Photovoltaics in Luxembourg are gaining more and more supporters due to rising electricity prices, pressure to protect the environment and the desire to become independent from external suppliers. Investors face a dilemma: connect the installation to the operator’s network (on-grid) or rely on their own energy storage and generator (off-grid). Each option differs not only in the degree of complexity of the installation, but also in the scope of responsibility, the required number of devices and the method of daily operation. On-grid allows surpluses to be transferred to the network, which eliminates the need to install large batteries and provides a safety buffer on cloudy days. In return, you have to sign a contract with the operator, install a bidirectional meter and comply with network standards. Off-grid provides full autonomy: energy is stored locally, and if necessary, the generator is started, but this involves the need for precise balancing of consumption and regular servicing of storage facilities and fuel facilities. When choosing, it is worth considering local climate conditions, the nature of the development, development plans and access to subsidies and administrative procedures. In the following part of the description, we will look at the technical differences, the installation process, settlement principles and the impact of weather on the efficiency of both solutions.
How does an on-grid system differ from an off-grid system: the most important technological differences
On-grid and off-grid systems are two fundamentally different approaches to the problem of supplying a building with electricity from photovoltaics. Although at first glance both solutions involve the use of solar panels, the differences between them go much deeper – at the level of design, installation, daily operation, and even relations with the grid operator and local authorities.
Advantages and disadvantages of on-grid installations
In the on-grid system, the photovoltaic installation is treated as an element of the power grid. The panels convert sunlight into direct current, and the inverter – a device whose basic task is to convert direct current into alternating current with parameters precisely matching the network specifications – ensures that the energy reaches home receivers or is transmitted to the network. The bidirectional meter monitors both the import and export of energy, so that surpluses can be deducted from bills, and in the event of shortages, energy can be collected from the operator as usual. The entire process is therefore closely integrated: the installer is responsible for the correct selection of panels and the inverter, and the network operator – for ensuring voltage stability and transmission security. Formalities related to connection usually come down to submitting an application for connection, presenting an executive project and signing an agreement that specifies the conditions for the collection and resale of surplus energy. In practice, on-grid puts the user in the role of a prosumer: they are obliged to monitor the operation of the installation and take care of the technical condition of the panels, and at the same time can count on the support of the network as a virtual warehouse. This means that regardless of weather conditions – even on cloudy days or at night – the electricity for the devices comes either from locally produced resources or from the network. The user therefore avoids the risk of a complete lack of energy, and additionally participates in the network balancing mechanism, supporting the operator in maintaining the balance of supply and demand.
Advantages and challenges of the off-grid system
In the case of the off-grid system, the user decides to completely disconnect from the grid. The installation includes not only panels and an inverter, but also energy storage devices – batteries that collect surplus production for use when the panels do not generate enough electricity. The most important element here is the battery management system (BMS – Battery Management System), which constantly monitors the charge level, cell parameters, temperature and other factors affecting the life and safety of the storage devices. If the energy level in the batteries drops below a certain threshold, an emergency generator – often a combustion one – comes into action, which can be started automatically to maintain continuity of power supply. Additionally, off-grid can be expanded with other local sources, such as micro wind turbines or small biogas installations, creating a hybrid RES system.
Unlike on-grid, the design of an off-grid installation requires predicting seasonal and daily fluctuations in production and consumption with a very high degree of accuracy. It is necessary to take into account the longest periods of low sunlight, the energy gap between peak and emergency days, and also to plan an adequate fuel supply for the generator and space for installing batteries, along with the necessary cooling and fire safety systems. The lack of a grid means absolute independence, but also the need to take full responsibility for each component: from regular filter replacement in the generator to efficiency tests of cells in energy storage.
To sum up the technical and operational differences:
- on-grid integrates with existing infrastructure, using the grid as an energy buffer and limiting the investment to panels and an inverter;
- off-grid requires extensive energy storage and a generator, which translates into a greater number of project stages, the need for a detailed analysis of the energy balance and the ongoing maintenance of many devices;
- in on-grid the user becomes a prosumer, using network mechanisms and smooth balancing, while in off-grid the user acts as the operator of their own, autonomous installation.
In the following sections we will discuss how these fundamental differences affect the cost estimate and schedule stage, the profitability of the investment, the level of energy independence and the significance of the climatic conditions prevailing in Luxembourg.
