There are three types of solar panel systems: grid-tied (on-grid), off-grid, and hybrid solar systems.

Each type of system has a unique setup that affects what equipment is used, the complexity of installation, and, most crucially, your potential costs and savings.

What would be the best in your situation? Let’s take a closer look at the pros and cons of different solar system types.

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Grid-tied solar systems

A home with a grid-tied solar system. Electricity flows from solar panels to the solar inverter to power electrical loads. The home's appliances can also take power from the grid when the panels don't produce enough energy, or the solar panels can send energy to the grid if they generate too much.

Grid-tied systems are solar panel installations that are connected to the utility power grid. With a grid-connected system, a home can use the solar energy produced by its solar panels and electricity that comes from the utility grid. 

If the solar panels generate more electricity than a home needs, the excess is sent to the grid. In some places, a utility will purchase the solar energy sent to the grid in the form of a bill credit to offset future electricity costs thanks to a billing structure called net metering

See how much a grid-tied solar system can save you annually

Pros and cons of grid-tied solar systems

Pros 

Cons

Cheapest home solar system

No backup power

Less equipment

Grid-tied solar panel systems are so popular because they provide the best value for how much they cost, especially in areas with full-retail net metering. Their cost is low because they require less equipment than other solar system types. However, this also means grid-tied systems can’t keep your lights on when the power is out.

How much do grid-tied solar panel systems cost?

You can expect to pay about $20,000 for an average-sized grid-tied solar panel system before incentives. The price drops to about $14,000 when you take the federal solar tax credit into account. Grid-connected solar systems are usually the cheapest way to go solar. The overall cost of a solar system will depend on its size and the installer you choose.

System size

Estimated cost

Estimated cost after tax credit

4 kW

$12,000

$8,400

6 kW

$18,000

$14,000

8 kW

$24,000

$16,800

10 kW

$30,000

$21,000

12 kW

$36,000

$25,200

14 kW

$42,000

$29,400

What equipment does a grid-tied solar system use?

Grid-tied solar systems require the least amount of equipment. Most grid-tied solar systems consist of:

Off-grid solar systems

A home with an off-grid solar system. Electricity flows from the solar panels to a charge controller to charge the home's battery system. When the home takes electricity from the batteries, it sends the power to the off-grid inverter that runs the appliances.

An off-grid solar system is a solar panel system that has no connection to the utility grid at all. To keep a house running off-grid, you need solar panels, a significant amount of battery storage, and usually another backup power source, like a gas-powered generator.

Sometimes called standalone systems, they’re common among homeowners who don’t have access to the grid. They’re popular in rural areas and for things like cabins that are in remote locations. 

Not only do off-grid systems require lots of equipment, they usually require lifestyle adjustments as well. Off-grid system owners have to be very conscious of their energy usage and be prepared to change their habits based on the amount of energy stored. 

Pros and cons of off-grid solar systems

Pros 

Cons

Provides electricity where there is no grid access

Very expensive

Self-reliant 

Requires lifestyle changes

Believe it or not, there are plenty of places throughout the country that the utility grid doesn’t service. Off-grid systems give these remote areas access to electricity. Being off-grid also makes you more self-reliant; you’re not beholden to a utility company, and the power is in your hands. 

But, off-grid systems are very expensive. You need a lot of battery storage to power an entire home without help from the grid, and the cost adds up. Going off-grid also requires certain lifestyle changes. You have to be very energy-conscious when you don’t have a grid with unlimited supply. Off-grid homeowners need to monitor their consumption and solar production to ensure they have the electricity needed. 

How much do off-grid solar panel systems cost?

Off-grid solar installations cost between $50,000 and $65,000 on average. That’s over $30,000 more expensive than a grid-tied system. 

The bulk of the expense comes from the battery storage, which will likely run a minimum of about $20,000 just for the equipment. This number could be even higher depending on what appliances you need to run in your home. 

Sometimes, people opt for a DIY solar installation when they go off-grid to save on installation costs. While you may cut down on the price, installing a solar system is dangerous work and should only be performed if you feel absolutely confident you have the necessary skills to get the job done.

What equipment does an off-grid solar system use? 

Typical off-grid solar systems require the following components:

Hybrid solar systems

A home with a hybrid solar plus storage system. Electricity flows from the solar panels to the inverter to power the home. Extra solar energy is sent to the charge controller and battery, where the home can use it later. If the home needs more energy than the panels and batteries can provide, it is still connected to the grid.

Hybrid solar systems combine the best of grid-tied and off-grid solar systems; the solar panels are attached to batteries and the utility grid. You’ll commonly see hybrid solar systems referred to as “solar-plus-storage” systems. 

Solar-plus-storage systems are popular in areas that experience frequent grid failures or in places that don’t have full-retail net metering. For example, batteries are popular in California because prolonged power outages are common and sometimes even planned. Plus, the state changed its net metering policy, so batteries now save homeowners more money on their electricity bills. 

Pros and cons of hybrid solar systems

Pros

Cons

Provide backup power

Expensive

Increase energy independence

Not always the right financial choice

Can potentially save more money on electricity bills

One of the biggest advantages of hybrid solar systems is that the battery serves as backup power during grid outages. Without a battery, solar panels can’t run your home when the power goes out. Batteries also allow you to rely less on the grid by using stored energy when your solar panels aren’t producing electricity. This also maximizes the amount of clean energy your home uses! 

Depending on where you live, a battery might even help you save more money on your electricity bills. If you don’t have full retail net metering or your utility requires time-of-use rates, you can send your excess electricity to your battery and use it later, so you get the full retail value out of it. You can learn more in our breakdown of solar savings with solar batteries versus net metering.

But, if you do have true net metering, a battery won’t save you any additional money. In fact, it will just cost you a lot of money. Because of the upfront cost of batteries, they often don’t pencil out financially.  

How much do hybrid solar systems cost?

An average hybrid solar panel system will cost at least $32,000. The total cost will depend on your system size and the battery you install. For example, the Tesla Powerwall costs about $14,000 to install, while a Generac PWRcell system could cost closer to $18,000.  

The good news is that batteries do qualify for the 30% federal tax credit, and there are a number of local battery rebates and incentive programs opening across the country to help reduce battery installation costs. 

The following table outlines the estimated cost of different-sized solar systems with one battery.

System size

Estimated cost before tax credit

Estimated cost after tax credit

4 kW

$26,000

$18,200

6 kW

$32,000

$22,400

8 kW

$38,000

$26,600

10 kW

$44,000

$30,800

12 kW

$50,000

$35,000

14 kW

$56,000

$39,200

What equipment does a hybrid solar system use?

Hybrid solar systems use similar equipment to a grid-tied solar system but also include the components necessary to connect a battery. Here is some of the equipment commonly used in a solar-plus-storage system.

How to pick the best solar system for you

A simple grid-tied system will usually be the best financial choice. Grid-tied systems generally provide the best return on investment because of their low upfront cost and simple system design. 

However, there are some cases where a hybrid system may make the most sense for you, especially if you experience regular power outages. If you really value energy independence and maximizing the amount of renewable energy your home uses, then a solar plus storage system could be just what you’re looking for. 

Off-grid systems are probably the least practical for everyday homeowners. But they are excellent for remote areas and may be the right choice for your mountain cabin.

The best way to figure out the right solar system for you is by contacting solar companies near you. Local solar installers will have the best understanding of the right solar system to install in your area and how you can get the most out of your solar panels. 

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