“Is a solar farm profitable?”
This is one of the first questions farmers ask us when they get in touch to talk about how solar energy will benefit them.
As the demand for clean energy generation rises, more and more land is being given over to creating solar energy. But is it worth it? Or is farming still the most profitable use for your land?
The answer is yes, it’s definitely worth it! A solar farm can generate a healthy annual revenue, however, much of this depends on the size and location of where you place the panels. So, let’s take a close look at what you can realistically expect to make from one acre of land and which factors influence the amount.
Solar farm income: In a Nutshell
- The average solar farm income per acre per year is $21,250 to $42,500.
- The size of the solar farm, sunlight access, grid proximity, and nearby farming practices all affect the overall profits.
- Agrivoltaics allow you to farm the land and make money off solar energy, maximizing the land’s profitability.
- Leasing your land to solar developers isn’t very profitable but it’s a good way to utilize non-farmable land.
- If you can’t fit a solar farm on your land, a smaller solar array can still reduce your energy bills by up to 96%.
How Much Money Does 1 Acre of Solar Panels Make?
A 1-acre solar farm will net between $21,250 to $42,500 in annual profit. This equates to a solar farm income of $1,770 to $3,541 per acre per month.
However, there are many variables that can affect this, including the size and location of the solar farm and whether the solar farm is yours or if you are simply leasing the land to solar developers.
What Affects Solar Farm Profits?
First, let’s take a look at what will affect your solar farm profit. These are all important factors to consider before you install your solar farm because the overall effectiveness of the panels is entirely down to where you place them on your land.
- Size of your land: The rule of thumb is that solar panels require 100 square feet per 1kW. For a 1mW solar farm, you’ll need at least 2.5 acres of suitable land.
- Access to sunlight: Shade will significantly lower the panel’s productivity and won’t be as profitable. To gain the most yield, they require clear access to sunlight throughout the year. This may mean you have to clear large trees and other obstacles to ensure the light can reach the panels.
- Proximity to the grid: How close you are to the grid plays a huge role in the installation costs of your solar farm and how efficiently it will deliver power to the grid. You want to ensure the land you choose is within 1,000 feet of three-phase power 2 miles or less from a substation.
- Proximity to farming practices: Dust and debris that is kicked up when farming will quickly cover the panels and reduce their efficiency. Make sure your panels aren’t located right next to farming activities that will cause them to accumulate dirt.
How Much Do Solar Farms Make When the Land Is Leased?
Installing a solar farm is a large project to undertake. As an alternative, many landowners opt to lease their land to solar developers instead.
This enables the solar developer to install and house a solar farm on your land in exchange for a regular lease fee or rent.
Lease terms tend to last for 20-25 years and the rent is generally paid annually. The amount paid is on a “per-acre” basis, meaning there will be a set rate to pay for every acre’s worth of solar panels that get installed on your land.
Don’t get too excited, though. Developers pay around $250 and $1000 per year for every acre you lease to them. This is likely going to provide you with less profit than if you used the land for crops or livestock but it’s a good option if you have a lot of land available that isn’t suitable for farming.
Solar Farm Profitability vs. Farming Profitability
Speaking about suitable farming land, before you go ahead and earmark large swathes of your land for a solar farm, you need to ask yourself, “How profitable is a solar farm compared with my agricultural activities?”
If you make more from your land from farming than you will from solar energy, then it doesn’t make sense to have a solar farm installed.
One huge benefit to solar farms is that the revenue you gain from them is consistent. The average number of sunny days does not deviate too much from year to year, so you can easily predict your average yearly income. Additionally, solar panels require little maintenance and have amazing longevity, often lasting up to and over 50 years.
In contrast, farming is unpredictable year on year, and where solar panels thrive on prolonged periods of sunlight, crops are far more vulnerable and often die during heatwaves.
That said, there is an interesting alternative that gives your land a dual purpose – and a dual income.
Agrivoltaics is the practice of growing crops or housing livestock on the same piece of land as your solar panels. There are some unique benefits to doing this, like the shade creating a healthier and protective environment for your crops while aiding water retention and preventing run-off.
You can read more about agrivoltaics in our in-depth article. The practice is still fairly new in the USA, but it’s paving the way for exciting possibilities to maximize your land’s revenue in a clean and sustainable way.
Solar Farm Challenges and Restrictions
Installing a solar farm can seem like an exciting – and profitable – business opportunity, but it’s not always plain sailing, or even possible in your area. Therefore, we feel it’s important to highlight some of the challenges faced by those wishing to profit from a solar farm.
One big problem is the existing grid infrastructure. If it’s not good enough or too old to withstand the extra demand placed on it by a solar farm, this can sadly make the prospect of building one impossible.
In San Louis Valley, outdated grid infrastructure is the reality that many farmers face. Replacing or updating the infrastructure will cost billions so, unsurprisingly, utility companies are unwilling or unable to facilitate the changes necessary to accommodate solar farms until they are forced to.
Furthermore, a solar farm is not a quick or small project, as it has many legal hurdles to accomplish and contracts to hash out and finalize.
Gaining permission for your solar farm from the state government and your municipality can be a lengthy and drawn-out process involving land suitability assessments, erosion control plans, electrical plans and drawings, water runoff assessments, and many other things.
Then you have to draw up the necessary operations and maintenance contracts, get an energy performance certificate, and finalize any other agreements, all before a single piece of solar infrastructure even touches your land.
Our aim in informing you about these challenges is not to put you off the prospect of going solar, but you must be aware that a large-scale solar project is not a simple process and, therefore, shouldn’t be taken lightly.
Solar Farm Income per Acre: Is It Worth It?
It is worth installing a solar farm if your land fulfills the conditions to generate a good solar farm revenue per acre. This is particularly true if you are able to take advantage of all the current incentives and tax credits that can significantly offset the cost of installation.
If your land is too small or not suitable, all is not lost. You can still make significant savings just by installing enough solar panels to power your farm and farm buildings. Doing this takes up significantly less space but has the huge benefit of reducing your power bills by up to 96%!
If you would like to learn more about the benefits and ROI that solar can provide for you, we welcome you to get in touch with our team at 8760 Solar. We’re seasoned solar developers and can quickly help you determine the suitability of your land and how much solar it can realistically house.
To start the process of having a full analysis carried out on your farm, text “READY” to 719 470-0254 or get in touch via email: sales@8760solar.com. We’re eager to show you the possibilities solar can bring.
Frequently Asked Questions
Are Solar Farms Profitable?
A solar farm is profitable if it fulfills the criteria to ensure the panels can have maximum efficiency. Things like the solar farm’s size, access to direct sunlight, proximity to the grid, and certain farming practices all affect the amount of revenue you can make.
How Much Money Does a Solar Farm Make?
A solar farm can make between $21,250 to $42,500 per acre, per year.
How Many Acres Does It Take to Build a Solar Farm?
It takes approximately 2.5 acres to build a 1mW solar farm. However, there is no set criteria for how large or small a solar farm should be.
Are Solar Farms a Good Investment?
Solar farms can be a great investment as long as the profit you can gain is larger than the revenue earned from farming the land. Solar farms create a consistent revenue stream and have excellent longevity, meaning your solar farm can generate income for up to 50+ years.