This study investigates the development of solar powered milk processor and processing cost analysis of solar processed milk using On-grid solar PV system. A set of 10 series connected On-grid solar panels of 3 kW capacity was mounted on roof top to easily meet the requirement for processing 40 L of milk in batch mode. Commercially available milk boilers of capacity 10 to 40 L are embedded with electrical heater coils of capacity 1 kW to 3 kW. As the proposed work is to design and optimize the solar panel for processing 40 L of milk in batch processor, 10 series connected On-grid solar panels, each of capacity 325 W, were mounted on the roof top with daily power generation capability of 3 kW. The efficiency of roof top mounted On-grid solar panels is 80% which means solar panel rated for 1 kW gives an output of approximately 800 W (0.8 kW). The energy generated in kWH is the product of power (kW) and time (h). The available peak sunshine h (PSH) from 10.00 a.m. to 3.00 p.m. (5 h) was utilized to generate 4 kWh of energy (0.8 kW × 5 h)/day for 1 kW capacity of solar panel. As 10 On-grid solar panels (3 kW) were installed, 12 to 15 kWh of electrical energy was generated per day based on the available peak sunshine hours and was recorded by means of digital energy meter. The milk processing cost analysis were carried out based on the trials conducted on the developed solar powered milk processor at College of Food and Dairy Technology, Koduveli, Chennai. It was found that the total processing cost/L ranged from Rs. 0.6 to 0.35 for various treatments without regenerative action and Rs. 0.58 to 0.16 for various treatments with regenerative action. Novelty impact statement Increased reliability and raw milk processing cost optimization are achieved with Solar solutions. The On-grid inverter provides a baseline electricity demand at village level for dairy farmers for productive/processing purposes. The developed solar powered milk processor ensures captive generation in dairy plants which provides a localized source of power to MSME/Small scale industries, as processing cost is lower.