On-grid means your solar system is tied to your local utility's GRID. This is what most residential homes will use because you are covered if your solar system under or over-produces in regard to your varying energy needs. All this means for you is that your utility system acts as your battery space. On grid systems make sense for locations with no daytime power cut or with less than 5 hrs of daytime power cut. This type of system is apt for reducing your electricity bills since it is cheaper than a battery based system and there is no recurring cost of replacement of components. Once the solar generation starts, the generated energy is first consumed by the loads. Once the load requirement is satisfied, the remaining energy will be exported to the grid. Grid by itself acts as a virtual battery taking in all the excess energy that has been exported. This is known as banking of energy.

This means being able to store solar energy that is generated during the day and using it at night. When the stored energy is depleted, the grid is there as a back up, allowing consumers to have the best of both worlds. Hybrid systems are also able to charge the batteries using cheap off-peak electricity. Modern hybrid systems combine solar and battery storage in one and are now available in many different forms and configurations. Due to the decreasing cost of battery storage, systems that are already connected to the electricity grid can start taking advantage of battery storage as well.