Solar Farm Income Per Acre - How Much Money Does 1 Acre of Solar Panels Make?
How much power does 1 acre of solar produce?
In Portugal where I live, huge solar farms are appearing throughout the countryside as many farmers are quickly seeing that there may make more revenue to be earned in selling solar power than in growing crops or rearing animals. Just how profitable are solar farms?
As a general rule, 1 acre of solar panels produces about 351 MWh of electrical energy per year. The actual profit depends on the Country and State/location irradiance (Peak-sun-hours), but the average is approximately $14,000. Installation cost for 1 acre of solar panels is about $450,000.
Video – Solar farm revenue per acre
How much power will 1 acre of solar panels produce?
To work this out we need to know:
- How many solar panels can be installed on one acre
- Irradiance or peak-sun-hours for the geographic location
How many solar panels fit in one acre?
There is physical room for about 740kW of solar panel surface on one acre, but the panels are mounted in rows with walk spaces allowing for maintenance, so a form factor of 0.58 is applied.
In general, 1kW of solar power can be fitted into 100 square feet. There are 43560 square feet in an acre, so the possible solar power can be found by:
43560/100x1kw= 435.6kW
Solar farms are installed in locations with high irradiance (peak-sun-hours) values, such as Nevada. The Peak-sun-hours value for Nevada is 2348. (Also measured as irradiance in kWh/m2.)
Power produced by 1 acre solar depends on location irradiance
Theoretical solar energy generated by 1 acre in one year equals:
435.6kW x 2348kWh/m2 = 1022mWh
By applying the form factor to allow for solar array spacing we get:
1022mW x 0.58 = 592.76 megawatt-hours of solar power
What are the losses that occur in a solar PV project?
How much power does one acre of solar panels produce? Unfortunately, we don’t get all the power out of a solar system that the formulae tell us a system can generate. All solar PV systems have losses, some of them we can influence and others we can’t. Solar PV losses are one of the leading disadvantages or cons of solar.
Table: Solar PV Losses
|
Cause of Energy Loss |
Percentage Loss |
Design or Maintenance |
Total Losses |
|
Shading |
7% |
Both |
23.8% lost |
|
Dust and Dirt |
2% |
Maintenance |
|
|
Reflection |
2.5% |
Design |
|
|
Spectral Losses |
1% |
Design |
|
|
Irradiation |
1.5% |
Design |
|
|
Thermal Losses |
4.6% |
Design |
|
|
Array Mismatch |
0.7% |
Design |
|
|
DC Cable Losses |
1% |
Design |
|
|
Inverter Losses |
3% |
Design |
|
|
AC Cable Losses |
0.5% |
Design |
Discover your solar saving potential
With losses averaging about 23%, we need to deduct it from the theoretical power output to find a practical value:
592.76 mWh – (592 x23%) = 592.76 – 136 = 351.3mWh solar output
How do solar farms raise money?
A land-owner can make money from solar panels in two ways:
- Lease his land out to a solar company who will mount, maintain and organize the installation, handling all contracts with the power company. The owner is then paid an annual profit based on the contract.
- The land-owner may opt to buy and install the solar panels himself. The initial capital cost is much more but the profits are greater.
Typical Solar Farm Lease Contract Example (online)
Laconia solar farm lease contract example (download)
How much money does 1 acre of solar panels make per year? Solar farm profit
Based on my previous calculation 1 acre of land would produce in Nevada about 351.3mWh of enegy per year. So how much money is this amount of electrical power worth?
Compared to a domestic solar installation, this is a huge amount of energy and it isn’t sold back to the utility companies as it is with home solar. Solar farm output is traded by mWh price in specialized markets, so revenue can fluctuate a little.
The average price per mWh is around $27/mWh, so 531mWh from a 1 acre solar farm would be worth $14337.
How much do landowners get paid for solar panels?
A very simple option for a landowner is to simply lease the land to the solar farm operator. The amount earned per acre varies a lot, due to a number of reasons:
- Are there any government or other incentives in the State?
- Level of land prices in the area
- How far is the nearest grid connection?
- Is there a demand for solar power in your State?
A landowner can expect to earn revenue of about $2300 per acre of land leased to solar farm operators. Depending on the estimates of solar power generated in that location, solar farm profit compares very well with other farm-based business.
How much would a 1 acre solar farm cost?
