This page may contain affiliate links, please check out our disclosure policy here.
In Portugal where I live, huge solar farms are appearing throughout the countryside as many farmers are quickly seeing that there may be more (or easier) profit to be made 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.
- How much power will 1 acre of solar panels produce?
- How do solar farms raise money?
- How much money does 1 acre of solar panels make per year?
- How much do landowners get paid for solar panels?
- How much would a 1 acre solar farm cost?
- Solar Farm Income Per Acre – Do solar farms make money?
- Are solar farms worth it?
- How much money can a 10 acre solar farm make?
- How many acres do you need for a solar farm?
- How much does it cost to set up a solar farm?
Video – How much can you earn leasing land out to solar panels?
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 per acre
- Irradiance or peak-sun-hours for the geographic location
How many solar panels fit in an 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:
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.)
Theoretical energy produced 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?
Unfortunately, we don’t get all the power out of a solar system that the formulas tell us. All solar PV systems have losses, some of them we can influence and others we can’t.
Table: Solar PV Losses
Cause of Energy Loss
Design or Maintenance
Dust and Dirt
DC Cable Losses
AC Cable Losses
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 contract 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.
Laconia solar farm lease contract example (download)
How much money does 1 acre of solar panels make per year?
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.
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 on average $2300 per acre of land leased to solar farm operators.
How much would a 1 acre solar farm cost?
Installation costs for solar farms are much less than for domestic solar systems, which come in at around $2.80 per kW in most states.
Solar farms installations can cost 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 would be off-putting for most farmers and land-owners.
Solar Farm Income Per Acre – Do solar farms make money?
Solar farm income per acre is around $14000 to $16000 for an installation size of 435kW of solar panels., depending on the location irradiance.
Most farms are rated in mW (megawatts), therefore solar farms make money at the rate of $32000 to $40000 per installed mW. This is clear profit.
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 are worth it.
Several things are driving this phenomenon:
- Depending on farm-land output, it is simply more profitable to launch a solar farm
- The land is easier to manage, requiring little work after 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 monetize under-performing land
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?‘.
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 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
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, 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.
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 energy produced in various states, according to the irradiance values:
Table – Energy produced by 1mW solar panels in 9 U.S. States
Irradiance Value (Peak-sun-hours) per year
Annual output estimate in mWh for 1mW installed
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 panels and all associated equipment.
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 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
More resources relating to making money with solar farms:
RENOGY are fast becoming the preferred source for solar panels, kits, batteries and solar control accessories. Based in the US, where the products are manufactured, they are widely known and respected for innovation and quality.