Investment cost comparison: on-grid vs. off-grid PV installation
When choosing between an on-grid and off-grid system, one of the most important issues is understanding the scope of work and elements involved in each of these options, because even without specifying specific amounts, the differences in the scale of investment capital involvement can be significant. To begin with, it is worth noting that in both cases the foundation is photovoltaic panels and an inverter, but what follows is diametrically different in terms of the number of components, scope of work and formalities. In an on-grid system, the project is limited to selecting the optimal power and type of modules and selecting an inverter with the appropriate characteristics and efficiency, which will automatically synchronize with the parameters of the national grid. In addition, there is the connection procedure with the operator – usually boiling down to developing technical documentation, obtaining consents and signing an agreement specifying the method of settling surpluses. Organizational, logistic and assembly costs are therefore mainly focused on installing modules on the roof or on the ground, running cabling to the inverter, connecting a bidirectional meter and technical acceptance by the operator. The whole can be recommended as a project with a relatively compact list of tasks, within which most processes have established standard procedures and implementation schedules.
The off-grid approach is completely different, where the entire system must operate in isolation from the external network. This means that, in addition to the panels and the inverter, installers must plan and deliver at least a few more key functional blocks. The first is an energy storage device – usually lithium-ion batteries or other types of batteries that store the generated energy for use during periods of low sunlight. In practice, this means that the battery must be installed in a separate and secured room, taking into account appropriate ventilation, protection against moisture, temperature, fire protection and access to service. In addition, there is a battery management system (BMS), which monitors the condition of individual cells, regulates the charging and discharging speed and protects the storage devices from excessive saturation or deep discharge. Each of these elements requires a separate stage of design, configuration, functional testing and certification in accordance with the requirements of local standards and European directives.
Another important component is a generator that acts as a backup in the event of longer cloudy periods or increased demand exceeding the storage capacity. Depending on preferences, it can be a combustion unit or an alternative source, such as a small wind turbine or biomass generator. Each of these solutions requires separate fuel connections, exhaust systems, safety systems and regular operational inspections. Adding a generator to a photovoltaic installation also means additional costs for the control system, which will automatically decide to turn on the generator when the level of energy storage drops below the planned threshold. At the level of documentation and acceptance, such system extensions are much more time-consuming – inspectors must check fuel documentation, assess fire risk and compliance with environmental protection regulations
On the logistical side, a larger set of devices involves challenges in terms of transport and assembly: batteries are heavy and often require the use of a crane or forklift, as do generators or larger BMS control cabinets. It is necessary to prepare a place on the construction site, provide access to electricity during assembly, and organize infrastructure for testing – not only electrical, but also thermal measurements, checking the stability of the installation and simulating operation in various load scenarios. As a result, the duration of an off-grid investment is usually several times longer than in the on-grid variant, and the schedule must take into account the subsequent stages of acceptance of individual components by various technical services.
In addition, there are issues of preparing the ground or roof – in the off-grid system, due to the weight of the batteries and storage cables, it is often necessary to strengthen the structure or make point foundations for heavier elements. On roofs, load-bearing capacity analyses, designs of the supporting structure and additional reinforcements are necessary, which require consultations with a construction engineer before installation and can increase documentation costs. In the on-grid variant, especially when installed above ground, a standard mounting structure is usually sufficient, without complicated foundations, which translates into a shorter and cheaper preparation process.
In summary, although both options are based on the same principles of converting solar radiation into electricity, the scale of investment in an off-grid system is much larger in terms of the number of devices, design stages, scope of formalities, and logistics and assembly activities. On-grid, on the other hand, is a more compact undertaking in terms of design and administration – a smaller number of elements and standard connection procedures allow for more efficient implementation and reduce involvement in preparing documentation and coordinating work.
Profitability and return on investment analysis for photovoltaics
Profitability analysis of a photovoltaic installation is not only a comparison of start-up costs, but also taking into account a number of operational, regulatory and market factors that affect the rate of recovery of invested funds and the final balance of benefits. This is generally assessed by comparing the stream of savings (or revenues) generated by the installation with the investment costs incurred and maintenance costs over time. The simple rate of return method (payback period), discounted cash flow analysis (NPV) and internal rate of return (IRR) play an important role in this, which allows for taking into account the variability of the value of money over time and the risk of changes in market conditions.
In an on-grid system, the main source of benefits is savings on energy bills – each kilowatt-hour produced and consumed directly reduces the value of the invoice from the operator, and the surpluses directed to the network are settled as part of the sales tariff, which additionally reduces costs. In practice, this means that the greater the share of independent energy consumption in relation to that given away, the faster the recovery of costs, because the savings resulting from each kilowatt-hour used directly have a higher economic value than that sold to the grid. In the case of changes in energy prices – their increase works in both cases to the benefit of the investor, because the value of saved or sold energy increases. Additionally, individual resale of surpluses is usually settled according to a competitive guaranteed tariff, which can be an additional incentive to accelerate the return.