How much does it cost to install 1 acre of solar panels?
Installation costs for solar farms per kw are much less than for domestic solar systems, which come in at around $2.80 per kW in most states.
Solar farm cost is between $0.90 and $1.30 per kW. Let’s take an average of $1.1/kW and assume the amount of solar power to be installed on 1 acre is 435kW:
435kW x $1.1/kW = $478,500
This capital cost can be reduced a lot by applying Government and State incentives in the form of grants and loans. Without such incentives the cost of a solar energy farm would be off-putting for most farmers and land-owners.
Solar Energy Systems Incentive Program – Nevada
Solar Farm Income Per Acre – Do solar farms make money?
Solar farm income per acre is around $14000 to $16000 per year for an installation size of 435kW of solar panels. Exact revenue depends on location irradiance.
1 mw solar farm profit
Most farms are rated in mW (megawatts), therefore solar farms earn money at the rate of $32000 to $40000 per installed mW. Solar farm profit margin is between 10% to 20%.
Solar farm land requirements – solar field of 1 acre
If your own venture, then any size land parcel 1 acre up will do, but it’s important to get a professional estimate of installation costs vs ROI – there are definitely advantages to large scale plants.
A professional venture would be looking for a surface of more than 10 acres to make it worthwhile.
How much do solar farms make per month
Solar farms make between $1200 to $1300 per month per acre, so even a small 2 acre solar farm should make $2500 per month, depending on location.
Are solar farms worth it?
The trend over the past 10 years shows more and more agricultural land being dedicated to solar farms, indicating that solar farms pay well. It’s very much worth it from the point of view of reducing dependence on non renewable resources such as oil and gas.
What to do with that 1 acre field – solar panels or agriculture?
Several things are driving this phenomenon:
- Depending on farm-land output, solar farm return is increasing every year
- The land is easier to manage, requiring little work after solar installation
- Energy is in big demand and new sources are desperately needed
- Government loans and grants are making it more attractive for land-owners
- Leasing land to solar companies is an easy way to gain revenue from under-performing land
Solar energy farm ROI
Solar farms are a big investment and investments are measured in ROI (Return on Investment). This asks the questions ‘How much money do solar farms make over time?‘.
Solar farm return
It’s hard to generalize due to different conditions from state to state, but as a general rule ROI for a solar farm is between 13% to 15% and payback time is between 8 to 12 years.
How much money can a 10 acre solar farm make?
The two ways to make money from a 10 acre solar farm is to:
- Lease the land to a solar company
- Install, own and run your own solar farm
Leasing your land for a solar farm
Farm lease rates vary by location but lies somewhere between $500 to $2300 per acre per year. The higher lease prices will be found in states like California, Texas and Nevada.
Assuming land being leased for a solar farm in Nevada at $2300 per acre, then a 10 acre piece of land will bring $23000 profit per year.
Can I start my own solar farm?
Any registered citizen can start their own solar farm. First of all, land solar farms are set up as a business, so normal business startup costs apply i.e. licensing, permits, insurance and others.
A solar farm is a big technical undertaking and is normally carried out by a reputable solar company. While the actual installation of a small to medium size solar farm can be done in about 6 months, the permits and licences to run it can take longer. It’s best to apply 18 months before you envisage beginning the work.
In the first instance, contact a good solar installer, who can streamline the permit application process and handle all aspects of a new solar farm, including giving guidance on grants and loans in your area.
Community solar farms represent a good way to spread the cost, the profits would be also bespread across the community.
How much does it cost to maintain a solar farm?
Industry research gives figures of between $15 to $25 per kW per year. At and average of $20/kW, a 5mW solar farm would cost $100000 to run.
How many acres do you need for a solar farm?
Solar installations benefit for scaling up and the initial capital cost tends to reduce the bigger the farm. In general, you should aim at a minimum installation size of 1mW installed solar.
Depending on the installer, 1mW of solar panels needs about 4 acres of land. The table below shows the annual solar energy produced in various states, according to the irradiance values:
Table – Energy produced by 1mW solar panels in 9 U.S. States
|
U.S. State |
Irradiance Value (Peak-sun-hours) per year |
Annual output estimate in mWh for 1mW installed |
|
1656 kWh/m2 |
1644 mWh/year |
|
|
2327 |
2327 |
|
|
1499 |
1499 |
|
|
1504 |
1504 |
|
|
Nevada |
2348 |
2348 |
|
2350 |
2350 |
|
|
1538 |
1538 |
|
|
1356 |
1356 |
|
|
2007 |
2007 |
How much does it cost to set up a solar farm?
