What is grid-tie solar and how does it work?

A grid-tie solar system is an alternative power system designed for homes and commercial buildings that are connected to the electricity grid. It allows you to produce your own power, thereby reducing your electricity bill by needing to import less power from the electricity grid. Any excess power is fed back into the electricity grid with the system switching seamlessly between exporting and importing power to and from the grid depending on what is needed.

Grid-tie solar systems are a popular and efficient solution for homeowners in New Zealand looking to harness the power of the sun and reduce their reliance on traditional energy sources. In the following article, we will dive into the details to help you understand the workings of grid-tie solar systems, their benefits, and what you need to know before installing this type of solar system in your home.

What is a grid-tie solar system?

A grid-tie solar system, also known as an on-grid or grid-connected solar system, is a type of photovoltaic solar setup that is directly connected to the electricity grid. The key components of a grid-tie solar system include:

  1. Solar panels: These convert sunlight into direct current (DC) electricity.
  2. Inverter: The inverter converts the DC electricity generated by the solar panels into 230V alternating current (AC) electricity, which is compatible with your home’s electrical system and the electricity grid.
  3. Import/export electricity meter: This is the electricity meter used by your power retailer to measure the amount of power you import and export. Critically it can identify the direction the power is travelling in (in or out of your property), standard electricity meters often can’t do this and hence your electricity meter will typically need to be upgraded as part of the installation. Note, this is not the smart meter which might also be installed to provide you with detailed historic and real-time monitoring information through an app or website.

How does a grid-tie solar system work?

When sunlight hits the solar panels, they generate DC electricity. This is transmitted to the inverter which converts this DC electricity into AC electricity. The AC electricity is then fed into your home’s switchboard. Any excess electricity generated by your solar system is sent back to the electricity grid with the electricity meter measuring it so it can be credited against your power bill.

During times when your solar system is not producing enough electricity to meet your household’s needs, such as at night or on cloudy days, your home automatically draws electricity from the electricity grid to make up the difference.

Benefits of grid-tie solar systems

Grid-tie solar systems offer numerous advantages for New Zealand homeowners:

  1. Financial returns: By generating your own electricity, you both ‘self-consume’ power generated on your roof, lowering your need to import power from the electricity grid, and export any excess power to the electricity grid for a credit on your bill which offsets the costs of the electricity you are importing. This typically results in a return on investment of 10-15% per annum for most people.
  2. Environmental benefits: By using clean, renewable energy from the sun, you are reducing your carbon footprint and contributing to a more sustainable future.
  3. Low maintenance: Grid-tie solar systems require minimal maintenance, as they have no moving parts and are designed to withstand the elements. A scrub of the panels once a year is all most systems require.
  4. Increased home value: Installing a grid-tie solar system can increase the value of your home, making it more attractive to potential buyers.

Installation and maintenance of a grid-tie solar system

Installing a grid-tie solar system involves several steps:

  1. Site assessment: A solar professional will evaluate your home’s solar potential, considering factors such as roof orientation, shading, and energy consumption.
  2. System design: Based on the assessment, a customised solar system will be designed to meet your specific energy needs.
  3. Network approval: An application needs to be made to your electricity distribution business (EDB – examples include Network Tasman, Nelson Electricity and Marlborough Lines) for approval for ‘distributed generation’; essentially approval to export power through compliant inverters. Your solar provider will handle this application process.
  4. Installation: The solar panels and inverter (and often a smart meter for monitoring) will be installed by a team of qualified professionals.
  5. Inspection: It is a regulatory requirement in New Zealand that the system is inspected by an Independent Electrical Inspector. They will also change the electricity meter to an import/export electricity meter if required. Provided the system passes the inspection, the Inspector will turn it on before they leave.

Once installed, grid-tie solar systems require minimal maintenance. It is recommended that you clean the solar panels annually.

Common concerns and misconceptions

  1. “Solar systems are expensive”: While the initial investment can be substantial, the long-term savings on energy costs generally outweigh the upfront expense. Most grid-tie systems have expected payoff of 6-9 years nowadays, equating to a return on investment of 10-15%. Additionally, the major New Zealand banks all offer sustainable or green loans at very attractive interest rates (0-1% p.a.). Check out out our Finance Page for more details.
  2. “Solar panels don’t work in cloudy weather”: While solar panels generate more electricity in direct sunlight, modern panels still generate an impressive amount of electricity on cloudy days. New Zealand’s climate is well-suited for solar power, with many regions receiving ample sunlight throughout the year.
  3. “Solar systems are complex and require frequent maintenance”: Grid-tie solar systems are designed to be user-friendly and low-maintenance. Once installed, they operate should operate without intervention and the maintenance requirements are typically just an annual clean of the panels with a brush and some water.

Case studies and real-life examples

Many New Zealand homeowners have already made the switch to grid-tie solar and are reaping the benefits. For example, a family of four in Nelson installed a 6kW grid-tie solar system on their home in January 2025. While they also have a solar hot water system, they have seen their energy bills decrease markedly. They are currently expecting to have power bills which average just $13 per month over the first year based on performance to date. They also enjoy the peace of mind knowing that they are contributing to a cleaner, more sustainable future for their children.

Another Tahunanui family with a 5kW grid-tie solar system have seen 53% of the output of the system self-consumed through their own usage. This has equated to 48% of their total power usage while still exporting 3,900kWh to the grid for a credit over the last 12 months.

What size system makes sense?

The size of the grid-connected solar system you install is only constrained by your budget and the space available for mounting panels, whether that be on your roof or a ‘ground mount’. In saying that, there will be an optimum size of system depending on how much power you use and when.

Systems are often talked about as being XkW in size. This can refer to one of two things; the ‘peak’ output of the solar panels installed (denoted kWp) or the power rating of your inverter (generally measured in kW). Most systems are designed to have more potential peak solar output from the panels than inverter capacity (e.g. a system could have 12kWp of PV solar panels with a 10kW inverter). This is usually the most efficient and effective arrangement when considered from a return on investment as while some of the panels generating potential could be ‘clipped’ by the inverter in the middle of a summer’s day, the majority of the time the panels will be producing below peak and having higher overall generation in the darker months of the year and either end of the day results in better overall performance.

Typically, homeowners will install a system with an initial capacity of between 5kW and 15kW. Small businesses might be looking at 10 to 25kW. For larger commercial or industrial property owners, bigger systems that could be anything up to 1 MW could be the best fit. System can be single, two or three-phase, with the number of phases usually set by the number of supply phases to the property.

Often, owners choose to install a larger system as they are believe there is a likelihood of their power needs increasing in the near future (heat pumps, EVs, pool or spas being the usual suspects). Looking for an inverter that has ‘hybrid’ capability, the ability to integrate battery at a later date, is also high on the list for most people. The cost of the system is dependent on system generating capacity and ease of installation.

 

Make Life Easier with an Experienced Provider You Can Trust

At Current Generation we are a one-stop shop, supplying a complete range of quality components, consulting with you, designing, and installing your grid-tie system. We will also liaise with the network company and electricity retailer. This makes the whole process easier for you. Ask us about designing and installing your system today!

Conclusion

Grid-tie solar systems offer a compelling solution for New Zealand homeowners looking for a great return on a financial investment, to minimise their environmental impact, and to increase the value of their homes. By understanding how these systems work, their benefits, and the installation process, you can make an informed decision about whether a grid-tie solar system is right for you.

To learn more about grid-tie solar systems and how they can benefit your home, come and talk to us at Current Generation for a consultation and personalised assessment of a solution that fits your situation.