Off-grid, on the other hand, is characterized by the fact that almost all of the energy produced is used for own needs, which on the one hand maximizes the share of independent consumption, and on the other – forces full coverage of the operating costs of the storage facilities and the generator from funds resulting from avoided energy purchases. As a result, the economic benefits translate into avoiding electricity bills, but at the same time it is necessary to take into account the depreciation of batteries and frequent servicing and possible repairs of the emergency generator. In the ROI assessment model for off-grid, it is therefore necessary to include in the analysis the operating costs related to the wear of cells, the decrease in the efficiency of storage facilities with their age, as well as expenses for fuel and spare parts for the generator. Although we avoid the costs of purchasing electricity from the operator, in return we gain a highly individualized profile of expenses, which can be more spread out over time and related to specific maintenance intervals.
When assessing profitability, one cannot forget about intangible assets – in the off-grid system, the investor gains full independence from the risk of network blackouts or sudden changes in tariff regulations. This is an aspect that can be included in NPV or IRR models as a bonus for increased security of energy supply, which is particularly valued in remote locations or in industries sensitive to even short power outages. Flexibility is important for an on-grid system – ease of expansion, the possibility of using support programs and subsidies offered by the government or European institutions, as well as relatively low operating costs, which contributes to a more predictable economic balance.
Another key element is the assessment of the durability and degree of degradation of components. Photovoltaic panels gradually lose efficiency, but their service life is so long that they usually do not significantly affect the return on investment over a period of several years. In off-grid, on the other hand, the battery may require replacement or serious service after a significantly shorter period of use, which should be included in the financial plan in advance – in the cash flow model, a reserve must be planned for the replacement of the battery pack or for servicing the generator.
To sum up, the profitability of an on-grid system is often associated with a shorter payback period thanks to free storage in the form of a network and lower operating costs. Off-grid requires a more extensive analysis of the maintenance and depreciation costs of energy storage but compensates for this with complete independence and resistance to external risks related to energy supply. The choice between these models should be preceded by a detailed financial simulation taking into account the individual consumption profile, local customer conditions and the prospects for energy price increases and available support programs.
How to gain energy independence with an off-grid system
The full energy independence offered by an off-grid system is the greatest motivation for many investors to choose a more expensive and complicated solution. In the off-grid model, all elements of the installation – from solar collectors, through energy storage, to an emergency generator – must cooperate autonomously, without the support of an external network. This means that someone who decides to go off-grid gains full control over the entire process of energy generation, storage and distribution, but at the same time takes full responsibility for the stability and continuity of power supply.
From the user’s point of view, the most important benefits are:
- independence from the network operator and related risks, such as failures, interruptions in supply or delays in removing faults;
- lack of susceptibility to changes in tariffs and energy price increases, which translates into predictability of operating costs;
- full freedom to use different storage or hybridization strategies (e.g. adding a wind turbine or a small biomass generator without having to renegotiate terms with the operator).
However, autonomy comes at a price in the form of a higher burden of operational responsibilities. An off-grid system requires constant monitoring: the owner must monitor the battery charge status, battery pack temperatures, fuel level in the generator, air quality in the storage room and many other parameters. It is not enough to configure the installation once and forget about it – regular inspections, panel cleaning, generator testing in start-up mode, fuel line tightness checks and battery cooling system maintenance are necessary. In practice, this means that the decision to go off-grid entails the need to develop operational procedures, service schedules and maintain operating documentation, which can be an organizational challenge for many customers.
Another important aspect is the requirement for an adequate energy reserve for periods of extended cloudiness or increased demand. An off-grid installation must be designed so that the battery storage can meet the demand for a whole series of days with limited solar production – at the same time, it is not worth oversizing the system excessively, because this is associated with excessive costs and space. Here, it is necessary to conduct a precise analysis of the consumption profile, taking into account both the typical load at different times of the day and seasonal fluctuations (heating, air conditioning, water heating). Only on this basis is the capacity of the storage and the power of the generator, which is an emergency supplement, determined.
In practice, off-grid users often decide on additional energy sources – a small wind turbine, a mini-biogas plant or fuel cells – to diversify resources and minimize the risk of power failure. However, the integration of various technologies requires additional control and synchronization systems, and in some cases also obtaining special permits or meeting environmental requirements. Independence is therefore not only an advantage, but also an obligation to maintain several technical systems in working order.