Installation costs are often quoted at between $0.80 and $1.36 per solar watt installed, but I’m not sure where these figures come from. It’s generally known that solar farm installation costs are less then half than domestic solar costs, which are well under $3/solar watt in the US.
It’s probably safe to assume $1/watt as an average figure, making our calculation easier. For a solar farm minimum size of 1mW it will cost about $1 million for the physical installation of solar panels and all associated equipment.
Do solar farms pay?
Basic cost of setting up equipment for a 1mW solar farm = $1 million.
Add another 15% to 20% to this if single axis solar tracking equipment is needed to maximize output. It’s rare to have dual-axis tracking on solar farms due to the poorer ROI associated with it.
Solar farm installation cost including single-axis sun tracking = $1.2 million
Associated solar permits and licenses = $5000
Hook up to grid = $3000 to $10000 (depending on distance to farm).
Software to coordinate and manage solar strings = $3000
Ongoing maintenance = $20/kw x 10000kW = $20000/year (deduct from revenue).
FAQ:
How much does it cost to build a 1 acre solar farm?
There are lot of variables solar developers have to take into account when estimating the cost of a 1 acre solar farm. There are environmental as well as engineering factors to consider in any development plan.
There’s also economy of scale, which means the requirements and costs of a larger farm using many acres would decrease per kw of electricity generated, also affecting the profit made.
As a general rule, for a larger farm, one acre of solar cells should cost between $350,000 to $500,000 (deduct government incentives), but it should be notes that cost of solar materials are reducing all the time.
How profitable is a solar farm?
Solar farms can be very profitable over a wide range possible, between $20000 to $60000 per acre. It really does depend on a study of each individual property.
Solar farm land requirements to be profitable are quite basic – flat land with no shading and a good irradiance value in the location are the main requirements for any developer wishing to create a solar energy plant.
Bigger farms provide bigger financial profits, due to economies of scale during the acquisition and build phases. More acres would make progressively bigger profits, but the capital costs could run into several millions USD.
Is a solar farm a good investment?
Solar farms can make a great investment and their is obviously an economy of scale i.e. the installation costs per solar watt go down the more acres and solar panels used.
The ROI (Return on Investment) relies heavily on location, which is why most solar farms are in locations with high irradiance (peak-sun-hours) and a scarcity of cloudy weather. Clouds severely reduce solar output and therefore profitability.
What do solar farms pay the landowner?
Solar farm payments to landowners vary according to land type and location. A good rule of thumb is about $500 per acre, but this can be considerably more.
Summary of post: How much money does a 1 acre solar farm make?
Solar arrays used in the large scale solar industry are generally big panels and their efficiency is one of the major factors affecting profitability. Property owners thinking of a solar development need to carefully consider the big initial investment, which is an important factor when considering the payback period with that kind of land use.
In the Unites States both solar farms and wind turbines are used to generate grid electricity, but a solar power plant has obvious advantages over both wind and fossil fuels. For one thing, maintenance costs are very low as it’s a passive generation system.
A long term power purchase agreement with the power grid company helps solar farm developers to forecast profits over the long term, making the most of the land value compared to a higher rent they could get in future years.
The federal government give tax credits for both small and large scale solar projects and solar farming is a viable commercial activity. Negotiating the best solar lease rates and locking them in contractually is the best way to maintain profitability.
The good news is that in many states like North Carolina solar projects are growing rapidly, connecting solar equipment to existing power lines. Green energy is the future and can be utilised on any amount of land, from 1 acre up. Solar gardens are fast becoming part of the landscape as it’s probably the most benign for the environment out of all the energy sources.
All natural resources come with disadvantages but fossil fuels also come with a heavy ecologic burden that renewable resources don’t have. The solar market is wide open for exploitation and solar energy production is set to exceed last year’s maximum by a wide margin.
Rural communities in particular can take advantage of common open land, exploiting it on a per acre basis as budget allows. A good business plan incorporating tax incentives and a contract with a local energy company ensure profitability for the good of the community as a whole.
