What is a Solar Power Plant? Types, Working, Cost, ROI, Pros, and Cons

A solar power plant is a solar energy system that either uses photovoltaic technology to generate electricity using solar PV panels or uses concentrated solar power technology (CSP) to generate steam that rotates turbines, which, in turn, generates electricity. Based on whether they use PV panels or lenses/mirrors, solar energy plants are classified as solar cell power plants and concentrated solar power plants.

Solar cell power plants: These are solar plants that use sunlight to generate electricity using solar PV panels. These are of three main types, namely, on-grid solar power plants, off-grid solar power plants, and hybrid solar power plants.
Concentrated solar power plants: They use mirrors and lenses to concentrate sunlight onto a single area. Then, they use the collected thermal energy to generate steam, which can rotate turbines to produce electricity. The most popular types of concentrated solar power plants are the parabolic trough collectors, solar power towers, linear Fresnel reflectors, and dish Stirling systems.

The solar energy plants that use solar PV cells represent the more practical technology. Hence, they’re more popular when it comes to installing rooftop solar panel systems for homes, housing societies, and commercial buildings.

In this blog, we will explain both types of solar power plants, how they differ, and the types of solar photovoltaic power plants and why they’re the most preferred solar energy power plants. We will also discuss the cost of installing on-grid rooftop solar panel systems for homes, as well as the potential savings homeowners can achieve over 25 years.

TL;DR Summary Box: What is the Difference Between PV and CSP Solar Power?

The main difference between solar PV and CSP technologies is how they turn sunlight into electricity.

Solar PV power plants, also known as solar cell power plants, use solar panels that directly convert sunlight into electricity. CSP (concentrated solar power) plants, on the other hand, don’t make electricity directly. They use mirrors or lenses to focus large amounts of sunlight on one area. It creates heat that’s then used to generate steam. Finally, the steam spins a turbine that generates electricity.

Here are the main topics covered in this blog in detail:

Main Topics	Quick Takeaways
What is the meaning of a solar power plant?	A solar plant is a large solar energy system that uses sunlight to produce solar electricity.
What are the types of solar plants?	Solar photovoltaic power plant and solar concentrated power plant
What are the types of solar PV power plants?	On-grid solar systems, off-grid solar systems, and hybrid solar systems
How does a concentrated solar power plant work?	Many mirrors or lenses collect sunlight and focus it onto a receiver that heats up. The heat is used to generate steam, which moves a turbine to produce electricity.
How does a solar PV power plant work?	Solar panels capture sunlight and use the photovoltaic effect to directly turn it into electricity.
Does the government offer any subsidy on solar plants?	Yes, the government offers a subsidy to homeowners and housing societies installing on-grid rooftop solar systems.
What is the cost of installing on-grid rooftop solar systems in India?	~Rs. 90,000* in Lucknow for a 2 kW solar system to ~Rs. 5.62 lakh* in Bengaluru for a 10 kW solar system after you avail of a subsidy under the PM Surya Ghar Muft Bijli Yojana.
What are the advantages of solar energy plants?	They offset carbon and reduce electricity bills for homeowners by 90% or more.
What are the disadvantages of solar electric plants?	Initial investment cost and weather dependency are two limitations. However, a subsidy for homeowners and high-efficiency solar panels takes care of these challenges easily.

What is a Solar Power Plant?

A solar power plant, also known as a solar electric plant, is a solar energy system which uses sunlight to produce electricity. Based on the way it generates electricity, it’s classified into solar cell power plants, also known as solar PV power plants, and concentrated solar power (CSP) plants.

Solar photovoltaic power plants are simpler to install, cheaper, easier to maintain, and more practical than concentrated solar power plants. Hence, they’re the most preferred technology used to install rooftop solar for housing societies, homes, and commercial buildings.

What Are the Main Types of Solar Plants?

The two main types of solar plants are solar photovoltaic plants and concentrated solar power plants. The solar photovoltaic power plants have solar panels that capture sunlight and convert it to DC (direct current), which a solar inverter then converts to alternating current (AC).

A concentrated solar power plant is significantly more complex than solar PV power plants. It doesn’t produce electricity directly but follows a rigorous series of steps:

Mirrors or lenses focus sunlight onto one spot: This creates intense heat that is used to make steam.
The steam spins a turbine: It’s the spinning of the turbine that generates electricity.

Which is Better, a Solar PV Power Plant or a Concentrated Solar Power Plant?

A solar PV power plant is significantly more cost-effective and easier to install and maintain compared to a concentrated solar power plant. In fact, the former can be installed on rooftops as well, saving a lot of land area when required. But concentrated solar power plants can’t be installed on rooftops.

