both systems are quite different. 

Let’s understand what these systems are and how they work to decode the on-grid and off-grid solar system differences in detail. 

What is an On-Grid Solar System, and How Does It Work? 

An on-grid solar system is also known as a grid-tied solar system, as it is connected to the utility grid through a bi-directional meter. 

Here’s how this system works:

• Sunlight falling on solar panels: When sunlight hits the PV cells in solar panels, it loosens the electrons. This flow of electrons generates electric current, which is in the form of direct current (DC).
• DC power gets converted to AC power: The DC power goes into the solar inverter, which converts it to alternating current (AC), which powers household appliances. 
• Electricity transfer to and from the grid: On-grid solar generates electricity during the day. The excess energy generated during the day is transferred to the grid through the net meter. At night, the same net meter imports electricity from the grid. This meter records the unit exchange to and from the grid. You get credits if your system supplies more power to the grid than it imports. If you import more units than you supply to the grid, you get a solar bill.

What is an Off-Grid Solar System, and How Does It Work?

Unlike an on-grid solar system, an off-grid system is a standalone system. This means that off-grid solar is not connected to the utility grid. Instead, it uses a battery bank to store the electricity it generates during the day. 

Here’s how this system works: 

• Sunlight falling on solar panels: This step is exactly the same as on-grid solar. Sunlight knocks the electrons loose, and the flow of electrons generates DC electricity.
• DC to AC conversion: The solar inverter in off-grid systems also has the same job. It converts DC power into AC power.
• Battery charging: This is the major difference between on-grid and off-grid solar systems. During the day, the electricity generated runs household appliances. The excess energy is used to charge the batteries. At night, power from the batteries is used to keep the household running. 

So, you see? One major difference between on-grid and off-grid solar systems is how they keep the household running at night. Let’s explore all the differences in the section on on-grid vs off-grid solar below.  

On-Grid vs Off-Grid Solar: Key Difference Between On-Grid and Off-Grid Solar Systems

Here’s a detailed tabulated snapshot of on-grid vs off-grid solar system differences. Have a look:

Aspect	On-Grid Solar Systems	Off-Grid Solar Systems
Connection to the Grid	Yes	No
Battery Storage	No	Yes
Powering Household at Night	Electricity is imported from the grid through a net meter.	Power stored in the batteries is used to keep the household running at night.
Functioning During Power Outages (When the Grid Fails)	Cannot function during a power outage for safety reasons.	Power outage makes no difference since it is not connected to the grid.
Solar Subsidy by the Government	Yes.	No.
Cost of Installing Solar System	Very affordable since the government also offers a subsidy.	The cost is very high since batteries are involved (and they are expensive) and the government does not offer a subsidy.
Maintenance Cost	Very low	Very high
Battery Storage	None required	Required
Scalability	Extremely scalable	Difficult to scale up or down
Rooftop Space Required	Less	More
Installation Complexity	Less	More

Now that you’ve seen the on-grid vs off-grid comparison, let’s dive deeper into the cost differences between the two types. 

On-Grid vs Off-Grid Solar Cost: Which is More Affordable?

Cost-wise, on-grid solar wins the on-grid vs off-grid debate. 

Not only is the cost of installing on-grid solar more affordable since it does not require expensive batteries, but the Indian government also offers homeowners and housing societies a subsidy for installing on-grid rooftop solar under the PM Surya Ghar Muft Bijli Yojana. 

Before we walk you through the on-grid vs off-grid solar systems cost variation, let’s review the subsidy details.

Off-Grid vs On-Grid Solar Subsidy Details

To make the air clear once and for all, you cannot claim a subsidy for installing off-grid solar under the PM Surya Ghar Muft Bijli Yojana. It’s available only for on-grid solar.

Here are the subsidy details for on-grid solar systems in India in 2025:

• Solar subsidy for 1-2 kWp solar systems: Rs. 30,000 per kilowatt
• Solar subsidy for additional capacity over and above 2 kWp up to 3 kWp: Rs. 18,000 per kilowatt
• Solar subsidy for 3 kWp or higher capacity: Rs. 78,000

Here’s a breakdown of the exact subsidy in India for different capacity solar systems. 

Solar System Size	Solar Subsidy in India
1 kWp	Rs. 30,000
2 kWp	Rs. 60,000
3 kWp	Rs. 78,000
4 kWp	Rs. 78,000
5 kWp	Rs. 78,000
10 kWp	Rs. 78,000

On-Grid Solar System vs Off-Grid Solar Price Breakdown

Did you know? The UP government offers an additional subsidy on top of the subsidy offered under the PM Surya Ghar Muft Bijli Yojana.  Here are the state subsidy details for UP homeowners: State subsidy for 1-2 kW solar systems: Rs. 15,000/ kW State subsidy for systems >=2 kW: Rs. 30,000

Here’s a breakdown of the cost of installing on-grid and off-grid systems in India.

