On-Grid: The energy produced via a residential renewable energy system both feeds off of and into the outside utility’s system.

Off-Grid: No connection exists between a residential renewable energy system and the outside utility’s system. All necessary electricity must be produced via the residential system.

While being off-grid is a great way to declare your energy independence, in most cases an on-grid system is more advantageous. It is cheaper and, even in cases where residents choose to obtain all of their energy from the solar power system, most like to know they have a back-up source readily available. Those who go off-grid have additional costs, because their systems must be big enough to supply all their power, and they must store the energy in batteries that on-grid users don’t need. Off-gridders also cannot take advantage of potential net-metering savings.

When residents choose to go off-grid, it’s usually because they live in a remote area where access to a power grid is not available. In this case, solar power becomes not only an environmental decision but a pragmatic one as well. Others choose independence from utilities for political reasons or so they can retain normal energy access if their utility suffers a blackout.

In some cases battery banks are an optional component of your residential solar or wind power system, while in others they are necessary. In either case, the bank’s function is to store energy for later use. In an off-grid system, the battery is necessary because solar power is your only source of energy, and you don’t stop needing power when the sun goes down. Your system will collect excess solar energy while the sun shines and store it in a battery bank until you need to use it.
In an on-grid system battery banks may still be useful, because they will allow you to store solar energy for use when neither the sun, wind or your traditional power source is available -for instance, if there were a power outage at night.

Picture from backwoodshome.com
For more information on battery banks, please visit:

http://www.backwoodshome.com/articles2/yago88.html Solar Power 101 with Backwoods Magazine – an excellent in-depth look at the specifics of solar power battery banks