In comparison, an on-grid system provides a much lower degree of independence, but compensates for this with trust in the grid operator. When the panels do not produce enough energy, the house automatically switches to power from the grid, without the risk of losing access to electricity. Surplus production goes to the grid and is used by other recipients, and the prosumer receives financial benefits in the form of reduced bills. Formally, the operator is responsible for stabilizing network parameters and repairing failures. Maintenance of an on-grid system usually comes down to periodic inspections of the panels and inverter and possible replacement of the bidirectional meter or inverter after many years of use.
To sum up, choosing full energy autonomy is associated with great independence, but also with a significant increase in operational responsibility and the need to manage the entire infrastructure. This is an option for people or companies that need a guarantee of their own supplies and are ready to devote time, resources and attention to the systematic maintenance of a complex system. The on-grid system, in turn, hands over some of these tasks to the grid operator, offering a lower level of autonomy, but compensating for this with simplicity of use and stability of supply.
The impact of Luxembourg's climate on the performance of a photovoltaic installation
Luxembourg, located in the heart of Western Europe, has a temperate transitional climate, which means that weather conditions vary significantly between seasons. The analysis of the efficiency of both systems (on-grid and off-grid) must take these local conditions into account, because the availability of solar radiation and its seasonal fluctuations directly affect both energy production and the size of the necessary storage.
In the spring and summer months – due to the longer days and higher angles of sunlight – photovoltaic panels reach their maximum efficiency, generating significant surpluses of energy, which in the case of an on-grid system are fed into the grid, and in the off-grid system can be stored in batteries or directed to support other systems (e.g. hot water heating). However, in autumn and winter, when the days are shorter and cloudiness is much more frequent, the average power produced by the panels drops drastically. For an off-grid system, this requires oversizing the storage to cover demand for a few days of limited production, while an on-grid system simply fills the gaps with grid energy without the need for storage.
In addition, production is affected by local terrain features – the hilly areas of the Ardennes promote some shading in the mornings and afternoons, and a high forest wall can cause uneven distribution of sunlight. In city centers and built-up areas, additional shadows are cast by buildings, chimneys, and tall structures, which in practice reduces the effective area of the panels and requires a detailed analysis of the shading before finalizing the orientation. In solar simulation programs, engineers take into account the terrain, exposure to the north, tree shadows, and seasonal changes in the sun’s position to minimize production losses.
Another important factor is the operating temperature: although the panels work best in moderate cold, excessive heat can reduce their efficiency. In summer, with intense sunlight and high air temperatures, the panels can heat up, which leads to small but significant energy losses. Therefore, designs often include adequate ventilation and a gap from the roof to ensure free air flow under the modules. In winter, low temperatures, although conducive to higher cell efficiency, can be combined with snowfall, which must be removed so that it does not block radiation.
In the context of an on-grid system, seasonal effects are relatively easier to mitigate even if production in winter falls below local demand, surpluses in summer cover losses, and the grid acts as a buffer. In off-grid mode, on the other hand, any subsidence in the winter season can lead to depletion of storage facilities if they have not been properly selected for multi-day periods of low sunlight. It is therefore often recommended to include an additional source of renewable energy, such as a small windmill, which will provide additional production during the windy months of winter.
The final design of each installation, regardless of the chosen operating mode, must be based on a detailed meteorological assessment: long-term data on irradiance, cloudiness, wind speed and precipitation. In Europe, databases such as PVGIS are available, which offer precise solar radiation maps and production forecasts for specific locations. Thanks to them, it is possible to simulate numerous scenarios and assess how climatic fluctuations will affect the annual energy balances.
In summary, the climatic conditions in Luxembourg pose challenges to the investor related to seasonal fluctuations in production and local shading. The on-grid system provides greater flexibility, relieving the need to oversize storage facilities, while the off-grid system requires precise adjustment of battery capacity and possible support from other renewable energy sources. Each solution requires an individual analysis of the microclimate to maximize efficiency and reliability throughout the year.
When to choose off-grid and when to choose on-grid: a practical guide to PV systems
Choosing between on-grid and off-grid is a decision that requires analyzing many aspects – from the nature of the development, through lifestyle, to long-term goals. It is worth approaching it as a strategic project, taking a multi-year or even multi-year perspective. In this part, we look at different usage scenarios and investor profiles, analyzing in what conditions which solution best meets expectations.
The first scenario is a property outside the city, with reliable and stable access to the grid, with moderate energy consumption. If you do not plan to significantly increase demand in the coming years, (e.g. by purchasing an electric car or expanding your house) on-grid provides an optimal balance between workload and benefits. Simple installation, standard connection procedure and the possibility of reselling surpluses mean that the payback is relatively quick, and daily maintenance comes down to seasonal cleaning of the panels and checking the operation of the inverter. This fits in with the needs of families who value convenience and do not want to get involved in detailed technical operations.
