Solar Farm Income Per Acre Calculator: See Profit Margin, Costs, Money Made

Written by Georgette Kilgore

Solar Panels | March 29, 2024

Have you ever wondered, what’s the solar farm income per acre?

With a specific calculator, you can assess your profit margins, the total costs you will incur, and ultimately, how much money you will make annually.

Some people lease their land as a solar farm, as an alternative to selling or farming, because it can provide consistent income for up to 50 years.

This complete guide focuses on the details of solar farming, how to use a solar farm income per acre calculator to measure your costs and potential profit margins, and whether or not you can install one on your land.

How Much Money Does 1 Acre Solar Panels Make? Is It Lucrative?

There are several factors to consider when determining the profit margin of an acre of a solar plant, but generally speaking, you can earn anything between \$21,250- \$42,500 per acre each year.8

The rates can be lower or higher than this after factoring in some variables.

A solar farm income per acre calculator shows a higher reading when dealing with hundreds or thousands of acres due to the economies of scale.

However, there are some other factors that impact how much you can make.

Factors Affecting Solar Farm Cost

Here are some of the factors that affect the cost of installing a solar farm.

1. Size of Land

Usually, solar farms are mega projects that need specific land sizes to be more profitable.

One rule is that you will require 1 kW from the panels every one hundred square feet, and the more land you have, the higher the development costs and the more the power output.

2. Sunlight Intensity

One of the essential considerations when taking on the project is ensuring that your land receives sufficient and intense sunlight.

Otherwise, shadows and poor weather can reduce the intensity, affecting the power output and making the business less lucrative.

3. Soil Quality

It may seem strange, but you have to build on land to set up a solar farm. If the soil is unstable or tasking to develop (like a boggy or swampy area), it means additional costs to clear, and if it is impossible to penetrate the soil, you may have to end the entire project.

4. Distance to the Grid

Availability of the necessary infrastructure is another critical concern for landowners opting for solar farming. If the grid is accessible,11 you won’t have to incur additional costs to build one.

(Image: LionMountain13)

If you want to minimize the capital, your land should be less than 2 miles from a substation and at least 1000 ft near a phase three power.

Once you account for all these factors,4 the next step is determining the land’s value and starting negotiations. It becomes more straightforward for the developer to set the rent and identify how many acres are necessary and the duration of the lease.

How To Use a Solar Farm Income Per Acre Calculator

Factoring in various aspects, you can make about \$21,250- \$42,500 annually, translating to \$1770- \$3540 per acre each month.

Therefore, you can estimate your total profits based on your farm size.

(Image: Hoan Ngọc14)

Luckily, a solar farm income per acre calculator will give you the most precise data considering all the initial costs and other deductions.

What Is the Solar Farm Profit Margin: Positive ROI

Most solar farms can earn up to \$40,000 for every MW (Megawatt) installed; therefore, the profit margin lies between 10%-20%.

These numbers will, however, deviate based on some necessary costs.

(Image: Tom Fisk15)

You must also account for how much electricity you use, rates, project size, and the total installation fees; luckily, the return on investment is typically high with low maintenance costs.

How Does the Solar Farm Income Calculator Work?

The solar farm income per acre calculator is the simplest way to determine your solar farm’s profitability. It is an automated process that gives you instant results that you can refer to ensure that the business is lucrative.

The system will ask for vital details like financing, farm size, how much power the farm creates in a year, and how much it costs to install the project. The utility rate and whether you are financing a debt are also critical to help generate the total value.

Once you enter all the key areas, the tool will run the breakdown, allowing you to save the generated results and download a spreadsheet or pdf for easy access.7

How Much Solar Farm Income Per Acre Per Year Should I Expect?

On average, you can expect a return on investment of \$21,250- \$42,500 per acre every year. However, these figures will vary depending on individual projects. To maximize your returns, you can erect the project on a massive land to enjoy the economies of scale.

When dealing with hundreds of acres, the initial capital is high, but it will translate to an equally higher profit margin in hundreds of thousands. Small farms, on the other hand, don’t have high profits given the low power output.

How Much Does 1 Acre Solar Farm Cost To Make?

Adopting solar farming on your land can be costly, but the ROI you expect will compensate for it. You will pay the utility costs and buy solar panels and other essential equipment like inverters, transformers, batteries, and wiring.

(Image: Lio Voo16)

Cumulatively, you will spend \$400,000- \$500,000 an acre when developing a solar farm, besides the annual maintenance costs.

Solar Farm Income Per Acre: How Much Does a Solar Farm Cost Per Acre To Develop?

According to (SEIA) Solar Energy Industries Association’s 2021 report,12 installing a PV system costs \$0.77-\$1.36 a watt. On the other hand, a residential system rates at \$2.50- \$3.50 a watt, and developers save a fortune when buying for massive plant projects.1

Experts usually pay about \$3 million for each Megawatt when erecting a farm, meaning it will cost you around \$500,000 to establish one acre.6 For an excellent ROI, developers prefer projects of more than 1 MW or more than 5 acres.

What Are the Solar Farm Land Requirements?

