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Grid-Connected Renewable Energy Systems for Homes & Businesses

If you want to power your home or business with renewable energy, a grid-connected system is one way to do it. These systems produce electricity you can use while allowing you to draw on the utility grid for backup power. And, as a perk, you can sell any excess power you produce.

Suppose you’ve decided to install solar panels at home. You could potentially disconnect from the power grid and have the panels power your home only. But doing this has a big downside. Once you are off the grid, your solar panels would have to supply all your energy needs. You might need a bigger system, and you’d definitely need a battery backup for times when the sun isn’t shining.

The alternative is a grid-connected renewable energy system. With this setup, you remain connected to the power system. You can draw power from it as a backup and also put power into it.

Whenever your system produces more power than you need, you can share it with your neighbors. The renewable power you produce can help make the entire grid greener—and earn you money at the same time.

What are grid-connected renewable energy systems?

A grid-connected renewable system is just what it sounds like. It’s a setup that produces renewable energy for your home or business but is also connected to the power grid. When the sun is shining or the wind is blowing, your system produces electricity to power your home. Any excess energy you produce flows into the grid.

If you’re not producing enough for your own home or business, that’s no problem. You just pull power out of the grid to cover the shortfall. When the sun goes down or the wind stops blowing, power continues flowing to your home with no interruption.

Better still, you can get paid for the power you feed into the grid. There are two ways to do this.

With net purchase and sale, you have two electric meters. One measures the power you draw out of the grid, which you pay for at the normal retail rate. The other measures the power you put into the grid. The utility pays you for this at a lower wholesale rate. The money you earn from generating power appears as a credit on your bill.

The other way, which is legal in most states, is called net metering. You have a single electric meter, but it can run in both directions. When you’re taking more power out of the grid than you’re producing, the meter runs forward. When you’re producing more power than you’re using, it runs backward.

At the end of the month, you get billed only for your net power use. That’s the difference between the amount you produced and the amount you used. If they balance out, you pay nothing. If you produce more than you use, your bill can actually be negative. However, in this case, the utility usually pays only the wholesale price for the excess power.

Some utilities use a different system. Rather than paying for any excess power you produce, they give you credit for it on the next month’s utility bill. That can be a good deal if your system produces more power in summer than winter. You avoid paying retail rates for extra power in winter, rather than earning a lower wholesale rate in summer. The downside is that if you come out ahead at the end of the year, the utility doesn’t pay you.

A home with solar panels across the whole roof.

What are the requirements for a grid-connected renewable energy setup?

The requirements to connect a renewable energy system to the electric grid vary widely. Each power system is different, and so each power provider has its own requirements. Utilities need to ensure that the power you put into the grid is safe and reliable. They also have their own rules about contracts, net metering, payment rates, and insurance.

The best way to know the exact rules in your area is to contact the power provider directly. If your utility doesn’t have a person in charge of grid connection requests, you can talk to someone in state government instead. Try departments like the state utilities commission, energy office, or the consumer representation office. Another alternative is to talk to a state utility consumer advocate group. These organizations represent consumers’ interests in dealing with the government and the court system.

What equipment do grid-connected renewable energy systems need?

Any renewable energy setup has two main parts. First, there are the elements needed to produce power, such as solar panels. The other part is the “balance of system” components needed to transmit that power safely to your home or business. In the case of a grid-connected system, this equipment must also enable you to connect safely to the grid.

Balance of system equipment for a grid-connected system can include:

Power conditioning equipment

Power conditioning equipment ensures that the electricity from your system is equivalent to the power flowing through the grid. Most home renewable energy systems produce direct current (DC). But most electrical devices run on alternating current (AC), which periodically changes the direction of its flow. Power from your system must be converted to AC before use—in your home or in the grid. It must also be fine-tuned to match grid power in:

  • Frequency. This is the rate at which the AC power cycles. The standard frequency for grid power is 60 cycles per second.
  • Voltage consistency. This is the extent to which the voltage fluctuates over time. (Voltage is the difference in electrical potential between two given points.)
  • Sine wave profile. The magnitude of AC power is constantly shifting as it switches from one direction to the other. If you plot these changes in magnitude over time on a graph, they form a shape called a sine wave. The power from your system must match the grid power not only in frequency but also in the shape of the sine wave. Ideally, it should be smooth rather than jagged.

Safety equipment

Lightning strikes, power surges, and equipment malfunctions can all overload a power system. When this happens, safety equipment can protect both the system itself and anyone using it from harm. Examples include:

  • Safety disconnects. A disconnect switch cuts the system off from the grid. Some safety switches do this automatically in case of malfunction. Others are manual shutoffs used to shut down the system for maintenance.
  • Grounding. When a wire comes loose, electricity seeks a path to the ground. You don’t want that path to go through sensitive equipment—or worse, through a person. Grounding equipment eliminates these risks by providing a clear, low-resistance path from your power system to the ground.
  • Surge protection. This protects your system from damage if it or a nearby power line is hit by lightning. It’s like the surge protector strips you can plug your or stereo into, only bigger.

