PV system design

What is a solar farm and how much money can it make you

A home solar system is a good way to save on electricity bills. A solar farm though can be a moneymaker. But what exactly is a solar farm and how much profit can it bring? Let’s break it down.

What is a solar farm? There are many types

A solar farm, also known as a solar park, solar power plant, or photovoltaic power station, is just the same solar system you have on your roof, but at a much grander scale. The average home system generates just a few kilowatts of power, while a solar farm operates with megawatts and even gigawatts of electricity, enough to power a whole village or even a city.

Most solar farms generate at least 1 MWp

Achieving such impressive numbers requires thousands or even millions of the most powerful monofacial and bifacial solar panels. For example, putting together a 1-megawatt solar farm would require 1,500-2,000 panels.

Such a scale also takes up a lot of space. Generally, one megawatt of solar power with the inclusion of roads and necessary spacing between modules requires from 5 to 10 acres. It’s like two Walmart Supercenters put together.

A solar farm “is a large-scale grid-connected photovoltaic power system (PV system) designed for the supply of merchant power.” - Wikipedia. According to this definition, a solar system can be considered a farm if it is large, connected to the grid, and serves for profit.

Type 1: Utility-scale solar panel fields

Utility-scale solar farms can sprawl across vast areas of land, often in deserts or rural locations, and generate megawatts of electricity. These farms are typically owned and operated by energy companies or private owners having purchase agreements with the utilities. They directly feed electricity into the power grid, supplying homes and businesses across a wide region.

Type 2: Community solar farms

While utility-scale farms cater to large areas, community solar farms offer a more targeted solution. These smaller-scale installations, typically under five megawatts, are collectively owned by residents of a neighborhood or businesses in a commercial district.

A 1 MW solar farm can power 173 homes

Here’s how it works: individuals or businesses can subscribe to a portion of the solar farm’s capacity, receiving credits on their electricity bills for the power generated by their subscribed share. This allows people who cannot install solar panels on their own rooftops, such as renters or those with unsuitable roofs, to still offset their traditional grid dependence and lower their electricity bills.

Type 3: Solar farm for company’s own needs

Many companies choose to build their own solar farms to meet their energy needs, be it a factory or a data center. This allows them to reduce electricity bills, retain power during outages, benefit from government incentives and project a sustainable image.

How to build a solar farm? It’s a long story

Building a farm requires a plot of land, equipment, permits, and a buyer to sell the generated energy to. Let’s go through these points and see how much it can cost us and how much we can make.

Step #1: Preliminary assessments

Before diving headfirst into construction, conduct a thorough research. First, decide what scale of solar farm you want to build and who you plan to sell your electricity to. Research the market, contact potential buyers, and find out prices. The electricity market can dramatically differ from state to state.

Second, secure the land. Ideally, this land will be bathed in sunshine, with maximum exposure throughout the year. The amount of land required depends on the scale of your project. Utility-scale farms sprawl over vast areas, while community solar farms can occupy a smaller footprint. Most importantly, your chosen location should have a strong connection to the power grid.

Third, estimate the costs. Consider the cost of acquiring or leasing the land you’ve chosen, plus buying and installing equipment. Additionally, you’ll want to factor in ongoing maintenance expenses. Don’t forget to explore government incentives that can offset some of the costs and make your solar generation plant more financially attractive. The cost of solar farms in the US is slightly above $1 per watt — for example, utility PV prices were at $1.16 per watt in 2023, according to the National Renewable Energy Laboratory (NREL). In other words, a 1-megawatt solar panel farm can cost upwards of over $1 million.

Step #2: Obtaining permits

Once you have a plan, you’ll need to get it stamped with approval. This means obtaining land-use permits from local authorities and any necessary environmental approvals. Don’t forget to secure agreements with the utility company to connect your completed farm to the power grid.

Step #3: Constructing a farm

With a plan in place and permits secured, it’s time to bring your solar plant to life. Source high-quality powerful equipment like solar panels, inverters, racking systems, and all the electrical components that your solar farm may need. 

Vasilii Smirnov
Solar Installation Expert

The process of building a solar farm may take from months to years, depending on the size of the project, supply and situation on the solar market, and willingness of authorities to cooperate. Sometimes paperwork and legal issues can significantly slow down the progress.

Step #4: Maintaining the system

To ensure your solar farm operates at peak efficiency, a regular maintenance plan is essential. This will involve monitoring the farm’s performance, cleaning, repairs, and making adjustments to maximize energy output.

How much money does a solar farm make? Results may vary

If you plan to sell the electricity that your photovoltaic farm generates, you’ll need to find a buyer for it. You can negotiate power purchase agreements (PPA) with utilities or businesses to ensure your clean energy finds a home and becomes a source of revenue. This often turns out to be one of the most difficult parts of launching a solar farm. What kind of profits can you expect though?