Let’s explore the key differences between the two types to help you understand why PV technology is superior when it comes to converting solar radiation into electricity.

Feature	Solar Photovoltaic Power Plant	Concentrated Solar Power Plant
How does it work?	High-efficiency solar panels directly turn sunlight into electricity.	Mirrors/lenses concentrate sunlight to make heat. This heat then makes steam that’s used to run turbines to produce electricity.
Setup	It’s easy to install and works as rooftop solar systems and big solar power plants on land.	It’s a very complex setup that requires large areas of open land.
Cost	Cheaper to install and maintain than CSP plants.	Very expensive to install and maintain.
Space requirement	Can be easily fitted on rooftops.	Needs open lands and very strong sunlight to work.
Where is it most commonly used?	Homes Housing societies Commercial rooftop systems Solar farms	Can be used in big solar farms in deserts.
Popularity	Extremely popular amongst homeowners, housing societies, and commercial offices and industries.	Not very commonly used.

How Does a Concentrated Solar Power Plant Work?

A concentrated solar power plant makes electricity from heat, not directly from light. It uses many mirrors or lenses to focus sunlight onto a small receiver. That spot gets very hot. The heat is picked up by a special fluid, used to make steam, and the steam spins a turbine to make electricity.

Here are the main types of concentrated solar power plants that use mirrors in a slightly different way to collect heat:

Parabolic trough: These are long and curved mirrors that focus sunlight onto a tube that runs along the mirror’s center. A heat-carrying fluid flows inside the tube and gets very hot. That hot fluid later makes steam to drive a turbine.
Power tower, also known as central receiver: In this CSP plant, thousands of flat mirrors, called heliostats, track the Sun and point light at a receiver on top of a tall tower. The receiver heats molten salt or another fluid. The stored heat then makes steam and power.
Linear Fresnel: In this setup, many flat and narrow mirrors are placed close to the ground. Light from those mirrors is concentrated onto a fixed receiver tube that’s kept directly above those mirrors.
Dish Stirling: This CSP plant uses a dish-shaped mirror to focus sunlight onto a small engine kept straight at the focus point. The heat runs a Stirling engine to produce electricity.

Step-by-Step Working of Concentrated Solar Power Plants

Let’s check out how these solar energy power plants use sunlight to generate electricity in simple steps.

Step 1 – Sunlight is collected: Mirrors/ lenses track the Sun and concentrate sunlight onto a receiver.
Step 2 – Receiver absorbs all the heat: The receiver gets very hot. A heat-transfer fluid, such as oil or molten salt, flows through it and absorbs the heat.
Step 3 – Absorbed heat is stored (optional but common): The hot fluid or molten salt is stored in insulated tanks. This allows the solar power plant to continue generating power even after sunset.
Step 4 – Steam is generated: Whenever needed, the hot fluid passes through a heat exchanger and boils water to produce steam.
Step 5 – Steam begins to spin the turbine: The steam rotates a turbine that is connected to a generator. It’s the generator that makes electricity.
Step 6 – The steam is cooled for reuse: The steam is cooled back into water and returned to the boiler loop. The heat-transfer fluid also returns to the receiver to be heated again.

How Does a Solar PV Power Plant Work?

A solar cell power plant consists of solar panels that absorb sunlight and straightaway convert it to electricity through a series of simple steps and multiple components that are a part of the solar system:

Step 1 – Sunlight falls on solar panels: Solar panels are made of solar cells. These solar cells absorb photons present in the sunlight.
Step 2 – Photons excite electrons present in the solar cells: Photons transfer their energy to electrons, making them leave their place and move. The place they leave behind is called a hole, which is positively charged.
Step 3 – The built-in electric field ensures electrons and holes do not immediately recombine: The cell’s internal electric field at the p-n junction pushes electrons and holes in opposite directions.
Step 4 – Electrons always flow in one direction: The flow of electrons is what’s known as DC power.
Step 5 – The DC power is taken to a solar inverter: The solar inverter converts direct current into alternating current so it can be used to run appliances at home.
Step 6A – A bi-directional net meter allows electricity exchange between the grid and the solar system: Any extra electricity is transferred to the utility grid through the net meter in an on-grid solar system. At night, the net meter imports electricity to keep the loads running.
Step 6B – A solar panel charge controller in the solar inverter charges the lithium battery bank: In off-grid and hybrid solar systems, the extra electricity is used to charge the lithium batteries, which can be used at night or during power outages to keep the load running.