Before declaring a land suitable for solar farming, developers must make their assessment counterchecking against the requirements below.

• Land Size

Each solar project is treated differently, but still, there should be enough space to set up all the panels and other equipment. Sometimes 5-10 acres suffice, but an average plant is usually 30-40 acres.

The general rule is that the larger the land, the bigger the project, hence the generation of more revenue per annum.

• Landscape

Flat land is the suitable terrain for a solar farm, but developers often prefer slightly sloping lands that offer more sun exposure. Small hills are also okay if the slopes are not too steep and the panels can still attain sunlight.

You will also have to remove any vegetation on the land that would obstruct the view and watch out for impenetrable soil that would make the project impossible or tasking to complete.5

• Local Regulations

It is imperative to check the laws of land use before initiating the project because some places prohibit solar farming,5 making it impossible for the developer to obtain the necessary permits.

Similarly, you cannot go through with the plan if your land is under conservation or environmental laws prohibit interference, mainly if an endangered plant or animal species stay there.

• Proximity to Infrastructure

You may need proper infrastructure to support the entire project, and the first thing the developer will check is the location of the utility grid and other related issues. If the site is too far, the project will be more expensive, and sometimes, you will have to cancel everything altogether.

How Much Is a 1 MW Solar Farm Profit? 1 MW Solar Power Plant Cost and Profit

The 1 MW solar farm size, also called the solar utility farm, has 6-8 acres of land. The four peak sunlight hours daily mean the 1 MW farm generates 1460 MWh annually.

If calculated with \$27.4 in every MWh, the result is around \$40,000 yearly,2 although this rate can vary based on several factors.

Factors Affecting Solar Farm Income Per Acre Per Month on a Solar Farm Income Per Acre Calculator

The goal of land use is to minimize costs while maximizing profits, and you can only do this when you understand the factors affecting income generation.

• Plant Size

You should use a larger parcel of land to benefit from the economies of scale. Developers advise 30-40 acres to generate more power and reap more from the system. Otherwise, less than 5 acres may not produce enough power for all your commercial needs.

• Debtors

If you set up the solar farm for personal use and seek capital from investors, part of your monthly income will go to financing the debts. In contrast, revenues will maximize if you invest in person since you won’t have to pay any other party.

• Power

The more panels you have for each acre, the more solar power the system generates and utilizes, and your income will significantly increase. Also, note that more power means a higher utility cost, although it is still more profitable.

• Project Capital

Besides buying the carbon footprint solar panel, there are several other necessary pieces of equipment to facilitate the project. If you have more money to start, it means buying more gear, getting more power, and eventually a rise in income per acre.

How To Start a Solar Farm: A Beginner’s Guide

Before converting your land to a solar farm,9 the following is all the information you need.

1. Meet the Specific Requirements First

Your land should be the correct size; you will need at least 2.5 acres for every 1 MW plant (space for the panels) and more room to accommodate the necessary equipment. Knowing that your land receives enough sunlight all year round without obstructions that cast shadows are also critical.

Additionally, you can confirm that the site is close to a grid and roads, or it will be more expensive to develop. The soil quality and land topology also matter for better placement of the panels and proper sunlight exposure.

Leveling the ground can be tasking, and sometimes the developer will advise that the land is unsuitable for the project. Lastly, remember that you will need a permit, which can take a while, sometimes years, depending on your locality.

2. Purchase the Required Components

You can consult your developer on all the necessary equipment for the project, but the following items will suffice for a 1 MW solar farm.1

• The setup will need MPPT Tech solar inverters, solar PV modules, protection and monitoring devices, ground-mounted solar structure, and cables.
• For the installation, you will pay for the erection costs and buy solar panels and inverters, protective gear, combiners, and junction boxes. You first have to find out how much do solar panels cost in your state since they are the most vital components.
• After completion, the plant will also need human resources and site and solar panel maintenance.

3. Know the Pros and Cons

To start a solar farm business, you must know all the ups and downs you are signing up for. On the positive, solar energy is one of the cheapest electricity forms, cutting down your energy costs. It also helps that it is safe for the environment since it is renewable.

(Image: Quang Nguyen Vinh17)

However, the disadvantage is that solar panels and the entire setup can be expensive to develop, and you will need a lot of capital to start. It is also a complex and demanding process that can take years to complete, which is not ideal if you are in a rush.

Is My Land Suitable for a Solar Farm? Vital Requirements to Consider

You may have the funds to build a solar farm, but ultimately, your land will determine whether the project is possible. First, you should have sufficient space for the plant, preferably more than 5 acres, depending on your needs.

Another vital consideration is whether your land is close to a power grid and whether it is stable and easy to build on. Also, check that there is a lot of sunlight throughout the year and no shadowing objects are around.

How Close Does a Solar Farm Need To Be to a Substation To Minimize Development Costs?

Proximity to necessary infrastructure is one of the essential factors to consider when setting up a solar farm. To minimize the project’s costs, your land should be at least 2 miles from a power substation and no further than 1000 feet from phase three.4

If these vital systems are not within range, you will incur extra costs to bring them closer to the plant, but the project may crumble since it is usually quite expensive.

