Do you want to start a solar energy farm company? If YES, here is a complete guide to starting a solar farm business with NO money and no experience.
Okay, so we have provided you an in-depth sample solar farm business plan template. We also took it further by analyzing and drafting a sample solar farm energy marketing plan backed up by actionable guerrilla marketing ideas for solar farms. In this article, we will be considering all the requirements for starting a solar farm. So put on your entrepreneurial hat and let’s proceed.
Why Starting a Solar Farm?
Solar farms are replacing croplands that don’t generate enough income from traditional farming. Other times, solar farms are being placed on vacant industrial sites or land that hasn’t grown crops in years. Most people are familiar with solar panels mounted on the rooftop of our house to solar farms, but the truth is that both the solar panels in our homes and solar farms serves the same purpose but in varying degrees.
The solar panels in our homes are usually single panels mounted on the roof that gets energy from the sun (solar) and converts it into Alternating Current (AC) for use in the house, while solar farms which are also known as Photovoltaic Power are a large area of land where solar tracking towers are mounted to provide power to a large number of people.
Building a solar farm is a capital intensive business as estimate shows you need at least 1 million dollars to start a solar farm, but the Returns on Investment (ROI) are worth it in the long run. Instead of trying to use the electricity from solar panels just to power your refrigerator and computer and air conditioner etc., the solar panels are used to create power that you sell back to the electric utility. Someone else uses the power you make.
When we put solar panels on your roof, you get a second meter. You have your first meter, and you buy all the electricity you use from the utility, just like you did before you had solar. The second meter measures the power your panels make, and the utility pays you for the power that goes out through this meter. You are a consumer just like you were before, but you are also a producer (a sort of mini-utility).
Hopefully, it is clear now that with solar on your roof, you are a consumer of electricity just as you always were. Moreover, you’re a producer of electricity. The electricity that you produce pays you. Your power is used by someone else which in turn reduces the need for the electric utility to buy fossil fuels to power its generators (the more you and other solar panel owners produce, the less they generate from coal or natural gas).
The panels on the solar farm put power into the utility grid. Businesses and consumers use the power during the day. Fewer fossil fuels burnt. These is what happens with the power from panels if they’re on your house. You get paid for power produced on the solar farm. Again, just like having the panels in your house.
Starting a Solar Farm – A Complete Guide
- Industry Overview
A solar farm is a large land area where multiple ground-mount 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 is known as solar farms, on a utility scale. The work executed within the industry include new work, reconstruction, rehabilitation and repairs et al.
- Interesting Statistics About the Starting a Solar Farm
Solar is the fastest-growing source of renewable energy in America, generating enough clean, reliable and affordable electricity to power more than 2.2 million homes. Solar created tens of thousands of new American jobs and pumped tens of billions of dollars into the U.S. economy. In fact, more solar has been installed in the U.S. in the last 18 months than in the 30 years prior.
The Solar Farm Developers industry has been skyrocketing over the past five years. Demand for new solar farms has been backed primarily by government incentives, such as the Solar Investment Tax Credit (ITC), which encouraged private investment into solar technologies by offering tax credits.
With these incentives, solar farms and other solar-power development projects have been built at accelerating rates over the past five years. This is because solar technology is not yet cost-competitive with other types of energy used in electricity generation.
Demand for construction of utility-scale solar power projects has skyrocketed thanks in large part to substantial government assistance. In addition to heavy demand catapulting revenue upward, falling capital costs have expanded the industry’s profit margins.
In the next five years, industry revenue growth is expected to slow significantly due to lesser demand for solar power generation on the utility-scale level. Additionally, technological advancements in solar panel construction will lead to a greater supply of low-cost panels, making solar panels more accessible for individual consumers.
The Solar Farm Developers industry has been skyrocketing over the past five years. Demand for new solar farms has been backed primarily by government incentives, such as the Solar Investment Tax Credit (ITC), which encouraged private investment into solar technologies by offering tax credits.
With these incentives, solar farms, and other solar-power development projects have been built at accelerating rates over the past five years. Because solar technology is not yet cost-competitive with other types of energy used in electricity generation, such as coal and natural gas, government incentives have been the driving force behind industry growth.
