Solar Power Farms Profitability Revealed


Solar Power Farms Profitability Revealed

Solar-powered farms are a great alternative to traditional energy such as fossil fuels and gases, which are harmful to the earth. Starting a solar farm can be a great opportunity to earn money and help the environment; with a large enough farm, it’s even possible to sell the energy created back to utility companies.

With global attention shifting to more renewable energy, Solar-power farms are being created around the world. From small scale to large farms, everyone is eager to gain a profit from this renewable energy. Certain factors do need to be concerned in order to gain the most profit from this farming.

This article will detail the importance of starting a solar-power farm and how to make the biggest profit through it. It also includes what factors should be considered before investing or starting up your own solar farm.

How Profitable Are Solar Farms?

Solar farms have many different ways that they can be profitable; anyone can earn a profit from solar energy. Against old ideas surrounding solar farming, the farms are not only profitable for those creating solar farms but also for those purchasing the energy to be sold and renters of the land.

Many farmers and landowners rent their land to be used for solar-power companies to build on, which profits both parties and helps stimulate the economy.

Some of these ways that solar farmers profits include:

  • Renting Land – farmers that allow solar panels to be installed on their land.
  • Renting Plots Of Solar Farms – renting individual acres of land on a solar farm.
  • Solar Investments – investing money in solar power companies
  • Starting A Solar Farm – creating your own solar farm company.

The Solar Energy Industries Association reported in 2016 that solar installation was the largest source of new energy (Solar Farming). Traditional farmers are moving towards renewable energy; it’s less risky than crops or cattle. These farmers already have large cleared land plots that are prime locations for solar panels.

Net Metering

Net metering is when someone that generates their own energy is able to send their unused energy to a power company in return for credit (Profit – Solar Energy).  Many find the reduced energy bill to be one of the biggest benefits of solar panels. It’s important to note that only 25 states in the U.S. offer the ability to sell unused energy.

Simply adding a solar panel to the roof of your house can make a difference; in the long run, even small-scale farms can reduce their monthly energy bill with solar panels. Some homeowners reported that over 20-years with solar panels, they were able to save $12,905 on average. 

There is another option for net metering, which is Aggregated Net Metering; this a newer, more modified version. This allows for a singular customer to use the extra energy on different power units on their property (Net Metering). Only 17 states allow this, and each state has created its own regulations around the practice of Aggregated Net Metering.

Land Rental

There are other options for people that can not afford to install a solar farm; these options are renting out their land to solar companies. The companies would install solar panels and create a solar farm, depending on the size.

These companies look for ideal locations and land they could build long term solar panels on. On average, those leasing out their land for solar farms could earn between $300 to $2,000 per acre yearly (Lease Rate).

When leasing land, it’s important to note that many companies want a long-term client, between 15 and 20 years of rental (Lease Rate). Many factors go into the yearly price, with the main factors being the location and how much sunlight is in that location.

In recent years more states such as Virginia are passing legislation that is requiring 100% of their produced energy to be renewable by 2050 (Solar Leases). These types of bills and laws being passed on are increasing the demand for favorable land to be purchased.

This demand is ideal for farmers looking to sell or rent out their land, especially for farms that are not seeing a profit from traditional farming. The prices for their property will increase over the coming years as the demand grows.

Government Funding

Many states offer tax subsidies or grants that give incentives to landholders to build and start using solar energy; these government aids could include tax breaks on year tax bills (Profit From Solar Energy). With this aid, it allows more people the opportunity to start using solar paneling and to start earning extra money.

The U.S. Federal Government has created a solar tax credit, which allows for those that purchase solar panels can earn a deduction on their taxes (Solar Funding). Individual states also offer similar programs that reduce the initial price of the installation.

Rebates can offer from different companies; these can be between 10 to 20 percent back (Solar Funding). The rebates and tax breaks are a great way for the government to help create more solar farms and start to move towards more renewable energy.

What Is A Solar Farm?

A solar farm uses photovoltaic panels to collect energy from the sun; this energy can then be purchased by energy companies. Solar farms are different than solar panels that might be installed on a roof; these farms operate as a power plant.

With the energy being sent to a central hub that sends that energy out to clients or subscribers (Solar Farming). People can choose to purchase solar energy from their energy company if it’s offered. This energy comes from a type of solar farm that produces excess energy or energy for utility companies.

The solar panels tend to be mounted into the ground and can move to follow the sun’s path throughout the day. These farms tend to be on flat, cleared land that allows for maximum sunlight to gain the most energy.

Types of Solar Farms

There are two main solar farms; they are utility and community farms or “solar gardens”; the biggest difference between the two is the size and scale. Utility farms tend to be much bigger, and around 1-megawatt of energy, while community farms are much smaller.

Another difference between the two farms is who the power is provided to. In a community, solar farms, the energy is provided subscriptions or to memberships, while utility farms serve utility companies and those customers (What Is a Solar Farm?).

The process of building a solar farm can take a long time of planning; permission from local energy companies and the government is needed. In addition, surveys have to be taken for the land to make sure the farm would not harm or ruin the local area.

Solar farming is a great way to introduce more jobs to the local economy near the farm. Other lower options are to install solar panels on top of businesses and house roofs; this allows for enough energy to decrease monthly energy payments.

How Much Profit Can Be Made?

How much a farm profits demons on how large the farm is; a few-acre farm is not going to produce nearly the amount of profit as a 10-acre plot. A basic guideline is 1 kilowatt of energy per 100 square feet (Solar Energy). But with so many factors that can influence the profit, the results are very individual.