What Are the Main Types of Solar Photovoltaic Power Plants?

The three main types of solar cell power plants that use the PV technology are on-grid solar systems, off-grid solar systems, and hybrid solar systems.

On-grid solar power plant: This solar electric plant is connected to the main power grid. It consists of a bi-directionalnet meter that allows electricity exchange between the grid and the solar system. During the day, when solar panels produce more electricity than can be consumed, the net meter transfers it to the grid. At night, electricity is drawn from the grid through the net meter to keep the load running.
Off-grid or standalone solar energy plant: These solar electric plants are not connected to the grid. Instead, they use a lithium battery bank. The solar inverter consists of a built-in charge controller, which is used to charge the batteries safely. At night or whenever required, stored energy in the batteries is used to keep the load running.
Hybrid solar energy power plant: These solar electric plants are connected to both the grid and the batteries. Extra electricity generated during the day is used to charge the lithium battery bank. If anything else is still left, it’s sent to the grid. At night or whenever needed, energy stored in the batteries is used to keep the load running.

On-Grid vs Off-Grid vs Hybrid: Which is Better and Why?

On-grid solar systems are the best and most economical options for both residential and commercial purposes. They’re the cheapest of the three types and also the easiest to maintain. Why? Because they do not require batteries, which are not only expensive to install but equally expensive to maintain and replace.

If you live in India and are looking to install solar at your home, housing society, or company, on-grid solar systems are better than off-grid and hybrid solar systems. Let’s check out the key differences between the three types that prove why areas with a reliable grid supply should opt for on-grid solar power plants:

Feature	On-Grid Solar Plant	Off-Grid Solar Plant	Hybrid Solar Plant
Is it connected to the grid?	Yes	No	Yes
Does it have batteries?	No	Yes	Yes
Main components	Solar panels, utility grid, solar inverter, solar mounting structures, bi-directional net meter, and solar accessories.	Solar panels, battery bank, solar inverter, solar mounting structures, and solar accessories.	Solar panels, utility grid, battery bank, solar inverter, solar mounting structures, bi-directional net meter, and solar accessories.
Installation complexity	Very low, as it does not include batteries	High, as it includes batteries	Highest, as it includes both batteries and the grid
Installation cost	Cheapest of the three types	Higher than on-grid solar systems	Highest of the three types
Does the government offer a subsidy?	Yes. It’s offered to homeowners and housing societies installing on-grid rooftop solar systems.	No	Yes
Does it provide power backup during outages?	No. As soon as the grid shuts down, the solar system stops supplying power. This is a safety feature that’s called anti-islanding. It ensures that linemen repairing faulty wires don’t get electrocuted.	Yes. As long as the battery has energy stored, it will give power. This means investing more in larger batteries.	Yes. As long as the battery has energy stored, it will give power. This means investing more in larger batteries.

When should you choose on-grid solar systems? On-grid solar systems are most preferred for homes, housing societies, and commercial buildings in urban areas that have a reliable grid connection.
When to choose off-grid solar power plants? Opt for off-grid only if you live in a remote location with a very unreliable grid supply or no grid connection at all.
When should you choose hybrid solar plants? You can opt for a battery energy storage system if you’re installing solar for an industry that requires power backup for sensitive operations.

Rooftop Solar Systems vs Ground-Mounted Solar Plants

Solar power plants using photovoltaic technology can also be classified based on the location they’re installed. Rooftop solar systems, as the name suggests, are set up on the roof of homes, housing societies, offices, and industries. Ground-mounted solar plants, on the other hand, are installed on open land.

Rooftop solar energy systems are better because they’re easier to install, do not occupy land, and are perfect for everyday electricity needs. Ground-mounted systems, on the other hand, require large spaces, significant investment, and are typically built for utility companies.

Let’s check out how the two differ and why rooftop solar power plants are the most preferred solar PV systems:

Feature	Rooftop Solar System	Ground-Mounted Solar Plant
Where is it installed?	On the roof of houses, apartments, offices, or factories	On empty land or large fields
Space needed	Uses unused roof space No extra land required	Needs big plots of land that are often away from cities
Cost of setup	Lower cost makes them affordable for homes and businesses	Higher cost makes them useful only for large-scale power plants for utility companies
Best for	Homes, housing societies, commercial and industrial buildings	Utility companies
Maintenance	Easy to clean and maintain since solar panels are present on roof	Harder to maintain because panels are spread out over acres of land
Government subsidy	Available to homeowners and housing societies installing on-grid rooftop solar systems	Not available

Does the Government Offer Any Subsidy for Installing Solar Energy Power Plants?