Statistics has it that an estimated 85% 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.
Statistics has it that The Solar Farm Developers industry in the United States of America, is worth $10bn, 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. The first Solar is the leading player in this industry; they have the largest market share.
Most people who have a stake in the industry will quite agree that the solar farms industry has come to stay and of course, it is one industry that plays key roles not only in the business world and in our homes simply because it is one eco – friendly way of generating power.
Starting a Solar Farm – Market Research and Feasibility
- Demographics and Psychographics
The services of a solar farm will be needed by the following;
- Banks, Insurance Companies, and other related Financial Institutions
- Blue Chips Companies
- Corporate Organizations
- Manufacturers and Distributors
- Real Estate Owners, Developers, and Contractors
- Research and Development Companies
- The Government (Public Works Department)
- Schools (High Schools, Colleges, and Universities)
- Sport Facilities
- Religious Organizations
- Television Stations
- Printing Press (Publishing Houses)
- Branding and Advertising agencies
- Individuals and households
List of Niche ideas in the Solar Industry That You Can Specialize in
There are several niches that you can decide to delve into. Here are some of it;
- Supply of solar energy
- Crystalline silicon solar power plant construction
- Thin-film solar power plant construction
- CSP power plant construction
- Sale and distribution of solar panel and accessories
- Servicing, maintenance, and repair of solar panels
- Roof mounted panel installation
- Solar tracking panel installation
- Ground mounted panel installation
- Fixed rack panel installation
- Monitoring services
- Other related solar panel installation, maintenance and repair services
The Level of Competition in the Solar Farming Industry
The Solar Farming industry is very competitive but open to any investor who is armed with the required start – up capital acquired the required training, skills and perhaps professional certifications to start his or her solar farm business.
List of Well Known Brands in the Solar Energy Business
There are several solar farming brands in America, here are some of them;
- First Solar
- Clean Energy Technologies®
- Innovative Solar Systems
- Topaz Solar Farm (CA, USA)
- Solar Star, (CA, USA.)
- Ivanpah Solar Electric Generating System
- Agua Caliente, Arizona
- Setouchi, Japan. GE, Toyo Engineering Corp
- Nzema Solar Park, Ghana.
- Redstone Solar Thermal Power Plant
- Amanecer Solar CAP Plant, Chile
- Jasper PV Project, South Africa.
If you are keeping tabs of happenings in the Solar Farm Developers industry, you will agree that the demand for construction of utility-scale solar power projects has skyrocketed many thanks to substantial government support. So also, technological advancements in solar panel construction will lead to a greater supply of low-cost panels, making solar panels more accessible for individual consumers, also lowering demand.
Another trend is that the Solar Farm Developers industry has galloped ahead in recent years as a result of the rapid technological developments in our world, falling solar panel costs and favorable government policy. In the coming years, demand for solar panel installation is projected to continue growing.
Ongoing government assistance and aid in the form of tax credits and rebates, along with technological advancement and research in solar energy, as well as the rising popularity of solar power purchase agreements, will assist to help revenue grow sharply going forward.
The demand for new solar farms has been backed primarily by government incentives, such as the Solar Investment Tax Credit (ITC), which encouraged private investment into solar technologies by offering tax credits. With these incentives, solar farms, and other solar-power development projects have been built at accelerating rates over the past five years. Because solar technology is not yet cost-competitive with other types of energy used in electricity generation, such as coal and natural gas, government incentives have been the driving force behind industry growth.
Is a Solar Farm Worth Starting from Scratch or is Buying a Franchise Better?
Starting a solar power business requires in-depth learning about the industry, available products, installation, and solutions for home and business owners. It also involves establishing relationships with suppliers and their sales consultants, so a supply of solar equipment is always available, along with a source of in-depth information for the questions the business owner can’t answer.
The easiest and most cost-effective way to ensure all of the foregoing is to buy a franchise, as the entire business model is already created, the kinks are worked out and the business is essentially ready to go.
Research various solar power franchise opportunities and select a franchise to work with. This way, the business model, including the business plan, and advertising media and materials are all ready-made. Establish a relationship with the chosen franchise and get as much information as possible about the way the business is operated, the startup capital required and the process of becoming a franchisee.
