Do you want to start a solar farm but you lack the technical know-how? If YES, here is a detailed step by step guide on how to build a commercial solar farm. Solar energy has become one of the most reliable sources of power supply especially in the operation of lifts in commercial buildings. The market for solar energy is increasing and it is still open for new investors to come in.
So if you are thinking of starting a business that is into the production of technological components, then you should consider starting your own solar panel manufacturing company. Basically, a solar farm is a large land area where multiple ground-mounted solar tracking towers are installed.
Usually it can be on a working farm or other open and mostly unimproved land. The Solar Farm Developers industry is made up of companies that mainly install and construct solar power grid systems, which are known as solar farms, on a utility scale. The work executed within the industry include new work, reconstruction, rehabilitation and repairs et al.
Statistics has it that an estimated 85 percent of U.S. residents can neither own nor lease solar panel systems because their roofs are physically unsuitable for solar or because they live in multi-family housing. At least 52 projects are under development in at least 17 states, and at least 10 states encourage their development through policy and programs.
The Solar Farm Developers industry has galloped ahead in recent years as a result of rapid technological developments, falling solar panel costs and favorable government policy. The demand for solar panel installation is projected to continue to experience rapid growth.
With the ongoing government aid in the form of tax credits and rebates, along with technological advances in solar energy, as well as the rising popularity of solar power purchase agreements (SPPAs), the revenue generated in the industry is expected to grow sharply.
Statistics have it that The Solar Farm Developers industry in the united states of America, is worth $10 billion, with an estimated growth rate of 46.5 percent. There are about 80 registered and licensed solar farm developer businesses in the United States and they are responsible for employing about 9,027 people.
Most people who have a stake in the industry will quite agree that the solar farms industry has come to stay. So if you are interested in the solar energy industry and you want to build a commercial solar farm, here are the step by step guide you are expected to follow to fulfill your business goal.
10 Steps on How to Build a Commercial Solar Farm
Table of Content
- Step One: Draw Up Your Business Plan
- Step Two: Choose a Suitable Location
- Step Three: Conduct Preliminary Financial Analysis
- Step Four: Land Leasing or Buying
- Step Five: Start the Basic Engineering Design and Technology Selection
- Step Six: Apply and Secure the Needed Permits and Licenses
- Step Seven: Sign the Power Purchase Agreement (PPA)
- Step Eight: Selection of A System Integrator or a Solar EPC Contractor
- Step Nine: Source for Finance for the Commercial Solar Farm
- Step Ten: Construct the Commercial Solar Farm
- Step Eleven: Testing and Connection to Grid
- Step Twelve: Ongoing Operation and Maintenance (O&M)
Step One: Draw Up Your Business Plan
The fact that you want to build a commercial solar farm means that you want to go into business, and no business of this magnitude will ever fly without a comprehensive business plan. When we talk of business plan in this regard, we are talking of a comprehensive document to covers everything from how you intend to run the commercial solar farm to all the necessary diagrams needed to build the commercial solar farm.
Besides, the fact that it is capital intensive to build a commercial solar farm means that you would require some form of business loan and part of the collateral that you would need to access the loan is your business plan. So also, you would need a business plan to apply and obtain some or even all of the permits and licenses required for this kind of business no matter the country you want to build the commercial solar farm.
Step Two: Choose a Suitable Location
If you are done with your business plan document and all the necessary drafting that is required to start your commercial solar farm, the next logical step to follow is to take action and taking action means that you should look for a suitable location that can accommodate your commercial solar farm.
There are loads of factors you should consider when choosing a location for your commercial solar farm. Some of the basic factors are; the location must have appreciable sunlight during the day, the location should not be heavily forested, the location must have easy access to good road network, power grid and above all, the location should be able to get permit for starting and operating a commercial solar farm.
Depending on the country that you are in, it is important to point out that commercial solar farms are being mainly built in countries which have subsidy program like tax rebates, feed in tariffs and government support via business loans et al for investors who are interested in operating commercial solar farms.
Step Three: Conduct Preliminary Financial Analysis
The fact that that you have gone all out to select a suitable location to build your commercial solar farm means that you are serious with the business and the next logical step to follow is to conduct a preliminary financial analysis for the business.
Preliminary financial feasibility will help you allocate figures to the cost of buying the land, the cost of installing all the solar equipment, the cost of connecting the commercial solar farm to the power grid you intend selling your power through, the cost of building the needed facility that will accommodate your employees and of cost the cost of maintaining and securing the facility.
The importance of conducting preliminary financial analysis cannot be overemphasized because it is through this step that you will be able to come up with the true figure (closest estimate) of the amount needed to build and operate a commercial solar farm. It will help to know how much you are expected to loan or save up.
Step Four: Land Leasing or Buying
Once you have been able to identify a suitable location for your commercial solar farm and you have been able to successfully conduct preliminary financial analysis, then the next step is to acquire the land. Please note that the acquisition of the land can either be through leasing or outright purchase (ownership) of the land.
The reason why the option you have is restricted to long – term leasing or outright buying is because building a commercial solar farm is a long – term investment, it might take you many years before you break even and you would not want to do that on a rented land. It will not be cost effective for you, besides the installation of the solar facility is also expensive and you would not want to do that knowing fully well that you are going to be doing it on a short – term basis.