On average by selling 1 megawatt of energy can produce around $40,000 per year (What Is a Solar Farm?). In order to achieve the most profit, creating the largest-sized farm with solar panels is the best option for a long term outcome.

With a large enough farm, the owner could rent off a portion of the solar farm to leasers for individual solar power. These people could be manufacturers or public departments, changing an average of $700 per rented acre a month is over $8,000. This is a good way to make an extra profit.

How Long Until Yeilding Profit?

For those that are purchasing small solar panels on their home roof, it could take between 7 to 20 years to earn that money back. But with solar farms, it’s much different; to start up a solar farm it costs around $1 million. With the average income from the farm being $40,000, it could take up to 25 years to earn that money back.

To decrease the time until earning back the money that was used for the start-up, there are a few ways.

  • Leasing Land
  • Renting Individual Acres
  • Selling Extra Energy Back

For small scale farmers that are using solar farming as an extra income, they will see a profit much sooner. By decreasing their monthly electric bill and selling back the extra energy, farmers in England reported over 25 years; they could make more than £465,000.

With large scall 1-megawatt farms, the amount annually earned can be affected by location and the regional demand for renewable energy. With more action being taken to use renewable energy, the demand is only expected to increase in the coming years.

How to Earn Additional Profit?

One of the best ways to earn more profit from the solar farm is to purchase more land and grow the size of the farm. The larger the solar farm is, the more energy that can be produced and sold to customers.

Many new startup solar-powered companies can not afford to purchase 15 or more acres of land; to start a 1-mega watt farm. They might want to rent. First, this is a great way to earn extra money; having a 20 year or more leasing contract will ensure a monthly income.

For people that want to get involved in solar farming but on a smaller scale that doesn’t involve purchasing solar panels or solar farming, solar investments are a great option. Some of the best up and coming companies to consider for solar energy stocks are:

  • First Solar
  • NextEra Energy Parnters
  • SolarEdge Technologies

Each of these companies focuses on renewable energy and creating more solar farms (Solar Energy Stocks). With the solar stock market growing and still small, it’s a prime time to invest and grow money without doing anything.

More states and companies are making strides to use mainly renewable energy, and solar energy is one of the best options. These investments are bound to keep rising in the coming years.

How Much Does it Cost To Start Up?

Starting up a solar farm is not easy or cheap; it’s rather expensive to purchase or rent land and also to build the panels. There is also a lot of people that need to be hired to set up the panels, but also maintain and care for them regularly. The creation of these companies helps the community and the plant together.

There are many factors that go into starting a solar farm. Starting up a solar farm requires large amounts of money, financial backing such as loans and grants, and research to get the best outcome.

This graph below shows how much each watt of energy costs to build on average; with one megawatt being enough to power 200 homes annually. 1-megawatts farms are the average size of large scale commercial solar farms, with some farms being double the size.

1 million watts equal to 1 megawatt, to show the scale of how large a megawatt farm would be.

$0.82 to $1.361-watt farm
$820,000 to $1.36 million1-megawatt farm

The typical solar power farm is 1-megawatt, which can cost around $1 million to start in order to get the land and paying for the installation of the panels. The purchasing or renting of land can also be expensive; to have a 1-megawatt farm, around 15 acres of land is needed.

Land prices can vary based on location, but to get an ideal plot of land for solar farming can cost between $21,250 to $42,400. With a growing market, people are looking around the country for the perfect land; the price is rising every year.

A major factor in starting up a solar farm is getting permission; local utility companies have to give permission to connect and run the farm (Solar Farm Business). This is a vital step that needs to be done before operating a farm. On average, this can cost around $30,000 to start running.

How Does Location Influence Profit?

In order to generate a megawatt of energy, a minimum of six to eight acres of solar panels is needed. To create a large-scale 1-megawatt farm, it’s estimated that 15 acres of land are needed to start off with, and then gradual additions of more land after.

To get the most profit, you’d need a large area of land ideally cleared from trees and buildings, and for the location to get decent sunlight. It’s also important that the solar farm is located near electrical panels and power lines. This is necessary to be able to send the harvested energy to the main power source for clients (Solar Farm Business).

Some of the world’s biggest solar farms are located in California, the USA this is due to their ideal weather. It might be assumed that climate with the strongest direct sunlight would be the best places for solar panels. But the intense heat is not desirable for the panels and can result in them not working and running properly (Harvesting Solar Energy).

A study from the University of Arizona tested how solar panels work on farms in hot weather in the southwest region of the United States (Harvesting Solar Energy). For this project tomatoes, and hot peppers were grown under the solar panels, the test was a success. The shade from the panel helped grow the plants, also saving water, while the plants helped cool the solar panels.

This research will help farmers in that region, who previously thought solar panels would not work, is now showing that they can run properly. This has allowed them to be able to rent their land and also install solar panels. With their crops and panels working together, that’s more of a profit to be created with the two options.

Conclusion

Due to recent pressure to start switching to renewable energy, solar power is at the front of investing and starting solar-powered farms. Solar-power farms are good for the environment and for local vegetation growing in the area. The market for solar energy is growing as well as the demand for more solar farms.

In coming years solar-powered farms will be one of the most desired forms of renewable energy; this will greatly increase the profit for solar farmers. Solar farming is an excellent way to help the earth and also earn money at the same time.

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Greg

Hi, I'm Greg. My daily driver is a Tesla Model 3 Performance. I've learned a ton about Teslas from hands-on experience and this is the site where I share everything I've learned.

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