Possible Threats and Challenges of Starting a Solar Farm
Just like any other business, one of the major threats that we are likely going to face is economic downturn. It is a fact that economic downturn affects purchasing or spending power. Another threat that may likely confront us is the arrival of a new solar farm or solar panel installation, maintenance and repair company in same location where our target market exist and who may want to adopt same business model like us.
Starting a Solar Farm – Legal Aspect
- The Best Legal Entity to Use for a Solar Farm
Due to the size of the business, you need to register it as a company with a legal entity. After making your business plan and estimates, you should start the process of registering your business name as a legal company and permissions provided by the law to starting a solar farm. This way, you will avoid legal issues with the law later. You can employ a legal counselor or Lawyer to handle the process for you.
The best legal entity for this business is starting a LLC. A limited partnership is an organization made up of a general partner, who manages a project; and limited partners who invest money but have limited liability and are not involved in day to- day management.
Usually, limited partners receive income, capital gains, and tax benefits; the general partners collect fees and a percentage of capital earnings and revenues. Typically, limited partnerships are in real estate, oil and gas, equipment leasing, family partnerships but can also finance movies, research and development and other projects.
Catchy Business Name ideas Suitable for a Solar Farm
Every business needs a suitable name to run their activities; but a solar farm business does not need a top notch brand name to function, all it need is a name for differentiating it from other firms both in and outside the industry. You can consider any of these names for your solar farm business;
- SunnyLight Inc
- Energy Growers
- Solar Harvesters
- Clean Source
- Sun Oasis
- Desert Pluggers
- Solar Growers
- Zero Emission
- Green Light
- Direct Sun Source.
Choosing the Best Insurance Policy for your Solar Farm
Consider insurance protection of your photovoltaic systems, in which coverage is provided for unanticipated physical damage and loss of insured property due to theft, burglary, robbery or pilferage. Insurance covers in particular damage caused by:
- Handling error, clumsiness or malicious intent by third parties
- A short circuit, excess current or an electrical surge
- Failure of measuring, regulating or safety devices
- Insufficient water, oil or lubricant
- Excess pressure or low pressure
- Fire, lightning strike, explosion
- Water or damp
- Storm, hail, frost, ice drift, flooding or snow load
- Damage caused by animals
Intellectual Property Protection for your Solar Farm
If you are considering starting your own solar farm business, then you should consider filing for intellectual property protection. Filing for copyright protection for your firm is not only limited to your company’s logo and other documents, and but also protecting, of course, the name of your business.
If you want to file for intellectual property protection and also register your trademark in the United States, then you are expected to begin the process by filing an application with the USPTO. The final approval of your trademark is subjected to the review of attorneys as required by USPTO.
Is Professional Certification Needed to Start a Solar Farm?
Research the licensing you need in your state to conduct solar installations and run a solar farm. For instance, Massachusetts and Connecticut both require an electrician’s license before you can pull permits for a solar installation, and Massachusetts additionally requires a construction license.
In other states, you can work on 12-volt photovoltaic (PV) wiring without a license only to the point where it ties into the inverter. From that point on, you are wiring 120-volt electricity, and you need an electrician’s license. Some states may also require you to have a roofing contractor’s license to conduct rooftop installations.
- Obtain certification with the North American Board of Certified Energy Practitioners (NABCEP). While not required to carry out solar installations, NABCEP certification is widely recognized in the solar industry and identifies you as a professional.The North American Board of Certified Energy Practitioners is primarily a professional certification organization. It also runs company accreditation programs and offers continuing education.
- You can also consider the Solar Energy Industries Association (SEIA) provides information on solar training opportunities, certifications, and training program accreditation. It also offers a job board, as well as networking opportunities through chapters and a LinkedIn group.
List of Legal Documents You Need to Start a Solar Farm
Register your business with the government. Laws vary by state. Talk to your local Department of Commerce and Department of Licensing to receive the forms that you need to establish your business and to learn if you need a license to do bookkeeping. You can notify the federal government of your business by applying for an Employer Identification Number (EIN). You can also create a business name for yourself and file a “Doing Business As” or “DBA” notice.