Step Five: Start the Basic Engineering Design and Technology Selection
If you have acquired the site you want to build your commercial solar farm on, then the next step to follow is to start the basic engineering design and technology selection that is most suitable for the type of commercial solar farm (small, medium or large solar farm) that you want to build.
Please have it in mind that an engineering layout for a solar farm is prepared along with a selection of the suitable technology and of course vendors of the solar equipment that you intend using in the commercial solar farm. Please note that if you get this step right, you will spend less on your operation and that will translate to increase in profit margin for your business.
Step Six: Apply and Secure the Needed Permits and Licenses
To start with, no matter the country or state (especially in the United States of America) that you intend to build a commercial solar farm, you are expected to apply and secure all the necessary permits and licenses or else you will be operating an illegal business. Besides, you would need the input of the government to be able to sell your solar energy.
Come to think of it, the regulations and permits for building a commercial solar plant or a solar farm differ from country to country and from region to region and this is strictly dependent on federal and state laws. For example, a large commercial solar farm like First Solar in the United States of the Aqua Caliente, there are a number of permitting steps that have to be passed before the solar farm can secure the needed permits and be built.
This is not so for smaller power plants that have the capacity to generate 5 Mega Watts or less. Within this range, the requirements are far less and less cumbersome to meet. The bottom line is that, the smaller the size of the commercial solar farm, the lower the number of regulations required.
The basic permits needed to launch a commercial solar farm especially in the United States of America includes – Industrial Clearance, Land conversion (Agricultural to Non-Agricultural), Environmental Clearance Certificate, Contract labor license from Labor Department, Fire Safety certificate from Fire Department, Latest tax receipt from the Municipal for the land, Auditor compliance certificate regarding fossil fuel utilization, Approval from Chief Electrical Inspector, Clearance from Forest department etc.
Please note that the above permits may vary from state to state.
Step Seven: Sign the Power Purchase Agreement (PPA)
The essence of building a commercial solar farm is to sell clean – green energy to end users or vendors hence the need to draft and sign the needed Power Purchase Agreement (PPA) document. As a matter of fact, you would need to sign a Power Purchase Agreement (PPA) with the Power Utility in your locale who will buy the electricity generated and then distribute same to the end users.
For example, in the United States, the copy of the Power Purchase Agreement (PPA) document needs to be submitted to state regulating authority along with the following certificates and documents (Industrial Clearance, Land conversion (Agricultural to Non-Agricultural), Environmental Clearance Certificate, Contract labor license from Labor Department, Fire Safety certificate from Fire Department, Latest tax receipt from the Municipal for the land, Auditor compliance certificate regarding fossil fuel utilization, Approval from Chief Electrical Inspector, Clearance from Forest department etc.) for final approval and for the records.
Step Eight: Selection of A System Integrator or a Solar EPC Contractor
The next step to take after signing the Power Purchase Agreement (PPA) document is to select a System Integrator or a Solar EPC Contractor for your commercial solar farm. Please note that if you decide to settle for a Solar EPC Contractor then all the solar panels needed in the commercial solar farm needs to be purchased if the Solar EPC Contractor is not a Turnkey One.
No doubt, you would have saved up some money to invest in this business, but trust me, after conducting step one to eight, you would realize that you still need more money to finance the business hence the need to source for business loan. From research, 60 to 80 percent of the Project is usually Debt Financed. In as much as the operation and maintenance of a commercial solar farm is marginally low, the initial investment is pretty much high.
Part of what you need to do to raise finance for your commercial solar farm is to raise money from investors and business partners, sell shares to interested investors, apply for loan from your bank / banks, pitch your business idea and apply for business grants and seed funding from donor organizations and angel investors and lastly source for soft loans from your family members and your friends who are well-boxed to finance such project.
Step Ten: Construct the Commercial Solar Farm
If you have everything in place and you have been able to secure reasonable startup capital, then the next step is to go all out to construct the commercial farm. You are expected to build it to specification hence the need to hire competent engineers and project managers, hire suitable equipment and source for permits and business loans. This is very important, because after the completion of the construction of your commercial solar farm, the regulatory authority will be on ground to inspect it before giving you the final approval to go on with the business.
Please note that the construction of a Solar Farm / Plant can take between 3 months to 2 years depending on the expertise of the project team. It is also important to note that when it comes to building a Solar Thermal Plant, you are expected to spend much more time on this project. Usually it will take you between 3-5 years to complete the project.
Step Eleven: Testing and Connection to Grid
One of the reasons why you would need to ensure that your engineers and project managers build your commercial solar farm to specification is because the solar farm will be subjected to testing before it can be connected to the grid. The bottom line is that the steps will not be complete if testing is not carried out. If the expected standards are not met, you will be required to rectify the problem and another testing will be carried when you are done.
Step Twelve: Ongoing Operation and Maintenance (O&M)
In order to continue to generate or harvest maximum energy from your solar farm, you are expected to draft an ongoing operation and maintenance (O&M) document and ensure that you follow them to the later. It might interest you to know that a Solar Farm or Plant has a life – span of between 25 to 30 years and it requires minimal maintenance and monitoring for it to be efficient and generate the required power output.
Part of the ongoing operation and maintenance requires that Solar Inverters have to be replaced after 10-15 years and also in the situation where it is a Solar Module that fails, it needs to be replaced as soon as possible because it will affect the output of the solar panel. There are other ongoing operation and maintenance that you are expected to carry out such as cleaning the solar panel and monitoring the output et al.