How grid tie solar works with the Australian Electricity Network


In Australia grid-tie solar PV systems are the most common solar system setups for residential properties, due to the impracticality of off-grid solar systems in many metro and suburban areas, as well as the lengthy return on investment that remains for battery storage which is an essential component when going off-grid.

Grid Tie Solar

For those that are contemplating grid-connected solar power, you’ll benefit from reading “what components, you’ll need for a quality grid-connected solar PV system”, on top of this you will also want to understand the National Energy Market (NEM) in Australia and how the electricity grid works.

Knowing the ins and outs of the NEM will help you better comprehend how Feed-in Tariff rates work, as well as what happens to the excess energy generated from your solar PV system.

What is the National Energy Market?

The National Energy Market (NEM) is the structure of the Australian electricity sector and the connection of the electricity grids across six eastern and southern states and territories in Australia, delivering around 80% of electricity consumption across the country.

(Western Australia and Northern Territory have a separate electricity network and regulatory arrangements).

The NEM is a wholesale electricity market and facilitates the trade of electricity between generators, distributors and retailers. This electricity is then supplied to our households or businesses and is what we pay for when we receive our electricity bills.

Transfer of electricity within National Energy Market

The process and production of electricity starts at power-stations where generators use coal, gas, wind, water or the sun (solar) to produce electricity. This electricity is then sent to the grid where distributors who own and maintain the power lines and poles, sell electricity at a wholesale price to energy retailers, who then re-sell this electricity to households and businesses.

average electric bill with solar panels

It is the Distributors’ role to transport electricity from generators to the households and businesses. Distributors are also responsible for the upkeep of poles and wires, meaning they are in charge and held responsible for any interruptions or faults in the network, such as blackouts and power outages.

Depending on your location in Australia Distributors will vary.

Retailers are energy companies such as Origin Energy, AGL, Energy Australia etc. They are responsible for connecting households and businesses to the NEM as well as provide billing and customer service.

Installing grid-connected solar PV system

When you install a grid-connected solar PV system, your household will have the ability to generate it’s own free electricity through the solar system as well as pull electricity from the grid as a secondary source, if the solar system has not produced enough energy. 

solar house night

In addition to this a grid-connected solar system has the functionality to feed excess energy generated to the grid. When this occurs the energy retailer buys this excess electricity at a feed-in tariff rate, which the household will receive as credit on their electricity bill.

Note: Environmental factors and weather conditions such as overcast or during the night will require your household to pull some electricity from the grid if you do not have battery storage. This is because solar systems require sunlight to produce electricity and can not store excess electricity without the addition of battery storage.

As the technology and uptake of battery storage gradually develops in Australia, it’ll become more common for grid-connected solar homes to install batteries and store excess energy generated by their solar systems. Being able to do this will further reduce reliance on the grid and greater decrease electricity bills. Those looking to install solar now but aren’t ready for battery storage have the option to buy hybrid solar systems, which are compatible to add battery storage should the household require it and when battery storage prices have decreased.

Work out the cost to install a grid-connected solar system and your estimated annual savings with our free solar calculator!

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Beginners Guide to Solar Power

If you’re considering solar for your property or just looking to maximise the savings for your solar system, download a FREE copy of our "Ultimate Guide to Solar Power in Australia - 2021 Edition".

Become an expert and better understand the ins and outs of solar power and solar PV systems for your property.

Includes detailed explanations and diagrams of the various types of solar systems and their parts, solar battery storage systems, Government incentives, expected ROI periods, finance, energy-saving tips and more!

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Understanding Batteries

Off-Grid Systems

For some households a battery system can be of great benefit and minimise a home’s reliance on the grid. However, it’s important to understand for a battery to be useful your solar system needs to be generating excess energy for the battery to store, which you can then use at night or when the sun is not out.

When selecting a battery, you’ll want to invest in a system that is most suited to your home and can drive the best return on investment (ROI). Despite a larger upfront cost, a higher quality battery may significantly increase your ROI.

    Battery systems start from $6,000 and costs can vary greatly based on the following factors:

  1. Cycle Life-Time

    The number of times a battery can fully charge and discharge.

  2. Battery Power (kW)

    How fast it can be charged or discharged.

  3. Storage Capacity (kWh)

    The maximum amount of energy a battery system can store.

  4. Battery Management System (BMS)

    An electronic ‘smart’ system that gathers data and manages the battery ensuring it does not overload or operate outside of its safe functioning zone..

  5. Inverter

    Battery systems require their own inverter if your solar system does not have a hybrid inverter.

  6. 'All-In-One Unit’

    A system which includes the battery, BMS and an inverter all in one unit.

  7. Warranty

    Length of time or cycles the battery system is under guarantee.

  8. Blackout Protection/Backup

    It’s important to note this is not a common feature of a battery system and could cost thousands of dollars to include. Blackout protection not only requires additional components but also a specialised installation and rewiring. For grid-connected homes, the cost for blackout protection can outweigh the benefit.

Additionally, if your purpose for adding battery is to go Off-Grid and become completely independent from the grid you will need to ensure your solar system can generate enough energy to power your home and your battery system is large enough to store this energy. For homes in metro areas going Off-grid is not cost effective and is only recommended for those in remote areas with limited access to the grid. Off-grid solar systems with battery start at approximately $30,000.

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