The Indian government offers a subsidy under the PM Surya Ghar Muft Bijli Yojana only to homeowners and housing societies installing on-grid rooftop solar systems.

You will not be able to avail the benefits of the PM Surya Ghar subsidy scheme if you install:

Off-grid solar systems
Ground-mounted on-grid solar systems
Rooftop on-grid solar systems for commercial purposes

In simple terms, you will get financial assistance under this scheme only if you’re a homeowner or a housing society installing an on-grid rooftop solar system.

Here’s the solar subsidy that homeowners receive under the PM Surya Ghar Yojana:

Solar System Size	Solar Subsidy for Homes in India in 2025
1 kWp	Rs. 30,000
2 kWp	Rs. 60,000
3 kWp	Rs. 78,000
4 kWp	Rs. 78,000
5 kWp	Rs. 78,000
10 kWp	Rs. 78,000

Please note: The Indian government has capped the subsidy for homeowners at a maximum of Rs. 78,000. This means that any system that’s 3 kW or higher gets a fixed relaxation of Rs. 78,000.

Here’s the solar subsidy that housing societies receive under the PM Surya Ghar Yojana:

Solar System Size	Solar Subsidy for Housing Societies in India in 2025
100 kW	Rs. 18 lakh
200 kW	Rs. 36 lakh
500 kW	Rs. 90 lakh

Please note: Group housing societies (GHS) receive a subsidy of Rs. 18,000 per kW in India up to 500 kW (@3 kW per house) for common facilities, including EV charging.

What is the Cost of Solar Power Plants Using PV Panels in India in 2025?

The estimated cost of installing on-grid rooftop solar systems at homes can range from ~Rs. 90,000* in Lucknow for a 2 kW solar system and ~Rs. 5.62 lakh* in Bengaluru for a 10 kW solar system after you avail of a subsidy under the PM Surya Ghar Muft Bijli Yojana.

Here’s a tabulated snapshot of the solar plate price in India with and without a subsidy under the PM Surya Ghar Muft Bijli Yojana:

Solar System Size	Solar Panel Price in India Without Subsidy (Starting Price – Indicative for Base Variant)*	Solar Panel Price in India With Subsidy (Starting Price – Indicative for Base Variant)*
2 kWp solar system	~Rs. 1.8 lakh in Lucknow to ~Rs. 2 lakh in Bengaluru	~Rs. 90k in Lucknow to ~Rs. 1.40 lakh in Bengaluru
3 kWp solar system	~Rs. 2.10 lakh in Lucknow to ~Rs. 2.35 lakh in Bengaluru	~Rs. 1.02 lakh in Lucknow to ~Rs. 1.57 lakh in Bengaluru
4 kWp solar system	~Rs. 2.55 lakh in Lucknow to ~Rs. 2.85 lakh in Bengaluru	~Rs. 1.47 lakh in Lucknow to ~Rs. 2.07 lakh in Bengaluru
5 kWp solar system	~Rs. 3.10 lakh in Lucknow to ~Rs. 3.70 lakh in Bengaluru	~Rs. 2.02 lakh in Lucknow to ~Rs. 2.92 lakh in Bengaluru
10 kWp solar system	~Rs. 5.80 lakh in Lucknow to ~Rs. 6.40 lakh in Bengaluru	~Rs. 4.77 lakh in Lucknow to ~Rs. 5.62 lakh in Bengaluru

*Please note: The above-mentioned solar plate price is indicative as of 25th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change.

Cost of Installing an On-Grid Rooftop Solar Power Plant vs Solar Savings

Wondering how much money you’ll save in the long run if you invest a few lakhs in installing on-grid solar at your home today? Let’s take you through a head-on comparison between the estimated solar installation cost in Nagpur vs the solar savings the rooftop on-grid solar will provide in 25 years of its life:

Solar System Size	Solar Plate Price in Nagpur With Subsidy (Starting Price – Indicative for Base Variant)*	Solar Savings in Nagpur in 25 Years*
2 kWp	~ Rs. 1.15 lakh	~ Rs. 11.05 lakh
3 kWp	~ Rs. 1.32 lakh	~ Rs. 16.58 lakh
4 kWp	~ Rs. 1.77 lakh	~ Rs. 22.11 lakh
5 kWp	~ Rs. 2.27 lakh	~ Rs. 34.43 lakh
10 kWp	~ Rs. 5.02 lakh	~ Rs. 68.86 lakh

*Please note: The above-mentioned solar panel price is indicative as of 25th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change. Additionally, while calculating savings, we have considered the annual tariff escalation at 3% and the annual degradation at 1%. The actual final savings from solar panel installation depend on the types of solar panels you’ve installed and their efficiency, intensity of sunlight your rooftop receives, orientation of the panels and tilt angle, the pollution level and weather conditions in your city, the temperature, shadow on the roof, impact of dirt/dust, and how well you maintain your panels after installation.

