You can assume that a 1 MW solar farm would cost roughly $1 million to install. Meanwhile, that value sounds unusually low in comparison to typical costs associated with residential solar ($3 to $4 per watt). The “economies of scale” concept is in full effect in the solar industry. Also, you have to understand that solar farm costs include labor and material, plus taxes and other expenses such as permitting fees.

We all can agree that the solar industry has been experiencing rapid growth over the past decade, and a key contributing factor has been the rise and expansion of solar farms across the globe. A solar farm sometimes referred to as a photovoltaic power station, is typically a large decentralized solar array supplying electricity to the power grid.

The majority of these massive arrays are owned by utilities and are merely another asset for the utility to supply power to properties in their coverage area. Also, a broader definition of solar farms could include other ground-mounted solar arrays large enough to supply power to many households.

This general concept of a solar farm could be associated with both residential community solar and larger utility-scale solar. Note that the idea of community solar, which is now a key part of the solar farm business, has taken off in recent years as more homeowners have realized that they can go solar without putting solar panels on their physical roof.

These community solar projects—sometimes referred to as “solar garden” or roofless solar —is a solar power plant whose electricity is shared by more than one household. In most cases, a community solar array is a large ground-mounted installation that spans one or many acres. These solar gardens resemble utility-scale solar farms, but they are often smaller in size.

Customers can either purchase a share of a solar garden and own that portion of the overall array or they can lease energy from the solar system and, in a sense, replace their monthly utility payments with monthly community solar payments that are typically at a lower price.

Building a Solar Farm – Cost Breakdown and Profit Margin/ROI

Solar farms at the utility-scale will probably be at least 1 megawatt (MW), which is a power plant capable of supplying some 200 households. Although the cost range will depend on some factors like location and available sunlight hours, industry experts have stated that the cost per watt for solar installations at this scale is somewhere around $1/watt.

Therefore, you can assume that a 1 MW solar farm would cost roughly $1 million to install. Meanwhile, that value sounds unusually low in comparison to typical costs associated with residential solar ($3 to $4 per watt). The “economies of scale” concept is in full effect in the solar industry. Also, you have to understand that solar farm costs include labor and material, plus taxes and other expenses such as permitting fees.

The total cost of a commercial solar farm should be all-inclusive. The overall system cost consists of equipment, shipping, taxes, and rebates. Equipment costs vary depending on your specific needs. Shipping costs vary wildly depending on what you order and where it’s shipped to.

There can be both federal and state rebates. States and counties usually charge a fee to inspect and permit your new solar farm. This varies greatly between locations, but as a ballpark, they are usually less (sometimes much less) than $1000, but that can still affect your ROI on your solar investment.

In California, for instance, permitting fees are limited to $500 for systems smaller than 10kW (and increases only slightly after that). Some counties have special exemptions to this though, so double-check with relevant agencies first. Other states like Colorado have varying prices in the city but also average out around $500.

Also, note that fees paid to the property owner for the land can differ widely based on the unique characteristics of the land and the size of the solar installation. On average, the solar farm profit per acre is somewhere between $21,250 and $42,500 on an annual basis.

Agreeably, solar farming can be quite lucrative for some landowners, as most solar installations require, at minimum, 4 acres of useable land; however, some solar farms span hundreds of acres, netting property owners hundreds of thousands of dollars per year.

Reports have it that the quick expansion in the solar industry came as a result of two major factors: government programs like the Investment Tax Credit (ITC). It’s also very important to state that solar farms typically require less maintenance than other forms of energy generation, but they can still have a dramatic effect on the local surroundings.

For instance, service roads are typically built to grant vehicles access to different components of the solar installation, which might necessitate the clearing out of high-value crops and other natural vegetation such as trees and shrubs.

Also, during the land lease negotiation, it’s important to figure out who will be responsible for large financial liabilities, like real estate taxes, landowner insurance premiums, and other expenses associated with the property.

It’s critically important to discuss what happens to the solar installation once the lease has ended, as many property owners may want to return the land to its original condition, which can be an extremely costly endeavor if done without assistance.

You should also understand that as a normal part of their lifecycle, solar panels very slowly lose performance over time on the order of about 0.5% to 1% per year.

Note that a good manufacturer warranty will include this degradation explicitly in their terms, and a typical guarantee is for panels to still produce at least 80% of their initial output 25 years later. This means a 300-watt panel today would be guaranteed to still produce at least 240 watts 25 years from now.

In the past, certain solar components (namely inverters) would wear out quickly and need periodic replacement before the system could pay itself back. But in recent times, solar panels have gotten drastically more efficient, and modern systems should see a complete payback long before any replacements are necessary.