Solar System Size	*Cost of Installing On-Grid Solar System in India After a Subsidy	*Cost of Installing Off-Grid Solar System in India
2 kWp Solar System Price	~ Rs. 90,000 in Pune to ~ Rs. 1,45,000 in Chennai	Rs. 1,60,000 onwards
3 kWp Solar System Price	~ Rs. 1,02,000 in Lucknow to ~ Rs. 1,57,000 in Bengaluru	Rs. 2,40,000 onwards
4 kWp Solar System Price	~ Rs. 1,47,000 in Lucknow to ~ Rs. 2,12,000 in Chennai	Rs. 3,80,000 onwards
5 kWp Solar System Price	~ Rs. 1,97,000 in Lucknow to ~ Rs. 2,92,000 in Bengaluru	Rs. 4,50,000 onwards
10 kWp Solar System Price	~ Rs. 4,72,000 in Lucknow to ~ Rs. 5,62,000 in Bengaluru	Rs. 6,00,000 onwards

*Please note: These prices are indicative as of 29th April 2025 for SolarSquare Blue 6ft variant. The actual final on-grid solar system cost depends on your city, DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Also, SolarSquare does not install off-grid solar systems. The off-grid prices listed above are standard market estimates.

What Are the Advantages and Disadvantages of On-Grid Solar Systems?

Did you know? The subsidy for installing rooftop on-grid solar systems will only be offered till the government solarizes 1 crore Indian homes under the PM Surya Ghar Muft Bijli Yojana. Post that, the subsidy might cease to exist!

On-grid solar systems have many advantages and few limitations. This section discusses both for absolute transparency. Let’s examine the details.

Top Advantages of On-Grid Solar

Here are the major benefits of installing on-grid solar systems in India:

• Connection to the grid: Since the solar system is connected to the grid through a net meter, it’s extremely easy to keep track of the energy exchange between the solar plant and the grid. 
• Availability of solar subsidy: The Indian government offers eligible homeowners financial assistance through a solar subsidy to help them install on-grid solar, bringing down the installation cost.
• Rapid payback period: It takes just 3-5 years to recover the initial investment cost. After that, you enjoy free electricity for as long as the solar system lasts. And with proper professional maintenance, a solar system lasts for at least 25 years.
• Cheaper maintenance cost: Since no batteries are involved, you don’t have to worry about maintaining or replacing them, making maintenance simpler and cheaper.
• Anti-islanding safety feature: The solar system automatically stops producing power when the grid goes out. This essential safety feature is hard-coded so linemen who repair faulty lines are not exposed to electrocution. 
• Cheaper installation cost: On-grid solar does not require a battery bank, which brings down the cost dramatically as batteries are very expensive. Moreover, the subsidy makes on-grid solar more affordable. 
• Availability of solar loans: Many banks offer loans for installing on-grid solar systems at home. In fact, SolarSquare offers a zero-investment loan, which literally makes your initial investment cost nil.

Disadvantages of On-Grid Solar

On-grid solar doesn’t have many disadvantages. However, one limitation is the power outage. 

When the grid goes out of function, the solar system does not produce power, and the house remains unpowered. However, this safety feature is actually an advantage since it ensures that linemen are not at risk. Moreover, urban areas with a reliable grid rarely suffer from power outages for long periods. 

What Are the Advantages and Disadvantages of Off-Grid Solar Systems?

Off-grid solar, like any other machinery, has advantages and disadvantages. Let’s explore both.

Top Advantages of Off-Grid Solar

Here are the major benefits of off-grid solar:

• The only option in areas where there’s no grid: Remote areas and villages with no grid yet can be easily powered using an off-grid solar system.
• No power outage: As long as the batteries are sufficiently charged, the power doesn’t go off and is incredibly reliable.

Disadvantages of Off-Grid Solar

Here’s why installing off-grid solar can prove to be a challenge:

• It’s expensive: The installation cost is higher, making it unsuitable for households. 
• Maintenance cost is high: Batteries are expensive to replace and maintain. This makes off-grid solar overall expensive. 
• It’s hard to scale off-grid systems: Again, the involvement of batteries makes scaling up and down both difficult and expensive.
• There’s no subsidy: The government offers no financial assistance for installing off-grid solar systems in India.
• Space constraint: Off-grid solar is bulky, so it requires more space to install an off-grid solar system than on-grid solar of the same capacity.
• Not ideal for the environment: Batteries cause pollution. While off-grid solar is still manifold better than fossil-fuel energy, it still pollutes the environment compared to on-grid solar, which is really good for the environment. In fact, installing just 1 kW on-grid solar is equal to planting 39 full-grown trees.

How to Choose the Right Solar System Type for Your Home?

The entire on-grid vs off-grid solar debate boils down to one question: which type is best suited for your home? Here are the factors to evaluate when making the choice:

• Area you live: If you live in urban areas with a reliable grid, an on-grid solar system is the best choice, both cost-wise and reliability-wise. On the contrary, an off-grid solar system is your best bet if you live in remote areas with an extremely unreliable grid or villages without a power grid.
• Your budget: An on-grid solar system is more affordable than off-grid solar systems. Plus, you get a subsidy for installing on-grid solar systems at homes and housing societies. 
• Your energy requirements: On-grid solar is highly powerful machinery capable of meeting all energy requirements at homes. However, for commercial purposes, an off-grid or hybrid solar system is more suitable since a battery backup is essential in such setups. 
• Keep maintenance cost in mind: When you install a solar system for your home, it doesn’t make sense to invest in off-grid solar, which will forever be expensive since you’ll have to invest more in maintaining and replacing the batteries. 