These are some of the basic legal document that you are expected to have in place if you want to start a solar farm business in the United States of America;
- Certificate of Incorporation
- Business License
- Business Plan
- Non – disclosure Agreement
- Memorandum of Understanding (MoU)
- Employment Agreement (offer letters)
- Operating Agreement
- Company By laws
- Operating Agreement for LLCs
- Insurance Policy
Writing a Business Plan for your Solar Farm
Solar farms make use of a large-scale deployment of solar panels to generate renewable electricity for sale to utilities, government entities, individual consumers, and organizations. A business plan is a formal document that provides a roadmap for a company’s startup and growth in early years.
Preparing a business plan for a solar farm can help you to think through all of the implications of starting a business in the growing alternative energy sector, and can help you to obtain financing and investment to get off the ground.
a. Create an overview of your company covering your mission statement, industry and a snapshot of your operations. Discuss the need that your business serves, and any industry trends that support the viability of establishing a solar farm, in addition to your company’s name, address and geographic reach.
b. Describe your company’s form of organization, its location and its competitive advantages. State the purpose of the business plan in this section in concrete terms: include the exact amount of funding or any other response the plan is intended to solicit from the reader.
c. Write an overview of your products and services. Describe the amount of electricity that will be generated by your solar farm, and detail your plans for the future expansion of your services. Compare the electricity produced by your business with traditional utilities and other alternative energy providers in terms of price, reliability and scalability.
d. Craft a marketing analysis section. Analyze your competitors and target customers in this section. Your primary competitors are likely to be large-scale alternative energy suppliers, such as other solar farms, wind turbine farms and large hydroelectric utilities.
e. Analyze the traditional energy suppliers; coal, natural gas and nuclear utilities in your region and discuss your company’s plan for gaining market share from these well-established powerhouses. Your target customers are likely to be established utility companies, large businesses, and government entities.
f. Create a financial plan section, including projected financial statements and ratio analysis. Large deployments of renewable energy technology, such as solar farms, require extensive capital resources at startup and feature a cost structure that decreases over time as the expensive technology begins to pay for itself.
g. Discuss possible sources of funding, including bank loans, stock offerings, and government grants. Grants are likely to play a large role in the initial funding of an alternative energy company.
h. Write a personnel plan. Include an organizational structure chart showing the layers and hierarchy of management, and present brief professional biographies of yourself and your executive team. Discuss the number and types of staff that will be employed in the solar farm’s initial years.
Consider keeping your staff to a minimum as long as possible in this type of business, using third-party labor for the installation of your solar equipment, and employing a small work force for maintenance and upkeep in addition to a small office staff.
i. Create an executive summary, and use it as the first section in your business plan. Provide a brief overview of each business plan section, highlighting the information that is most important to the specific reader of the plan. Consider altering your summary slightly to suit different readers; whether bankers, investors or even potential customers.
A Detailed Cost Analysis for Starting a Solar Farm
A good number for solar farm cost per acre is typically $500,000 here in the U.S. You will find that typically a megawatt size solar farm system needs around five acres of land to be oriented and sited properly. This amount of acreage is also a good number if using any type of tracking systems on your panels to increase production levels is your goal.
A one-megawattsolar farm project will cost somewhere around $2.5 Million U.S. dollars and require a land of no less than about five acres. Building solar farms that have higher output rates while requiring less ongoing maintenance is what a solar farm company excels at.
When it comes to setting up a business, the tools and equipment that will be used are nearly the same cost everywhere, and any difference in prices would be minimal and can be overlooked. As for the detailed cost analysis for starting a standard solar panel installation, maintenance, and repair company; it might differ in other countries due to the value of their money.
However, this is what it would cost us to set up a solar farm in the United of America;
- Business incorporating fees in the United States of America will cost – $750.
- The budget for Liability insurance, permits and license will cost – $3,500.
- Acquiring a vast acre of land large enough to contain the numbers of massive solar panels will cost – $400,000.
- The amount required purchasing the needed solar energy equipment, tool box and repair equipment – $350,000.
- Equipping of office facility (computers, printers, projectors, markers, servers / internet facility, furniture, telephones, filing cabinets, and electronics) will cost – $30,000.
