Everything You Need to Know About Starting a Solar Farm

Allie Ogletree
Written by Allie Ogletree
Updated June 6, 2022
Farmers walking through solar farm
Photo: Mike Harrington / Stone / Getty Images


  • Solar farms cost between $800,000 to $1.3 million for one megawatt of solar capacity.

  • On average, solar farms have an ROI of 10% to 20%.

  • The type of solar panels, land, location, and soil condition all play roles in total costs.

  • Make sure you find a reputable solar developer to install your solar farm.

  • It can take three to five years for a solar farm to be approved for development.

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Going on a cruise around town, you might notice those impressive, blue solar panels on the roofs of more and more houses. Beyond the outskirts of your town, there may be an even bigger series of panels, called solar farms. Why have panels when you can have a farm? This guide will give you all the tools to get started on a solar farm project.

What Is a Solar Farm?

A solar farm, also called a solar power plant or photovoltaic (PV) power station, is a renewable energy plant comprised of many PV solar panels. Much like a solar energy system for homes, these solar panels absorb the sun’s rays and convert that energy into electricity. 

But, unlike a home solar panel system, solar farms send the electricity generated either to the electrical grid to be distributed to homes or directly to paid subscribers.  

How Do Solar Farms Work?

Solar farms work by generating electricity from sunlight using solar panels. As the sun’s rays hit the panels, they activate the semiconductors that are inside the panels, enabling them to produce electricity. 

Parts of a Solar Farm

Most solar farms consist of solar panels, a racking or mounting system, cables, an inverter, a way to send converted energy to the electric transmission grid, and—in some cases—an energy storage device. Here’s a look into each of these parts:

Solar Panels

The solar panels themselves are one of the most noticeable solar farm components; they sweep across the vacant land, consuming the sun’s rays and turning them into electricity. There are three main types of solar panels: monocrystalline, polycrystalline, and thin-film solar panels. Each comes with its pros and cons, which you’ll want to factor into your decision to go solar.

Monocrystalline Solar Panels

Monocrystalline solar panels cost around $1 to $1.50 per watt and are 15% to 20% energy efficient. These panels have a 25- to 50-year lifespan, so while their upfront costs are higher than the other panels, they pay off in the long run because you don’t need to replace them as quickly, and they’re more efficient.

Polycrystalline Solar Panels

Polycrystalline solar panels cost around $0.90 to $1 per watt, are 13% to 16% energy efficient, and have a 25-year lifespan. This makes them more affordable than monocrystalline panels but slightly less efficient and with a lower lifespan.

Thin-film Solar Panels

Thin-film solar panels are the most affordable, costing $0.70–$1 per watt, but they’re also only 7% to 13% energy-efficient and last 10 to 20 years. These panels are ideal for lower budgets or areas with high sunlight.

Mounting System

There are four mounting systems for solar panel farms, and they depend on the location, terrain, and climate zone. Here’s a breakdown of the different mounting and rack systems for solar panels:

1. Ground-Mounted System

Ground-mounted systems are fixed mounting systems that cost around $100 per panel. In the U.S., these popular solar racking systems should face the south to receive the most sunlight without shade from surrounding structures. Fixed systems are the most affordable and durable, as they have no moving parts that deteriorate quickly over time.

2. Tracking System

For around $600 to $1,000 per panel, you can upgrade a traditional ground-mounted system to a tracking system. As the name suggests, these racks track the sun as the earth moves to give the solar panels constant exposure to solar rays. The extra cost might be worth it for regions where sunlight is limited, but in climates where sunlight is regular, it may be more feasible to opt for the standard ground-mounted system.

Tracking systems can either use a single axis or a dual-axis to track the sun; dual-axis tracking systems are the most efficient, as they move circularly to capture sunlight, whereas single-axis tracking systems move from east to west. 

3. Solar Canopies

Also called solar carports, these canopies are often installed over parking lots in commercial areas and come in around $2,500 for the mounting structure. Homeowners who live in an urban area may be able to tap into the benefits of solar canopies if space is limited and a business is willing to lease out space for you to develop your solar farm project. 

Not to mention, it’s more sustainable to build on developed land rather than build on vacant land that serves as a habitat for wildlife. 

4. Floatovoltaics System

Floatovoltaics are a series of solar panels installed on water rather than land. This type of system is newer, only recently picking up steam in the U.S., but if you have a pond or lake access on your property, then installing a solar farm via water is an option. Floating solar systems consist of a floating platform with panels mounted to the surface. 

The main downside to this option is that it’s newer, making it hard to find a professional skilled in installing the floating solar panels. Prices are also around 10% to 15% more than other options. 


Without getting too into physics, solar panels produce electricity called direct current (DC). Most electronics, however, acquire their power from alternating current (AC) electricity. Here’s where an inverter comes in. Inverters convert DC electricity into AC electricity to be usable by the grid. Inverters come in many shapes and sizes. The trick to getting the right one all falls on your specific solar farm system and its output.

Power Lines and Substations

You will also need power lines that lead to the substation, which the utility company owns. If you’ve ever driven past a fenced-in facility that looks like a strange cluster of metal and power lines, chances are, you’ve seen a substation. These stations convert voltages from high to low and low to high, depending on the circumstances.

Energy Storage Device

If you plan to store excess energy rather than send the excess electricity to the utility company, you’ll want an energy storage device on hand. This usually consists of a battery bank. You also may need specialized inverters to convert the electricity stored in the battery from DC to AC.