Meters and instrumentation

Electric meters keep track of both the power your system produces and the power you draw from the grid. If you are using net metering, your existing meter may be able to do both. But if you are using net purchase and sale, you will need a second meter to track your system’s output.

In addition, other instruments are useful to keep your system running smoothly. If your system has battery backup, you can add instruments to monitor voltage and charge level. There are also instruments that can track your power usage in real time.

Connecting a renewable energy system to the grid

When you connect your system to the grid, you will probably have to sign an interconnection agreement with the utility. It will probably charge a variety of fees for connecting you to the grid. Your costs may include:

  • A permitting fee.
  • Engineering or inspection fees.
  • A metering charge if you need a second meter.
  • A standby charge to cover the cost to the utility of maintaining your system as a backup power source.
  • Liability insurance to protect the power provider in case of an accident involving your system. Most homeowners’ insurance policies include at least $100,000 of liability coverage, but some utilities require more than this.

In addition to the cost, there’s likely to be a lot of paperwork involved. Fortunately, some providers are moving to make the process smoother. They’re making interconnection agreements simpler and setting time limits for processing the paperwork. Also, many of them have assigned reps to handle any questions you have.

Types of grid-connected renewable energy projects

There are many types of grid-connected renewable energy projects. Homes, businesses, nonprofit organizations, schools, and government entities can all use them. The power source involved varies, as well. Solar photovoltaic systems are the most common type, but residential wind and even micro-scale hydropower are also options.

Examples of grid-connected renewable energy systems include:

  • Community solar
  • Rooftop solar panels on a home
  • A wind turbine that provides electricity for a business
  • A small hydropower turbine that powers a family farm
A wind turbine powering a business

Frequently asked questions about grid-connected renewable energy

Here are some other questions people often ask about grid-connected renewable energy systems.

How do grid-connected renewable energy systems work?

A grid-connected renewable energy system is a two-way street. It can produce renewable power for your home or business and feed any excess electricity into the grid. But it can also draw power from the grid when you’re not producing enough for your needs. This give-and-take is reflected on your electric bill. You pay for the power you take out of the grid and get paid for the power you put in.

How does a renewable energy system connect to the grid?

A grid-connected renewable energy system has several parts. These include:

  • A power source. First, there’s the power source itself, such as solar panels or a small wind turbine. These generate power in the form of direct current (DC).
  • An inverter. Next, power from a grid-connected system must pass through an inverter. This device converts DC to the alternating current that flows through the grid.
  • Safety equipment. A solar panel will always produce current as long as the sun is shining. But letting this current flow freely at all times would be dangerous for workers who need to maintain or repair the system. That’s why a grid-connected system needs an isolator switch that disconnects the power source from the inverter. Systems typically need other safety equipment as well, such as grounding cables and fuses.
  • Electric meters. An electric meter measures the power flowing from the system into the grid or vice versa. Some systems have two separate meters, one for power output to the grid and one for power drawn from the grid. Others have a single bidirectional meter that can spin backwards or forwards.
  • The grid. The final part of the system is the utility grid. This is the entire network of power plants and transmission lines that deliver electricity to homes and businesses. The power grid serves the same purpose in a grid-connected system that batteries do in an off-grid system. It absorbs all the excess power the system produces and delivers extra power when needed.

What is off grid renewable energy?

Renewable energy systems don’t have to be tied to the power grid. Off-grid or stand-alone systems are entirely self-contained, providing power for only a single home or business. People who use them produce all their own electricity and don’t need to pay a power bill.

Off-grid systems are often the best option in remote areas with no existing utility lines. In these areas, running new power lines can cost anywhere from $15,000 to $50,000 per mile. They may also make sense in areas with frequent power outages. Grid-connected systems only work when the utility grid itself is running.

However, in areas with a reliable power grid, a grid-connected system is generally a better bet. A stand-alone system only produces power when the sun is shining or the wind is blowing. To provide backup power at other times, these systems need large banks of batteries, which add significantly to their cost. A grid tied system, by contrast, has the entire utility system as a backup power source. And, as a bonus, grid-connected systems allow you to sell your excess energy back to the grid.

Community solar farm
Community solar is a shared grid-connected renewable energy model where the panels are owned by a third-party company—and local residents and businesses can "subscribe" and earn credits for the energy it produces. Credits are applied as a discount off your utility bill.

Is a grid-connected renewable energy system right for you?

Grid-connected renewable energy systems offer many benefits. They allow you to produce green energy while relying on the utility system as a backup. This eliminates the need for battery backup, saving you money. And it allows you to sell any excess power you produce.

But these systems have downsides also. For one, they only work when the power grid is running. There’s a high up-front cost—in both money and effort—for building one and hooking it up to the grid. And it’s only an option at all if you own a home or business in a location with adequate sun, wind, or waterpower.

A grid-connected system isn’t the only way to enjoy the benefits—or monetary incentives—that come from green power.

For many people, a better alternative is community solar. You don’t need to install any rooftop panels, and it's even available to renters. Thanks to state clean energy incentives, it can save you money off your utility bill. Perch can help find a community solar project near you.

Get matched to a local solar farm and save on your electricity costs.