Today we would love to talk about the solar farm investment.
As the solar energy has grown exponentially, so too has demand for land to house larger and larger solar arrays. Projects have expanded massively in terms of scale and this has necessitated a push beyond the usual residential and commercial spaces for solar power companies across the country. With the increased demand for space and increased investment in the renewable energy sector looking set to continue, there are unique opportunities for landowners to use these developments to their advantage. Solar farms have been a big part of the global solar expansion, but how exactly do they turn a profit for the landowners?
Firstly, it’s important to note that a number of variables determine the value of the land and, thus, the rates of the solar lease.
#1 – Amount of Land (solar farm)
Solar farms are usually quite large projects and will require a certain number of acres for a developer to be interested. A rough guideline for how many panels the land can hold is 1kW per 100 square feet. The amount of land required varies on a project-by-project basis, and you should also take into account the additional surrounding space that will be required for non-panel solar equipment.
#2 – Amount of Sunlight (solar farm)
Obvious as it may be, the land should receive plenty of sunlight annually if it’s going to be viable for a solar farm. Lots of obstructions mean lots of shadows and this isn’t good news for a solar panel frame project. If there are some obstructions on your land, don’t give up hope immediately, removal is possible. Of course, removing these obstructions may not be realistic in some cases. Getting rid of a few trees or bushes should be okay, getting rid of a building, maybe not.
#3 – Grid Proximity (solar farm)
This is a huge deciding factor for solar developers looking to lease land for a solar farm. If the necessary infrastructure to connect the solar farm to the utility grid isn’t accessible then it’s unlikely that the project will be able to advance. Even seemingly obvious infrastructure, like road access to the land, can be decisive. This kind of infrastructure is expensive and difficult to build, so you definitely stand a better chance if your land is already close to the necessary components.
#4 – Soil Quality (solar farm)
This might sound like a concern for those involved in traditional farming pursuits more than those developing solar, but it’s an important factor nonetheless. If the land is unstable, difficult to build on, or covered with other debris and obstructions, then this could be a dealbreaker. Clearing the land could cut into a developer’s budget to the point where the project is not viable, and if the land simply can’t be built upon safely, well, that’s it.
If all these factors have been taken into account, and the value of the land has been determined, then it’s time to move on to the negotiation period. The solar developer will draft up a lease agreement to be reviewed by the property owner. This lease will cover all the key points – the monthly rent, the acreage required, and the length of the lease. Take care in this stage of the process and ensure that you’re happy and informed about all aspects of the lease.
#5 – Conclusion (solar farm)
So, how much money can a solar farm make for property owners? Well, according to Landmark Dividend, the average solar farm profit per acre lands somewhere between $21,250 and $42,500. Of course, it’s very important to remember that these figures vary wildly on a project-by-project basis, thanks to some of the factors we’ve discussed above. Actual profits can be much lower or, indeed, much higher. Solar farms spanning hundreds of acres can see profits in the hundreds of thousands.