Eager to check how much money an on-grid solar system can save in 25 years in your city? Use SolarSquare’s free solar rooftop calculator to get an estimate now.

What Are the Advantages of Solar Power Plants?

Solar power plants can tackle India’s air pollution problem easily, as installing even something as small as a 2 kW solar system can offset 51,744 kg of carbon dioxide from the atmosphere. In fact, it reduces at least 90% of electricity bills for homeowners.

Let’s check out all the advantages of solar power plants in detail:

They protect the environment: Installing solar on your rooftop means you’re reducing your carbon footprint automatically. Installing even a 3 kW solar system is equivalent to planting 118 full-grown trees, which can remove 77,616 kg of carbon dioxide from the air. Can you imagine how much carbon a solar system in megawatts can offset?
They reduce electricity bills: Electricity bills for homeowners are slashed by more than 90% because the solar system generates solar electricity using sunlight, which is free. You just pay for the initial system investment cost. After that, a well-maintained system, which lasts for more than 25+ years, will generate free electricity for you throughout its life.
They make the country self-reliant: When the country produces its own energy using sunlight, there won’t be any requirement for importing costly fossil fuels. It will make India truly 100% energy independent.
They offer better ROI than any other form of investment: A solar system pays for itself in 3-5 years. The return on investment is superior to other forms of investment, as the solar system operates for over 25 years, saving tens of lakhs of rupees that would have otherwise been spent on electricity bills.

What Are the Disadvantages of a Solar Energy Plant?

The initial investment cost is a limitation. However, the government has already resolved this issue of affordability by offering homeowners and housing societies installing on-grid rooftop solar systems a subsidy under the PM Surya Ghar Muft Bijli Yojana. Furthermore, SolarSquare also offers its customers solar loans.

Here are a couple of limitations of solar power plants:

The initial investment cost is high: While homeowners and housing societies get a subsidy, commercial offices and industries can’t avail of this subsidy. However, installing solar is still a lot more economical than continuing to pay hefty electricity bills.
The output is weather-dependent: Solar panels need sunlight to work, and their output reduces under cloud cover and during the monsoon. Having said that, solar panels continue generating electricity even during the rainy season. The output from solar is never linear. If it’s lower during the monsoons, it’s much higher during summers when sunlight is more abundant. Plus, better technology, including half-cut mono-PERC solar cells and bifacial solar panels, offers great performance even under partial shadows.

Conclusion

Solar power plants are classified into concentrated solar power (CSP) plants and solar PV power plants based on how these technologies use sunlight. CSP solar energy plants are complicated and expensive to set up. In comparison, solar PV power plants are inexpensive and much simpler. They use solar panels to capture sunlight and convert it into electricity, which can be used to power homes, housing societies, and businesses.

Solar cell power plants that use PV panels are of three main types: on-grid, off-grid, and hybrid systems. If you live in urban areas with a reliable grid, consider opting for on-grid rooftop solar systems, as the government offers a subsidy to homeowners and housing societies that install them. For any further information, book a free solar consultation call with SolarSquare.

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FAQs

Q1. Do solar panels work at night?

Ans. No, solar panels do not work at night. In on-grid solar systems, the bidirectional net meter imports electricity from the grid to keep the load running at night. In off-grid and hybrid solar systems, solar energy stored in batteries can be used to deliver power at night or during power outages.

Q2. Is CSP more expensive than PV?

Ans. Yes, concentrated solar power plants are a lot more expensive than solar PV power plants. Unlike solar PV plants, which can be installed on rooftops, CSP plants require large land areas, significantly increasing the installation cost.

Q3. What is the cost of a 10 kW solar power plant?

Ans. The cost of a 10 kW solar system in India before a subsidy ranges between ~Rs. 5.80 lakh* in Lucknow to ~Rs. 6.40 lakh* in Bengaluru. *Please note: The above-mentioned solar plate price is indicative as of 25th August 2025 for the SolarSquare Blue 6ft variant. The final cost of installing an on-grid rooftop solar panel system at home depends on your DISCOM charges, product variant opted for, panel type, inverter type, mounting structure height, type of after-sales service, savings guarantee, roof height, etc. Prices are subject to change.