- Amount required to purchase the needed software applications to run the business – $3,500.
- Launching an official Website will cost – $500.
- Amount need to pay bills and staff members for at least 2 to 3 months – $250,000.
- Additional Expenditure such as Business cards, Signage, Adverts and Promotions will cost – $5,000.
Going by the report from the market research and feasibility studies, about $1.5 Million to successfully set – up a medium scale but standard solar farm in the United States of America.
- Financing your Solar Farm
Seek grant funding from government and private sources. As an alternative energy business, you may be eligible for significant grant money from a range of sources.
Raise additional financing through traditional means if necessary. Venture capitalists may be interested in injecting large sums of money into your venture if you impress them with your business model — your plan for profitability. Banks may also be willing to extend traditional business loans to help you get off the ground.
- Choosing a Suitable Location for your Solar Farm
Mounting a solar farm is a business that requires a land space to get started. Some professionals estimate that you need at least 15 acres of land to start a solar farm. If you have the capital, you can out rightly purchase the land, it you do not, you can lease the land. However, make sure your leasing agreement covers at least 50 years. So that there will be no need to dismantle the panels sooner than expected.
At this phase, it is time to start erecting the Photovoltaic power. Some companies offer the service of mounting the solar farm for you. You can give them the contract of mounting the tower within your land space; the company should also be responsible for major maintenance and renovation of the solar farm because it is better to work with one company for a single long-term project than having different companies handle the contract.
Starting a Solar Farm – Technical and Manpower Details
A BSc degree in mechanical engineering or electrical engineering is required for solar engineering positions. In some areas, more advanced certification and qualifications could be required. Degrees in industrial engineering, chemical engineering, and computer software engineering may also be helpful.
Many of the responsibilities on a solar farm require a Professional Engineer (PE) or Engineer in Training (EIT) licensure. Licensure requirement: A degree from an ABET-accredited engineering program, A passing score on the Fundamentals of Engineering (FE) exam, relevant work experience, typically at least 4 years and a passing score on the Professional Engineering (PE) exam.
College graduates may take the Fundamentals of Engineering (FE) exam immediately. Engineers who pass this exam are called engineers in training (EITs) or engineer interns (EIs). After gaining four years of work experience, EITs and EIs can go on to take the Principles and Practice of Engineering exam to qualify for licensure.
Several states require engineers to participate in professional development activities in order to keep their licenses. Most states recognize licensure from other states, as long as that state’s requirements meet or exceed their own licensure requirements.
More complex jobs may require a MSc or PhD degree. Engineers are expected to participate in professional development to keep up with technological developments. They should also be familiar with AutoCAD, a computer-aided design program widely used in engineering. Within solar engineering, AutoCAD is used for photovoltaic system layout. Some firms may also use Google SketchUp.
Because solar engineers must consult with clients, create technical reports, and write emails, they should also have good communication skills which will be of benefit to your solar farm.
Equipment Needed to Start a Solar Farm
Typically, solar farms use a technology that is known as photovoltaic (PV). These systems use panels that are specially designed to convert sunlight or solar energy into electricity. PV systems include a battery, inverter, and solar tracker.
The shining blue panels (which are used to capture the sunlight), is often referred to as modules, and when used alone provide petite amounts of energy. However, in conjunction with other panels, much more usable energy can be provided. Multiple modules linked together are often called an “array.” Several rows of arrays must be establishedto power businesses and homes.
Arrays often need an inverter to convert the direct current (DC) into alternating current (AC). Since the inverter is extremely important to a solar farm, it should be purchased from a reputable company.
Producing this equipment has become relatively cheaper as the demand for solar power increases. The reduction in cost, in turn, means a lower overhead and a faster return on investment. Tax credits are also available, which allows for the purchasing of a solar farm to be more of a realistic opportunity than a dream.
Starting a Solar Farm – The Marketing Plan
- Marketing ideas and Strategies
To survive in this industry, consider the use of the following marketing and sales strategies to attract clients;
- Introduce your solar energy company cum solar panel installation, maintenance and Repair Company by sending introductory letters alongside our brochure to individuals, households, corporate organizations, religious organizations and key stakeholders.
