It’s no surprise that with the massive growth in renewable energy, there are many people out there interested in investing in solar energy. Some are even so ambitious to start their own solar farm business. Investing in a solar energy farm can have many benefits, such as the money generated from the solar farms are typically tied to inflation, the contracts are generally in place for a significant duration, and the return on investment can be excellent.
The simplest way to invest in a solar farm or solar company is to buy solar energy stocks. But if you are eager to explore the adventures of having your own solar farm business, here are some areas to consider before you take the plunge.
What Is a Solar Farm?
So, you are interested in starting a solar farm business. But do you know what a solar farm is? Essentially, it is an extensive decentralised solar array that exports sun-generated electricity to the main power grid. Most massive arrays are owned by utilities and not private individuals. These solar farms include ground-mounted solar arrays, which are so large they can supply power for several households and businesses.
A solar farm can be installed on an actual working farm or other kinds of unimproved land or open space. If you own a large plot of cropland that does not generate much income, installing a solar farm could be an excellent way to make the land make some money. Solar farms are also being installed on vacant industrial land and sites which have not been used for many years.
Is There a Return On Solar Farm Investments?
The upfront costs needed to invest in solar farms are enormous. Any investments made in solar farms should be made cautiously and after some detailed financial planning. Starting a solar farm often requires a minimum investment of $1 million.
The positive, however, is the return on investment can often be worth it as recurring revenue will pay dividends for many years. Unlike domestic rooftop solar panels, a solar farm is able to not only power your household and business appliances, the solar power generated will be used by someone else as well.
How To Start A Solar Farm
There are some essential steps you should follow to start your own solar farm. It can be a somewhat complex process as there are many industry regulations to ensure the solar farm is being constructed safely and in an environmentally courteous way. Here are some steps that will need to be considered.
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Make Sure You Do Your Research
Before you start constructing your solar farm, you will need to carry out some thorough research. It is worth considering the following:
- The amount of capital you will need to invest
- The cost per acre of solar panels
- Any local solar farmland requirements
- Case studies of other solar power investor projects
- Key facts and figures relating to the solar farm return on investment
- Challenges you might face and how to plan to overcome them
Try to honestly answer all of your questions before you can get started and invest any time or energy.
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Draft Your Business Plan
Once you have performed your research and have the answers to the above, you will need to move onto preparing your solar farm business plan. Even if you consider yourself a solar expert, it is a good idea to involve professionals in the development of your business plan. This plan will provide you with the cost estimates and the approximate return on investment. The business plan should cover at least 10 years of your potential solar farm business.
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Source Land for the Solar Farm
As a solar farm company, you will need space to set up the panels. This means you will need land before getting started. A question that often comes up is how much land is required. You will need at least 15 acres of land for a 1 MW solar power plant. If you already have the capital available, you can purchase the land. Otherwise, you may need to look into leasing. If you go down the leasing route, it is best to find an agreement with a 50-year minimum term. This will ensure the solar panels will not need to be dismantled too soon.
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Install the Solar Farm
Once you have the land sorted and the business set up, it will be time to erect the PV power structures. For this stage, it is best to bring in a professional company to mount the solar farm. They will also be responsible for the renovation and maintenance work. It tends to be best to work with a single company for the long term. It can get a little complex if you have too many companies involved.
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Market You Solar Business
During the construction process, get your terms of service and other marketing efforts well on the way. Once the solar farm has been built, you can reach out to companies, industries, and individuals to let them know about your solar farm and the services you offer. They will be interested to know about details of the cost and payment method for using power from your solar farm, so be thorough with your market research.
Closing Thoughts
The above is a highly simplified example of the processes involved in starting a solar farm company. It takes a lot of time, money, and expertise to get this type of business off the ground and make it successful. If you are seeking a way to get involved in renewable energy investments, it is much simpler to check out the best renewable energy stocks. Although there is still some risk involved in purchasing solar stocks, the stakes are probably lower than starting your own solar farm.
Interesting Related Article: “Why Solar Energy is Good For The Environment“
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