Why Choose SolarSquare As Your Solar Installation Company?

Kyunki, mehanagi bijli se muft bijli tak ka safar aasaan banaata hai, SolarSquare!

SolarSquare is India’s most-trusted rooftop solar installation company, rated 4.8+ on Google by 7,000+ customers. 

Here are some reasons why many Indian homes prefer SolarSquare:

• Zero-investment Solar Scheme: We offer easy loans and financing options where your government subsidy offsets the initial down payment. With one of the 5 year loan schemes, where your subsidy equals the down payment, and your EMI is equal or less than the monthly solar savings, you get to own the solar rooftop system @ 0 investment.
• Storm-Proof Mounting Structures: Our latest WindPro Mount™ IIT-Bombay-approved mounting structures boast an 80-micron hot-dip galvanized iron coating that withstands cyclonic winds up to 170 kmph.
• Flexible EMI Plans: You can choose an EMI schedule from 3 to 60 months.
• Swift Installation: Our team executes the installation process in less than 8 hours.
• Reliable After-Sales Support: We offer a minimum of 45 maintenance visits over 5 years for deep cleaning and preventive checks.
• Leakage-Free Installation: Our HILTI AirTight chemical anchoring protects your roof. And if a leak still appears, we offer a Rs. 1 lakh leakage-free guarantee for 1 year. 
• Savings Guarantee With Money-Back Guarantee: We’re the first and only solar company in India to offer a money-back guarantee at Rs. 8 per unit if we fall short on promised generation.

Conclusion

On-grid solar systems emerge as a clear winner in the on-grid vs off-grid solar debate when it comes to installing rooftop solar systems for homes in India. 

When you install on-grid solar, you get a government subsidy, which makes the cost of installation cheaper. Furthermore, the cost of installation breaks even in 3-5 years. Plus, you don’t have to deal with expensive battery maintenance and replacement costs, and you offset your carbon footprint, contributing greatly to reversing the damage caused to the environment. 

Having said that, you must also know that the government will not offer a subsidy forever. The government will offer financial assistance only till it hits its target of solarizing 1 crore homes under PM Surya Ghar Muft Biljli Yojana. 

So, why wait any longer? Book a free solar consultation with SolarSquare and take advantage of the financial assistance offered. Let us handle the nitty-gritty of going solar while you settle back to enjoy free electricity for the next 25 years of your life.

FAQs

Q. Which is better: off-grid or on-grid?

This is highly subjective and depends on a few situations, as listed below:

• Do you live in urban areas or remote areas with no grid? If you live in urban areas with a reliable grid, go for on-grid solar. If your grid is unreliable or you live in a village without a grid, go for off-grid solar.
• What are your energy requirements? If you require solar for home, an on-grid solar system which is a lot cheaper than off-grid solar systems and requires less space is a better option. 

Overall, on-grid solar systems with a reliable grid connection are better for homes. 

Q. What is the disadvantage of on-grid solar systems?

A. One possible limitation is power outage, as on-grid solar does not work when the grid is down. However, not many people are aware that this is actually a safety feature of on-grid solar systems, which is called anti-islanding. This is done to ensure that any lineman working on a faulty site is not exposed to the risk of electrocution. 

Q. What are the disadvantages of off-grid solar systems? 

A. Here are the top 5 disadvantages of installing off-grid solar systems for home:

• Their installation cost is a lot higher than on-grid systems
• Unlike on-grid solar, there’s no subsidy for installing off-grid solar at homes
• Maintaining and replacing batteries makes off-grid solar systems expensive beyond installation. You’ll be shelling out a lot of money to keep off-grid solar running
• It’s harder, complex, and expensive to scale off-grid solar systems
• Off-grid solar systems are bulky; hence, they require a lot of space for installation 

Q. How do off-grid vs on-grid solar panels differ?

A. Actually, there’s no difference between on-grid and off-grid solar panels. The panels used for on-grid setups can also be used for off-grid solar.  

Q. Is it cheaper to go off-grid?

A. No, it’s quite the opposite. Installing off-grid solar is expensive when compared to on-grid solar. Here are some numbers for illustration:

• *Cost of installing a 3 kW off-grid solar system in India: Rs. 2,40,000 onwards 
• *Cost of installing a 3 kWp on-grid solar system in India after a subsidy: ~ Rs. 1,02,000 in Lucknow to ~ Rs. 1,57,000 in Bengaluru

*Please note: These prices are indicative as of 29th April 2025 for SolarSquare Blue 6ft variant. The actual final on-grid solar system cost depends on your city, DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Also, SolarSquare does not install off-grid solar systems. The off-grid solar panel prices listed above are standard market estimates.