- Promptness in bidding for solar panel supply, installation, repair, and maintenance contract from the government and other cooperate organizations
- Advertise our business in relevant business magazines, newspapers, TV stations, and radio station.
- List your business on yellow pages ads (local directories)
- Attend relevant international and local expos, seminars, and business fairs et al
- Create different packages for different category of clients to work with their budgets and still deliver excellent services
- Leverage on the internet to promote our business
- Engage direct marketing approach
- Encourage word of mouth marketing from loyal and satisfied clients
Possible Competitive Strategies for Winning Competitors in the Renewable Energy Industry
If your plan is to sell directly to property owners who are existing or past clients, you can start by calling them to see if they are interested in solar. Without much knowledge about solar, you should be able to gauge a general interest. All you need to know is if they are interested in lowering their electric bills by investing in solar.
If you have found that customers are interested, start investing in technical and financial training. By investing in technical and financial training, you will have the skills to find and understand if a potential site and client will be a good fit for solar or not.
Possible Ways to Increase Customer Retention for your Solar Farm
Establish a successful customer relationship management (CRM) solution. Implementing a well-devised CRM plan can better position savvy energy providers to retain and acquire the most profitable customers, build strong brand identity, keep information technology (IT) costs in line, and streamline operational efficiency. A well-chosen CRM solution will enable utilities to succeed in their short- and long-term IT goals and stay within budget constraints.
The key enabler for building and maintaining these closer, more personal customer relationships is a complete view of each consumer. An integrated CRM solution built on the foundation of a customer-centric data warehouse can provide a customer view that focuses on improved communication and individuality.
To achieve these goals, energy companies should select a CRM solution from a data warehouse vendor who can provide an industry-specific system that can grow-orscale-for future needs. With a CRM data warehouse solution that has been customized with data models and valuations specific to the energy industry, utilities can avoid costly and lengthy system customizations and reap the rewards of rapid implementation. With the appropriate CRM solution, businesses can receive a measurable return-on-investment (ROI) in as little as 90 to 120 days.
Strategies to Boost Brand Awareness and Create a Corporate identity for your Solar Farm
Map out clear cut publicity and advertising strategies that will walk your way into the heart of your intended market. If you want to become the number one choice for both corporate clients and individual customers in the whole of the United States and beyond, make provisions for effective publicity and advertisement of your solar energy farming company.
Below are the platforms you can leverage on to promote and advertise your new solar start-up;
- Place adverts on both print (newspapers and magazines) and electronic media platforms.
- Sponsor relevant community and renewable energy based events / programs.
- Leverage on the internet and social media platforms like; Instagram, Facebook, Twitter, YouTube, Google + et to promote our service.
- Install solar powered digital Bill Boards on strategic locations around your target market.
- Engage in road show from time to time in targeted neighborhoods.
- Distribute our fliers and handbills in target areas.
- Contact corporate organizations by calling them up and informing them of the services offered by your solar farm.
- List your solar farm business in local directories / yellow pages.
- Advertise your solar farming company on our official website and employ strategies that help pull traffic to the site
- Ensure that all our staff members wear our branded shirts and all our vehicles are well branded with our company logo et al.
Creating a Suppliers/Distributors Network for your Solar Farm
When looking at starting a solar farm, there are three main parts of the supply and distribution chain; developers, EPCs, and Subcontractors.
- Support services. This includes accountants, lawyers, and supporting engineers. Especially in commercial solar, these services are part of the supply chain, but I will not discuss them in this article.
- This includes the producers of all of the equipment that is installed. Yes, there are opportunities to bring new products to the market, but that is beyond the scope of this article.
- Distributors provide low volumes of equipment and support services. This is mainly to the residential and light commercial market.
Tips for Running a Solar Farm Successfully
Running a solar farm is unlike a normal power station or a farm as the name implies. It requires a more complex knowledge of how a power plant runs and also how to harvest the natural resources provided unto the human race. This is a business of the future as the world is moving toward a cleaner and greener source of energy in the face of the depletion of the ozone layer as a result of different sources of fossil fuels which have led to global warming.