Pros and Cons of Solar Farms

A solar panels farm
Photo: Carlos Sanchez Pereyra / The Image Bank / Getty Images

Solar farms offer many benefits that make them worth their while, but these solar-converting machines aren’t for everyone. Here are some benefits and disadvantages of solar farms:

Solar Farm Benefits

  • They’re a form of renewable energy.

  • They lower your carbon footprint by reducing emissions.

  • Solar farms are great for renters or homeowners with too little space for solar panels.

  • They’re $1.70–$2.20 more affordable per watt than residential solar systems.

  • Solar farms have a high ROI of 10%–20%, depending on the efficiency of your equipment and climate.

Solar Farm Disadvantages

  • Solar farms have a high upfront cost.

  • You might need to lease from a solar developer if costs are too high.

  • Land acquisition is a must for starting a solar farm.

3 Types of Solar Farms

There are three types of solar farms, though most residential solar farms fall into the latter two: utility-scale, community, and micro-community solar farms.

  1. Utility-scale solar farms: Designed primarily to generate electricity for the utility company, these farms can take up thousands of acres in some instances and have a capacity of over five megawatts (MW).

  2. Community solar farms: These farms distribute energy among a neighborhood of homeowners sharing in the solar ownership or lease. They’re usually around 1 to two MW in size. Excess energy is sold to the grid.

  3. Micro solar farms: These solar farms are small versions of community solar farms and tend to have a max capacity that’s under one MW.

Cost to Install a Solar Farm

A one-megawatt (MW) solar farm costs between $800,000 to $1.3 million, not including land; however, many solar farms are smaller than this, so there’s a great deal of flexibility in the cost of a solar panel. One-MW solar farms can power around 200 households, so if your goal is to power far fewer homes, you can potentially cut these costs in half to achieve your goals.

If you don’t have land yet, the national average for agricultural land is $3,200 per acre. Most one-MW solar farms require approximately six to eightacres of land, so add $19,200 to $25,000 to your budget to account for this expense. 

Cost Factors

Several factors can affect the cost of your solar farm, with the size of your farm being one of the biggest factors. Larger farms require more acreage and equipment to generate enough electricity, but they also see the biggest ROI for solar farms, with earnings anywhere from $20,000 to $60,000 per MW. Other cost factors include:

  • Land acquisition

  • Equipment

  • Watts

  • Size

  • Proximity to the utility grid

  • Terrain

Ways to Save Money on Building a Solar Farm

Most solar farms depend on public or private financing to get installed. For example, larger, utility-scale solar farms tend to require large sponsors through grants or private companies. 

If you’re starting a community farm, then you can save money by finding a group of homeowners interested in privately owning shares in the solar farm. You’ll see a reduction in your profits from the grid, as community members will share that, but you’ll also personally invest less into the project.

Things to Consider Before Installing a Solar Farm

Before you get started on a solar farm project, keep these tips in mind for making the most out of a solar farm investment:

  • Location, location. Factor in the location of your site; you don’t want unexpected expenses like clearing out the land, long deliveries to the site, distance from the grid, and even shadows cast from mountains to interfere with your budget.

  • Research solar companies. Many solar farms are leased by solar companies, so make sure you read the fine print before you sign a lease agreement and talk to a lawyer to be on the safe side.

  • Know your neighbors. Make sure your community wants to switch to solar energy before building a solar farm to plan for the most accurate size.

  • Climate matters. Your climate might not yield high profits if you opt for a low-efficiency option like thin-film panels. Factor in the efficiency level you need to determine which panels and rack system are financially wise.

  • Dig this. Soil quality can also affect your project. Rocky, uneven land is a pitfall for a solar farm project. You don’t want land that dips in the middle, nor do you want soil too rocky to dig into for the rack installation.

  • Get up to code. Solar farms are a major project. As such, you’ll want to make sure you’re following regulations by acquiring permits and licenses ahead of time.

  • Solar investment tax credit. The U.S. Department of Energy supports renewable energy with a 26% tax credit that’s good through 2022. The credit changes to 22% in 2023 and ends in 2024.

  • Maintain and service. Like any equipment, solar farms do need to be maintained and serviced at least two times a year, depending on how much rainfall, dirt, and debris are in your region. Solar panel repairs cost around $700.

How to Install a Solar Farm

Installing a solar farm is a bit like walking down a winding road—there are many steps to doing it right, and you don’t want to step into a pothole! Check out these steps to installing a solar farm to stay on track.

1. Finding a Solar Company

A solar farm is a major, lengthy project that requires professionals to get the job done right. But not every professional is equal. Search online for a solar panel company near you and look at reviews, ratings, testimonials, and credentials to steer clear of deals that seem too good to be true. It’s a good idea to call at least three reputable solar panel contractors and ask for details on solar farm projects they’ve recently completed to get a good idea of their experience levels.

After choosing a solar company, a solar developer will survey your land to ensure that the site is accessible, reaches the utility grid, and has access to water. When your solar developer deems your land suitable for a solar farm, this is when you can sign a solar lease agreement or purchase the renewable energy system with your own funding or grants. 

2. The Development Phase

Solar farms take only a few months to build, but you may find yourself impatiently waiting for siting and permitting. The permit process is complex because solar farms are subject to reviewal processes by the federal, state, and local regulators to ensure there are minimal environmental impacts.

The solar company you work with must submit a detailed construction plan of your project and even test out environmental studies with potential solutions if issues were to arise to get started on the project. This process can take three to five years

3. The Operations Phase

After your solar farm is fully developed, you can begin producing energy and selling and distributing electricity to the grid and the community.

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