With an average payback time of 5-10 years and average warranties of 10-25 years, there should be little to no additional maintenance costs. In an off-grid solar setup, eventual battery bank replacement can be a significant expense.

In battery-backup situations, batteries will last about 10 years with proper care. In off-grid or grid-assisted setups, where batteries are cycled daily, the heavy usage can diminish that to 5 years or less. Batteries wear based on the number and depth of discharge cycles, so more usage will wear them out more quickly.

  • Conclusion

When considering building a solar farm, whether it be a 50 kW array or a 50 MW project and larger, there are a lot of factors to consider. A smaller solar farm may only require a few acres of land whereas a large utility-scale solar farm can require hundreds of acres.

You’ll need to consider the location of the land and whether or not it’s situated close enough to power lines and electrical panels to feasibly connect your array to the power grid or a centralized power source. You will also have to consider whether or not the location has water sources or cleaning options. This will be important to maintain the efficiency of so many solar panels that are situated so close to the ground.

Also, to make sure you’ll be able to meet the expected energy demand with your solar farm, you’ll need to first start with the needed kilowatt-hours of energy and work backward to get the number of panels you’ll need for the array.

To calculate this figure, you’ll need to determine the solar panel production ratio for your area to understand how much energy a certain solar panel wattage will provide. You will also need to find a good price for your solar installations. For larger arrays, there will likely be significant discrepancies between quotes from various contractors, so it will be important to get a few bids from different companies.

Frequently Asked Questions

  1. Can You Put A Solar Farm On Your Land?

Yes, you can put a solar farm on your land, but this will depend on the zoning laws governing the installation of solar farms.

  1. What Kind Of Land Is A Good Candidate To Host A Solar Farm?

The kind of land that is a good candidate to host a solar farm is a land that is clear, stable, and flat, with little debris and no major obstructions. Things like trees, bushes, shrubs, and other small pieces of vegetation can be removed, although this will increase the overall project cost.

  1. What Is The Minimum Acreage For A Solar Farm?

The minimum acreage for a solar farm is at least 30 to 40 acres but you can occasionally bundle land together from neighboring landowners if you have smaller parcels of land.

  1. Who Are The Developers Of Solar Farms?

Solar developers are people that turn your solar farm dreams into a reality. Solar developers find the best sites and technologies to develop the most effective solar panel project for their clients.

  1. How Much Can You Make Leasing Land For A Solar Farm?

The truth is that the amount you can make leasing your land for a solar farm will depend on some key factors, but generally, solar lease rates (also called “rents”) typically range from $300 to $3,000 per acre, per year. Please note that solar lease rates are almost always based on both the quality and the quantity of the land assigned to the lease.

  1. How Much Does It Cost To Build A Solar Farm?

Solar farm installation costs are typically between $0.82 to $1.36 per watt. That means that a 1 megawatt (MW) solar farm would cost between $820,000 and $1.36 million. These figures are based on the SEIA’s average national cost figures in Q1 2020.

Please note that for a megawatt solar farm, expect to spend $3 million developing it. For larger farms, expect to spend approximately $500,000 per acre. Solar farms that produce less than one megawatt of power usually cannot justify the cost of development.

  1. How Are Solar Farm Land Lease Rates Determined?

For a typical solar installation, the general rule of thumb is that for every 1kW of solar panels needed, the area required is approximately 100 square feet. This means that for a 1mW solar PV power plant, the area required is about 2.5 acres or 100,000 square feet.

  1. How Much Does It Cost To Maintain A Solar Farm?

The average cost to maintain solar panels ranges from $300-$700, with the average homeowner spending around $400 for cleaning and inspecting a basic 2KW solar PV system on a bungalow-style house.

  1. How Do You Know If Your Land Is Good For Solar Farming?

You know that your land is good for solar farming when your land is clear, stable, and flat, with little debris and no major obstructions. Things like trees, bushes, shrubs, and other small pieces of vegetation can be removed, although this will increase the overall project cost.

  1. What Voltage Does A Solar Farm Produce?

Power generating plants such as solar farms output power at different voltages. If the nearest transmission line to your property has a voltage of, say, 115 kV (115,000 volts), the output voltage from the solar farm needs to “step up” to 115 kV to feed power into it.

  1. What Happens To Unused Power From Solar Panels?

Unused power from the solar electric array will be automatically exported to the electric grid, earning the homeowner a credit against future electric use on non-sunny days. For every 1 kilowatt-hour of electricity you send into the grid, you get 1 kilowatt-hour of bill credit which will reduce your remaining power bill.

  1. What Are Some Skills And Experiences That Will Help You Build A Successful Solar Farm?

Here are some skills and experiences that will help you build a successful solar farm;

  • Good solar technology, engineering skills, and experience
  • Good business management skills
  • Good marketing skills
  • Excellent communication and interpersonal skills
  • Being able to pay attention to details.
  1. What Are The Different Types Of Solar Farms?

