Section 3: Grid-connected solar explained

Find out how your new solar electricity system will help your property interact with the electricity grid, drawing electricity when needed and feeding any surplus back into the grid.

How does grid-connected solar work?

Most solar customers choose a mains grid-connected system for the reliability that such a system offers. Your business can draw electricity from the grid when insufficient electricity is being generated by the solar panels.

Any electricity produced by the solar electricity system but not needed by your business at the time it is produced is simply fed into the mains grid, with a feed-in tariff paid to the system owner.

Check with your energy distributor that your premise will be able to feed excess energy into the grid. Grid-connected systems have two main components, the solar panel array on the roof, and a grid-interactive inverter, connecting into your switchboard and electricity meter.

Grid Connection

Approval for grid connection from your Distribution Network Service Provider (DNSP).

The DNSP is the business that owns and operates the electricity network – poles and wires – in your area. They are responsible for the physical connection of your system, and business, to the electricity grid.

The process and technical details for grid connection will vary depending on your specific electricity distributor. Find your electricity distributor on the Electricity Distributor section of Victoria’s Energy website(opens in a new window).

Pre-approval for grid connection

Before you proceed with installing your solar system, you may be required to get pre-approval for grid connection from your Distributor.

Pre-approval ensures that your system will be able to be grid connected once it is installed.

Not everyone will be able to feed excess energy into the grid and your distributor should inform you if this is the case. Your solar retailer should discuss any constraints on exporting energy into the grid with you as part of the quote process.

System size and grid connection

For most small systems (up to 5kW) and in most locations, the process of grid connection is streamlined.

Your distributor will advise you of your ‘export limit’; which dictates how much excess solar generation you can feed back into the grid for a feed-in-tariff. These limits should be considered when selecting the size of your system. For systems larger than 5kW, you may be subject to a negotiation process with your distributor for grid connection.

Speak to both your distributor and solar installer first and find out as much information as you can with regards to likely timeframes, information requirements and costs. You may need to engage an energy professional to assist you to negotiate the grid connection process.

Solar Savvy Tip: You should check your eligibility to export with your distributor before you install.

System components: panels + inverter

Solar panels

Solar panels are made from many solar cells connected together, with each solar cell producing DC (direct current) electricity when sunlight hits it. Find out more about solar panels in Finding the right solar panels for your system in section four of this guide.


A solar inverter is a vital part of a grid-connect solar electricity system as it converts the DC current generated by your solar panels to the 230 volt AC current needed to run your appliances.

A grid-interactive inverter is the most common type of inverter. It requires the mains grid voltage to be present or it will shut down for safety. This means that if there is a power failure, your solar system will shut down and will not supply energy until after the mains grid returns to normal.

Hybrid, or multimode, inverters exist as well, which are designed to work with a battery (if one is installed) and as a grid-interactive inverter as well, allowing you the best of both worlds. Hybrid inverters can feed energy into the grid from either the solar array or the battery bank.

Some hybrid inverters can be installed in such a way that they can isolate themselves from the grid and continue to provide power from solar panels and batteries if the grid is down.

Find out more about inverters in Finding the right inverter for your system in section 5 of this guide.

Below are some of the key issues to consider and discuss with your system installer and distributor.

Technical specifications

The technical and other requirements specified by distributors for grid connection are beyond the requirements imposed by Australian Standards (Such as, AS/NZS 4777 Series and AS/NZS 5033) and those specified by state or territory safety regulators.

Your installer must be aware of these technical specifications for connection to your specific electricity distributor.

The eligibility criteria listed in the ‘Notice to Market’ is in addition to the connection requirements listed by DNSPs/Distributors, national standards, as well as requirements to access other federal/government incentives (such as STCs).

Connection agreement and charges

The process and guidelines for obtaining grid connection vary significantly between distributors.

Distributors are required to negotiate ‘in good faith’ a ‘fair and reasonable’ agreement and charge for connecting your system to the network. In reality, the costs can vary significantly depending on your location, distributor and retailer. Check and clarify these costs, and the process, early and often.


Grid connection requires an electricity meter that allows recording of bi-directional electricity flow to measure energy going to and coming from the grid. Most Victorian Businesses have Smart Meters, which can do this already. But if your business premise is one of the small number of Victorian locations without a Smart Meter, you will need to upgrade.

Speak to your distributor about the process for this, and whether there will be any cost.

What about batteries?

One way of maximising solar electricity is to store it in a battery for use when you need it, rather than when it is generated.

Battery systems have been around for a long time but have been complex and generally too expensive to consider with grid-connect solar PV systems.

That is changing with the introduction of simpler modular battery systems, which means that you can start with just one battery unit and add more if and when needed.

When buying a solar panel system you should consider whether you want to ensure that it is also battery-capable if you want to upgrade.

We recommend talking to your installer about systems that are battery capable. This means that you will be able to add a battery to your system in the future.