What is a solar farm? Costs, land needs & more
Solar power is grabbing the attention of farmers and landowners across the country.
After all, solar is being hailed as the new ‘cash crop,’ offering far superior returns than traditional items like corn or soybeans. (Just Google ‘solar panels cash crop’ and you’ll see what I mean).
So, if you own a large piece of land should you be looking to harvest solar power on your property? And if yes, how should you go about starting one?
This blog will tell you what you need to know about solar farms. We’ll tell you what exactly constitutes a solar farm, how much they cost, and how you would go about starting one.
On this page:
- What is a solar farm?
- Solar farm types
- Solar farm cost
- Starting a solar farm
- Leasing your land for a solar farm
- Record-holding solar farms
- The future of solar farms
What is a solar farm?
Solar farms are large-scale, ground-mounted solar installations. They use photovoltaic (PV) panels or other means of collecting solar energy, like concentrating solar systems, to harness the sun’s power.
Solar farms are also known as ‘solar parks,’ ‘solar plants’ and ‘solar power stations.’ They operate as power plants, just like the fossil-fueled power plants that have generated electricity for consumers for the last century.
They’re different from rooftop solar systems and even commercial solar power systems in a number of important ways.
- Solar farms take advantage of economies of scale, meaning, by placing large orders for solar panels and other equipment, project developers can purchase the equipment for less.
- Solar power stations can also be located in a more ideal location that’s free from issues like shading from trees.
- Solar farms are decentralized and usually consist of ground-mounted solar panels, installed across large areas.
- In most cases, solar farms provide power to the electric grid and are part of the utility’s energy mix.
There are also different types of large solar projects, like community solar farms and utility-scale solar farms.
Different types of solar farms: Utility solar vs community solar
The biggest difference between utility-scale solar farms and community solar farms is scale: utility-scale solar farms tend to be much larger than community solar.
Utility-scale solar farms can have a capacity of anywhere between 1 MW to 2,000 MW. Community solar farms, on the other hand, are typically under 5 MW in size, and it's not uncommon to find ones that are under 100 kW.
Another key difference between the two types of solar farm is who they provide their power to.
Community solar farm projects serve subscribers or members who have paid for a share of its power. Utility solar farms, on the other hand, serve the utility company and all of its customers as part of the energy mix it carries on its power lines.
Read more: What is community solar?
How much does a solar farm cost?
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. The figure I’ve quoted above also assumes that you already have the land to build the solar farm on.
Solar farms are much cheaper to build and operate than rooftop solar systems. SEIA stats show that residential solar panel systems — which are typically under 20 kW —cost $2.84 per watt.
In other words, the cost per watt for a solar farm is well under half the cost of installing residential solar power.
The low cost of solar farms is also why utilities are increasingly using solar farms when adding new power generation capacity; it’s not just cheaper than rooftop solar, but competitive with most other energy sources, as well!
US solar system installation costs
Image source: Solar Energy Industries Association
Starting a solar farm - key points to consider
Here are the top questions asked by those interested in starting a solar farm on their property:
1. How much land does a solar farm need?
With all the equipment and space between panel rows, a 1 MW solar farm typically needs 6–8 acres, according to GTM Research.
Be aware that with large solar projects, you don’t just need space for the solar arrays. Land is also required to house allied equipment like inverters, and space needs to be left between rows of solar panels for repair and maintenance access.
2. How long does it take to build a solar farm?
Depending on the size of the solar project and the number of people working on it, construction on a solar farm can be completed in a matter of months.
Siting and permitting, however, is a lot more complicated. It can take 3–5 years to get all the necessary approvals and contracts completed for a solar farm.
After a solar farm is complete and online, it needs little maintenance, and can be serviced about 3–4 times a year.
3. How much money can you make with a solar farm?
In terms of revenue, you can earn in the ballpark of $40,000 per year by selling the electricity from a 1 MW solar farm.
Here’s an explanation of how solar farms generate revenue.
Utility-scale solar farms sell their power by entering Purchase-Power Agreements for their generation on the wholesale electricity market. This can be done using electricity marketplaces such as LevelTen Energy.
According to LevelTen Energy’s P25 index, in Q4 2019, solar power traded at $27.40 per MWh. (The P25 index shows the 25th percentile of PPAs [25% of PPAs traded for less than this, while 75% traded for higher] and thus is a pretty conservative figure).