Can You Work With a 2 Acre Solar Farm?

Two acres are enough for all your needs, and you can share them with your neighbors. In contrast, developers usually advise at least a 5-acre plant for commercial power. Otherwise, small lands and fewer solar panels do not generate enough power for sale.

If you want to provide energy for more people, you will need more than 5 acres, and developers usually recommend 30-40 acres for the highest power output.

Solar NPV Calculator: What It Is and How To Interpret It

The NPV (Net Present Value) calculation helps determine whether solar PV is ideal for you.10 For convenience, you can use a spreadsheet to enter the necessary data.

You will need the 1st year energy output in kWh, yearly output degradation (how much power the panels will lose over time), electricity cost per kWh, quoted cost for the PV plus installation, and the price inflation.

Once done, you will see the results below the page where GPV (Gross Present Value) is the system’s worth, while the NPV is the system cost minus its value. If the NPV is positive, buying is an excellent investment; otherwise, it may not be a great choice.

What Is the Total Solar Farm Cost Breakdown?

Estimating the costs of a solar farm can be broken down using the cost to generate one watt of energy, plus the sales tax of the purchases. For every watt of power generated, expect to invest about \$2.00.

 Component Price Inverter \$0.05/ W PV Module \$0.34/ W Electrical Balance of System \$0.07/ W- \$0.45/ W Structural System (BOS) \$0.09/ W- \$0.98/ W Permitting, Inspection and interconnection \$0.02/ W- \$0.23/ W Overhead \$0.27/ W- \$0.47/ W

To this estimate, make sure to add approximately 20% of the sales tax.

As the table indicates, the price to set up a solar farm depends on the total of many costs. The table only factors in the components that fall in a specific range, while everything else is variable, skilled labor and supply chain costs, for instance.

When thinking of long-term and solar panel carbon offsets, think of renewable power.3 If you have a solar farm income per acre calculator, you can quickly estimate how much to expect from your farm based on other costs, and you will tell the ROI of the plant.

Why Solar Farming and Do You Need a Solar Farm Income per Acre Calculator?

Solar farming is ideal if you want a cheap and renewable energy source. The initial cost may seem overwhelming, but eventually, it is more sustainable than other energy forms, thanks to the low maintenance and renewability.

References

1Chauhan, B. (2022, January 10). 1 MW Solar Power Plant: Types, Models, Price & Complete Details in India 2022. Kenbrook Solar. Retrieved October 19, 2022, from <https://kenbrooksolar.com/solar-power-plants/mw-solar-power-grid>

2Clayton, D. (2021, June 27). How Do Solar Farms Make Money? ROI Explained. Energy Follower. Retrieved October 19, 2022, from <https://energyfollower.com/how-do-solar-farms-make-money/>

3Clean USA Power. (2022). How To Buy Cash-Flowing Renewable Energy Land Directly. Clean USA Power. Retrieved October 19, 2022, from <https://cleanusapower.com/invest/direct-land-purchase/>

4YSG Solar. (2022, January 10). How Much Money Can a Solar Farm Make in 2022? YSG Solar. Retrieved October 19, 2022, from <https://www.ysgsolar.com/blog/how-much-money-can-solar-farm-make-2022-ysg-solar>

5Ong, S., Campbell, C., Denholm, P., Margolis, R., & Heath, G. (2013, October 3). Land-Use Requirements for Solar Power Plants in the United States. NREL. Retrieved October 19, 2022, from <https://www.nrel.gov/docs/fy13osti/56290.pdf>

6Profitable Venture Magazine Ltd. (2022, September 07). How Much Does It Cost Per Acre to Build a 1 MW Solar Farm? Profitable Venture Magazine. Retrieved October 19, 2022, from <https://www.profitableventure.com/cost-build-solar-farm-margin/>

7Solar Project Builder. (2022). Calculator. Solar Project Builder. Retrieved October 19, 2022, from <https://www.solarprojectbuilder.org/index.php/calculator/>

8Yacoubou MS, J. (2021, December 5). Solar Farm Land Requirements: Top 7 Tips for Farmers, Ranchers, and Landowners. Green Coast. Retrieved October 19, 2022, from <https://greencoast.org/solar-farm-land-requirements/>

9Davis, A. (2021, May 28). Solar Farming Considerations. University of Kentucky Agricultural Economics. Retrieved October 19, 2022, from <https://agecon.ca.uky.edu/solar-farming-considerations>

10Hay, F. J. (2013, January). Economics of Solar Photovoltaic Systems. University of Nebraska–Lincoln Nebraska Extension Publications. Retrieved October 19, 2022, from <https://extensionpublications.unl.edu/assets/html/g2182/build/g2182.htm>

11U.S. Department of Energy. (2013, September 30). Solar Power and the Electric Grid. NREL. Retrieved October 19, 2022, from <https://www.nrel.gov/docs/fy10osti/45653.pdf>

12Wikipedia. (2022, August 20). Solar Energy Industries Association. Wikipedia. Retrieved October 19, 2022, from <https://en.wikipedia.org/wiki/Solar_Energy_Industries_Association>