Solar power trades at about $52 per megawatt-hour in 2024, according to LevelTen Energy’s P25 national index. With 5 peak sun hours per day, a 1-megawatt solar farm can generate about 5 megawatt-hours solar power per day and 1.8 gigawatt-hours per year. Subtract 20% for energy losses and then multiply by the trading price, which in 2024 is about $52:

(1 MW x 5 psh x 365 days/year – 20%) x $52 ≈ $75,000/year

So a 1-megawatt solar farm can earn you about $75,000 per year — at least on paper. With $1 million upfront costs, a solar farm takes about 13 years to pay for itself and start making a profit. But hold your horses – the earning potential of your solar energy farm hinges on many factors, making it difficult to pinpoint an exact figure:

  • Operational costs. Solar farms aren’t maintenance-free. Regular monitoring, cleaning, repairs, and occasional panel replacements are all part of the equation. If you leased land for a farm, this will likely become the major expense.

  • Taxes. Depending on your state, these can include property taxes on the land, income taxes on profits, and potential tax breaks or incentives offered by federal or state governments to encourage investment in renewable energy.

  • Location. Solar panels in areas with abundant sunshine hours naturally generate more electricity. In return, this might mean higher competition. Location heavily impacts trading prices.

  • Trading price. Solar farms typically sell the electricity to utilities or directly to commercial customers through power purchase agreements – PPAs. The price per kilowatt-hour of electricity depends on location and market conditions. Areas with high electricity costs can offer better selling opportunities.

What are the pros and cons of having a solar farm? Plenty of both

Building a solar energy power plant and shoveling money, what could be better? But is it as easy as it seems? Here’s the breakdown on the benefits and drawbacks of having a solar farm:

 Long-term contracts and steady income. Utilities are interested in clean energy, and they’re willing to pay for it. You can secure long-term contracts to sell your solar electricity at a fixed rate. This translates to a predictable, reliable income stream for years to come.

 Low operating costs. Once the solar energy farm is up and running, the ongoing maintenance costs are relatively low. The sun provides the fuel, so there’s no need to worry about volatile fossil fuel prices or constant resupply.

 Tax breaks and incentives. Governments are keen to promote renewable energy, and they offer tax breaks and other financial incentives to solar farm owners. This reduces the tax burden and makes the investment even more attractive.

Let’s not forget that there are two sides to the coin. Sure, going green and making money feels good, but there are some drawbacks as well:

✗ High upfront costs. The land acquisition, solar panels, installation, and grid connection can be a hefty sum. It’ll take some time before you start seeing a return on that investment.

✗ Fluctuations in electricity prices. While the contracts offer some stability, electricity prices can fluctuate over time. If the price drops, your profit margins could shrink. Carefully negotiate your contracts to mitigate this risk.

✗ Maintenance needs. Those solar panels won’t maintain themselves. Regular cleaning, repairs, and potential upgrades add to the ongoing costs and need to be factored into the profit calculations.

✗ Variable generation. Solar energy depends on sunshine. This means that the production of a solar electricity farm changes throughout the day and stops at night. This makes it tricky for utilities to work with solar farms as they may get a surplus of energy at noon and lack of supplied electricity in the evenings, on cloudy days and in winter months. Batteries store excess solar energy during the day but adding energy storage to a solar farm greatly increases the costs.

Building a solar farm is a calculated bet. There are undeniable financial benefits in the long run, but it requires a significant upfront and ongoing investment. If you’re not frightened by the possible challenges, this is a gamble worth taking.

Examples of solar farms: Familiar names

Bhadla Solar Park

India’s Bhadla Solar Park holds the title of one of the largest solar parks in the world — only a Chinese Golmud Solar Park might have slightly surpassed it in capacity in 2024. With 2,245-megawatt capacity, it can power 1.3 million homes. Bhadla Solar Park covers over 5,700 hectares – about one-third of Washington D.C. Vikram Solar was one of the brands that supplied the project with panels.

Panda Power Plant

Check out LONGi solar panels for sale at A1 SolarStore!

One of the world’s most fun PV projects is likely the Panda Power Plant in China, built by Panda Green Energy. The 100-megawatt project will be built in two stages. The first phase, currently operational, features a pair of adorable young panda cubs, generating 50 megawatts. The second phase will see the construction of two adult pandas, completing the happy panda family. The Panda Power Plant can generate 3.2 billion kilowatt-hours of clean power over 25 years, a significant contribution to China’s efforts to reduce its carbon footprint. First Solar and LONGi Solar were among the main suppliers of panels for this project.

Al Dhafra Solar Farm

Al Dhafra solar power plant was completed in UAE in November 2023 and became one of the world’s largest single-site solar PV plants. A 2,000-megawatt installation is located 35 kilometers from Abu Dhabi. The project encompasses 4 million bi-facial solar modules. The majority of them came from China: Trina Solar delivered 800 megawatts of Vertex solar modules to the Al Dhafra plant. A solid pick — find Trina Solar panels for sale at A1 SolarStore!

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Years of experience in translation and a love of nature help Julia find the right words to encourage going solar. She joined the team in 2023 and is happy to make her contribution to a greener future.

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