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 an annual revenue of roughly $40,000 per year.
These, of course, are just average figures, and will vary based on factors such as solar power production in your area and the going rate for solar generation in the wholesale market.
Moreover, do note that there are wide variations in PPA values based on the wholesale electricity prices in your Regional Transmission Organization area.
How much do solar farm leases pay?
Landowners who rent out their land for a solar farm can earn between $250 and $3,000 per acre a year, according to top solar land lease websites.
This is an option for those who don’t want to build their own solar farm, but rather lend out their property to an external solar developer.
You might be wondering why there’s such a big range of lease rates. Its because there are many different factors based on where you area which can affect the going price for a land leases; these include:
- Land prices in your area
- Electricity transmission infrastructure near your land
- Substitute uses of your land (i.e. possible agricultural farm income)
- Demand for renewable energy in your state
- State and municipal incentives to solar farm operators
In short, the amount you can earn by leasing out your land for a solar farm really depends on market conditions in your area.
Agreements are generally long-term, between 15 and 20 years, with options to extend for as long as 50 years. They also include annual escalators 1.5 to 2.5% to account for inflation.
Some developers even offer to pay for the leases as a large upfront payment.
What are the largest solar farms?
Right now, solar farms are enjoying their time in the sun — no pun intended. The solar industry is building ever-bigger solar farms thanks to the improved economics of solar energy generation, and the desire of governments to switch to renewable energy to avoid climate change.
The biggest solar farm in the United States
Solar Star in Kern and LA Counties, California is currently the largest solar farm in the US. It's been the biggest one in the country since its completion back in 2015.
It has an installed capacity to produce 579 MW energy, which is enough to power over 250,000 homes or about 142 football fields. It comprises 1.7 million separate solar panels, which cover a total area of 3,200 acres of land.
While the Solar Star was also the biggest solar farm in the world when it launched, it has long been superseded by bigger solar farms in other parts of the world. It is also set to be eclipsed by a solar farm under construction here in the US — the Gemini solar farm.
Solar Star is located less an hour-and-a-half’s drive from Los Angeles and provides electricity to the Southern California Edison power grid. Image source: PVTech
Gemini solar farm - set to be the biggest in the US
The Gemini Solar Farm is a $1 billion project currently under construction in the Moapa desert, outside Las Vegas.
The project will take advantage of the plentiful Nevada sunshine to generate 690 MW of electricity, which is enough to power 260,000 homes. It will cover an area of 7,100 acres, or as much as 5,370 football fields
It also includes large solar batteries that can store 1,400 MWh of energy to help provide power after dark, when the power is needed most.
Once completed, it will become the largest solar farm in the US - but still way smaller than the biggest solar farm. Unfortunately, there’s nothing to see just yet - construction is scheduled to commence in 2021.
The largest solar farm in the world
As of July 2020, the largest solar farm in the world is Bhadla Solar Park in Rajasthan desert region of India.
The solar farm covers a mammoth 10,000 acres. It has an energy generating capacity of 2,245 MW, or 2.2 gigawatts. It is nearly four times the capacity of America’s current biggest solar farm, Solar Star.
The 2.2 GW Bhadla Solar Park is on the fringes of the Thar Desert in India; temperatures there go up to 126 degrees Fahrenheit.
The future of solar farms
Moving forward, community solar projects, utility-scale solar projects and rooftop solar will all be part of the renewable energy solution providing clean energy around the US and replacing fossil fuel power.
Large-scale solar will continue to get cheaper as developers of solar farms find more ways to reduce financing costs and equipment costs keep coming down. Expect to see many more solar farms, and even bigger ones, in the near future.
- Solar farms are large standalone solar installations
- Utility-scale solar farms (generally 1 MW - 2,000 MW) sell their electricity to generate a profit for their owner.
- Community solar farms (usually 100 kW - 5 MW) sell their electricity to utilities to reduce the electricity bills of subscribers.
- Solar farms typically cost between $0.82 to $1.36 per watt to install.
- The average 1 MW farm can earn roughly $40,000 a year by selling its electricity to utilities
- Landowners who lease their land out for a solar farm can earn between $250-$3,000 per acre/year.
- The under-construction 690 MW Gemini solar farm in Nevada will soon overtake the 579 MW Solar Star in California as the largest solar farm in the US.