The different types of solar farms are utility-scale, distributed generation, and microgrids. Please note that utility-scale solar farms are solar installations that scale up to 1 GW while spanning over multiple acres of land.

  1. How Long Does It Take To Build A Solar Farm?

On average, a 5-megawatt community solar farm will have 12,000 panels, though that number can vary depending on the size and wattage of the panels. That means it typically takes between 12 and 15 days just to get all the panels in place. Overall construction typically takes 4-6 months.

  1. How Many Solar Farms Are There in the United States?

The United States has more than 2,500 utility-scale solar photovoltaic (PV) electricity generating facilities. Most of these power plants are relatively small and collectively account for 2.5 percent of utility-scale electric generating capacity and 1.7 percent of annual electricity generation, based on data of November 2018.

  1. What Is The Biggest Solar Farm?

In 2016, the largest photovoltaic power station in the world was the 850 MW Longyangxia Dam Solar Park, in Gonghe County, Qinghai, China.

  1. How Much Money Does A 1 MW Solar Farm Make?

Based on the national average of four peak sun hours per day, we know that the average 1 MW solar farm would make 1,460 MWh per year. That means that the average 1 MW solar farm can expect annual revenue of roughly $40,000 per year.

  1. Can Hosting Solar Panels Help Agricultural Land?

Yes. The land that supports solar arrays can be revegetated with a range of low-lying, deep-rooted plants, grasses, and flowers that can rebuild the soil.

  1. How Do Solar Panels Help Farmers?

Solar panels provide energy for farmers, which reduces production costs. Large farm equipment can’t harvest crops grown under solar installations. Therefore, farmers must harvest vegetables manually, so there are some limitations to what they can plant.

  1. How Much Does Solar Installation Cost, Per Acre?

Solar farms typically cost between $0.82 to $1.36 per watt to install. Landowners who lease their land out for a solar farm can earn between $250-$3,000 per acre/year.

  1. Do Solar Farms Devalue Property?

It is a common misconception that ground-mounted solar farms decrease nearby property values. Examining property value in states across the United States demonstrates that large-scale solar arrays often have no measurable impact on the value of adjacent properties, and in some cases may even have positive effects.

  1. How Much Does It Cost To Build A 1 Acre Solar Farm?

A good rule of thumb is that on average, a one-acre field of solar panels will cost from $400,000 to $500,000 before government incentives.

  1. What Are The Best Cities And States For Solar In 2022?

Los Angeles leads the nation in total installed solar PV capacity among the 69 cities surveyed from 2013 to 2015 and in 2017, after briefly being topped by San Diego in 2016. Since 2016, Los Angeles has added over 150 MW of solar capacity.

Other cities that are good for solar in 2022 are;

Texas, Florida, North Carolina, Nevada, New Jersey, Utah, Georgia, Massachusetts, New York, and Arizona.

  1. How Does a Solar Land Lease Work?

A solar land lease is generally a long-term agreement, somewhere in the region of twenty-five years, and payments are made annually on a per-acre basis. The payment rate will be agreed upon in the contract between the landowner and developer and it should be a fair price for both parties.

  1. What Is The Market Rate That Utilities Are Paying Solar Farms For The Energy Produced Per Kwh?

For the common residential TOU plan E-TOU-A, rates range from about $.15/kWh for off-peak to about $.40/kWh for peak hours.

  1. What Is The ROI On A Solar Farm?

According to Paradise Solar Energy, in 2019 their Utility farms had an average ROI of 15.55 percent and a payback period of 8.1 years across all states. Community solar farms had an average ROI of 13.91 percent and an average of 8.21-year payback period.

  1. How Long Does It Take To Pay Off A Solar Farm?

Data from the EnergySage Solar Marketplace shows that, in 2020, solar shoppers who compare their options in the Marketplace can achieve payback on their solar investment in about 8 years, before continuing to enjoy free electricity for the life of their solar panel systems, which can last between 25 and 35 years.

  1. What Happens If There Is Snow On The Solar Panels?

When a solar panel is covered with snow, it cannot produce electricity. However, solar arrays tend to shed snow pretty well—the panels themselves absorb the sun’s heat as well as its light, they are mounted to face the sun, and are often on a slope.

  1. How Do I Keep My Solar Panels From Sliding Off The Snow?

To keep your solar panels from sliding off snow, you should install a solar panel snow guard. A solar panel snow guard is a physical barrier you can install in between or on the edges of your solar panels. It’s designed to prevent the mini avalanches that can occur when you install rooftop solar. Solar snow guards catch snow sliding off of your panels, which keeps them from falling all at once.

Ajaero Tony Martins