The second group are farms located in rural or mountainous areas, where connection to the grid is more expensive or technically difficult. For them, off-grid may be the only sensible choice, even if it requires a larger initial investment and ongoing maintenance. Here, the key is the willingness to independently monitor and service energy storage and the generator. People who have access to local fuel sources, are able to plan their gas or diesel supplies and want to enjoy complete independence will gain certainty of supplies around the clock, regardless of grid failures.
Another case is users who anticipate a rapid increase in energy consumption – for example, they plan to install a fast charger for an electric vehicle or expand their home with new heating or air conditioning devices. In such a scenario, the flexibility of expansion is important: on-grid allows you to easily add additional modules and increase the power of the inverter, consolidating surpluses back into the network. Off-grid, on the other hand, requires a re-analysis of the energy balance, expansion of the battery and generator, which can result in work on a “live” system and complex collection procedures.
For companies and manufacturing plants, the most important thing is to ensure the continuity of energy supply for critical processes. Off-grid combined with hybrid sources – for example, a diesel generator and a wind turbine – can create a power supply environment that is extremely resistant to disruptions. However, in practice, many companies choose on-grid with additional storage as a backup copy. Such a system, sometimes referred to as hybrid net-metering, uses the network as the main buffer source, and batteries as short-term support during failures.
Another profile is that of ecology enthusiasts and those who are keen on minimizing the carbon footprint. Although off-grid involves emissions when starting the generator, many people choose alternative fuels or zero-emission hydrogen generators to maintain independence and at the same time take care of the environment. People who are ready to invest in technical innovations, test new storage solutions or integrate their own micro-sources (biogas, small water turbines) consider off-grid as a field for experimentation and self-optimization. For them, the main priority is freedom from central infrastructure and the ability to implement improvements according to their own standards.
The operating budget and availability of technical support are also crucial. If you do not have people with the appropriate knowledge in your team or do not plan to use the services of companies servicing batteries and generators, on-grid will allow you to reduce maintenance costs and simplify the inspection schedule to several visits a year. Off-grid, on the other hand, requires the involvement of specialized teams, regular replacement of parts and energy storage, which must be included in the annual budget and work schedule.
Weather conditions also play an important role. In places with high variability of sunlight, with long periods of cloudiness, off-grid requires excessive oversizing of batteries or additional sources, which increases complexity and costs. On-grid then presents itself more advantageously, because the network provides constant supplementation. In locations with predictable conditions – for example, on a southern slope with minimal shade – off-grid can operate effectively, provided that the storage is well selected.
How to approach the final decision? It is best to start with an energy consumption audit: monitor the load profile at different times of the day and in different seasons for several months. Then simulate production in local conditions – taking into account shading and meteorological data. Only then compare the two models: on-grid with tariffs and off-grid with operating and service costs. It is also worth consulting an experienced RES designer, who will prepare installation variants and present the advantages and limitations in a specific context.
The decision-making can be made easier by analyzing the table below, which summarizes the most important differences between the two systems.
| Aspect | On-grid | Off-grid |
|---|---|---|
|
Installation Complexity |
Limited number of components, standard grid connection procedures, quick installation |
Complex system: panels, inverter, batteries, BMS, generator, extra safety elements, longer setup time |
|
Profitability and Payback |
Faster return thanks to the grid’s “virtual storage” and lower operating costs |
Longer payback due to battery depreciation and generator servicing, but no electricity bills |
|
Independence |
Limited – you can fall back on the grid in case of failure or low production |
Full autonomy, no blackout risk, independent from tariffs – but requires self-management |
|
Service Requirements |
Minimal – regular panel and inverter check-ups |
High – regular inspections of batteries, generator, BMS, fuel lines, and safety procedures |
|
Climate Sensitivity |
Resistant – backed up by the grid during low production seasons |
Needs precise solar potential assessment and often other RES support to avoid energy shortages |
|
Expansion Flexibility |
Very high – adding panels or an inverter involves minimal formalities |
Moderate – expansion requires recalculation of storage, new documentation, and testing of added components |
|
Ideal User Profile |
Homes with good grid connection, moderate consumption, looking for quick return and low maintenance |
Properties in remote locations or with limited grid access, for users aiming at full energy independence and willing to manage the system themselves |
The decision between on-grid and off-grid is essentially a choice between convenience and ease of use and full autonomy and greater responsibility. The on-grid solution will work in most cases, when access to the grid is certain, development plans are moderate, and predictable savings are the priority. Off-grid, on the other hand, is an option for the brave, seeking independence and ready to manage their own energy infrastructure in all conditions.
