

Guide to Solar Farms

A comprehensive look at solar farms, their revenue potential, and their installation.

Last updated:
Reviewed by
Carlos Huerta

Solar-generated electricity has been on the rise over the last decade, and is today one of the fastest-growing renewable energy sources in the U.S. Solar technology is destined to form the backbone of any clean energy economy. Over recent years, large-scale ground-mounted solar arrays, private rooftop installations, and utility-scale solar farms have increased dramatically in both popularity and productivity.

Solar farms can be community-owned or private, small or large-scale. Large-scale installations cost around $1 per watt of power generated, with a 1MW farm (powering 200 homes per year) requiring an initial investment of around $1,000,000. Factors contributing toward the success of a solar farm include: proximity to existing infrastructure, sunlight availability, land lease rates, and state incentives.

As attitudes toward the climate crisis change, solar farms are an attractive long-term investment now more than ever. This article describes what solar farms are, how much they cost, outlines their revenue potential, and provides you with the information you’ll need to know when considering the development of a solar farm.

Solar energy is the fastest growing renewable energy source in the US. Source: Pixabay

What is a Solar Farm?

Solar farms are renewable energy power stations, comprising large numbers of photovoltaic panels (PV), also known as solar panels. Thanks to the chemical and physical reaction of their photovoltaic cells, when exposed to sunlight, they are able to generate consumable energy by converting sunlight into electricity.

In contrast to domestic solar arrays, which are typically mounted on roofs for the charging of batteries or home appliances, solar farms usually consist of ground-mounted solar panels installed across large areas. These farms (also known as solar parks or power stations) tend to feed electricity directly to the power grid, from which consumers can access this renewable energy.

Varying Uses for Solar Farms

Solar farms may vary greatly in their application. For example, large-scale solar arrays may be community-owned, through which a nearby community can invest in and enjoy the benefits of solar energy. Community solar farms are popular with those who do not have the personal property or space required for a domestic solar installation, yet have access to nearby land available to lease. Generally speaking, community solar farms require less land and are smaller than utility-scale projects.

Larger projects may be state-owned, supplementing the power grid with energy from renewable, rather than nuclear or fossil fuel sources. Alternatively, they may be the investments of private enterprises, who have established a solar farm (whether onsite or offsite), in order to meet their own high energy demands. These installations feed their generated electricity directly to the company in question.

Utility-scale solar farms may power thousands of homes every year. Source: Pixabay

How Much Do Solar Farms Cost?

The investment required by any given solar farm may vary greatly, depending on a number of variable factors. Before developing a solar farm, sound research is required. Here we present average figures and requirements which may be taken as an indicator of your own development’s projected costs.

Average Cost Per Watt

Though cost per watt may vary depending on factors such as sunlight availability, access to infrastructure, and lease rates for the land, as a good rule-of-thumb the installation of large-scale solar farms costs about $1 per watt. That means for a utility-scale farm producing 1MW (one million watts), the average initial investment would be $1,000,000. A farm of this scale would generate enough electricity to power around 200 households per year, and may require 4-5 acres of space. However, other sources state that the cost per watt may reach upwards of $2.50, making a 1MW farm cost about $2,500,000.

Financing Options for Solar Farms

Considering the financing of a solar farm development, there are often many options available to you. Certain states, government bodies, non-governmental organizations, and utility companies offer subsidized loans with reduced interest rates, in a bid to encourage investors to develop renewable energy projects. These loans can be used to purchase not only the solar equipment required, but also the land. Alternatively, you could choose to establish a cooperative group, through which members of your community can invest in and benefit from the farm. Those with the necessary capital need not resort to loans or coops, but could invest in the farm using personal resources.

Of course, if purchasing the land necessary for a solar farm is impossible or undesirable, then the next best option is to lease the land over an extended, ideally lengthy period of time. Given the large return solar power tends to have on the initial investment, and the trend toward green energy in the global economy, leases of around 40-50 years are recommended. In short, a lengthier lease ensures a greater return on investment.

Factors Affecting Solar Farm Lease Rates

The great advantage to solar energy production is that it’s output is consistent and reliable, and relies on an infinite fuel source (sunlight). Given the consistency of this return, fixed rental rates on a per-acre basis are the most common structure used in land lease contracts for utility-scale solar farms. Typically, these contracts range in terms anywhere from 15 to 50 years. However, it is important to remember that rental rates can vary greatly, depending on the size of the project, average land prices in the area, alternative possible uses, and the regional supply and demand of solar power.

Generally speaking, rent tends to be higher for small-scale solar farms (such as community arrays requiring only 5 or 10 acres of land) than large, industrial or utility-scale installations (which may cover hundreds of acres in the same region). The higher rent is incurred not only in order to cover tenants’ access to existing infrastructure and connection to the power grid, but also as recompense for landlords who would prefer to rent to larger-scale developers.

Additionally, whilst land lease rates naturally vary from state to state, they may also differ wildly within a given state. Oftentimes a bidder must understand the profits a landlord makes on the land’s current use, or may hope to gain from alternative developments (such as residential or transport projects), and adjust their bid accordingly. Naturally, the higher demand for land, the higher the cost to rent it.

Factors Affecting Solar Farm Revenue Potential

The long-term value of any solar installation depends largely on the initial investment. In other words, a solar farm is guaranteed to consistently produce energy, which will always be in high demand, but the revenue potential of a farm may only be fully realised once the initial investment has been paid off. Thus, the smaller the initial investment, the sooner the solar farm can start turning profit. One of the best ways to ensure a fast turnaround of capital is to purchase the solar equipment required, though (as we’ve mentioned) there are subsidized, or even $0-down loans for solar projects available to investors.

The primary factors affecting a solar farm’s potential revenue are:

  • Sunlight availability
  • Location of the farm (i.e. state rules, proximity to exisiting infrastructure)
  • SREC (solar renewable energy certificate) values in the area
  • SITC (solar investment tax credit) availability in the area
  • Additional incentives

Sunlight Availability

In order to produce as much electricity as possible, and thus generate the maximum revenue, the land selected for solar farm development is crucially important. South-facing land (in the USA) is preferable, ideal if that south-facing land is free of obstructions which may cast shadows on solar panels at any point during the day/year. If such obstructions exist, they should be removed (if possible), in order to maximise the potential output of the farm.

Location of the Farm

Solar developments require connection to the electrical grid in order to supply generated electricity to consumers or private enterprises. Thus, an important consideration in the evaluation process should be the proximity of the prospective land to existing infrastructures, such as roads and electricity grids. Utilizing existing infrastructures is preferable, given the immense expense and regulatory processes behind building them from scratch.

Additionally, the layout and quality of the land are important. If the area is unstable, difficult to build on, or contains debris and existing structures, additional investment would be required to prepare the land for the solar farm. with other debris and obstructions, this could make an additional investment necessary to clear the land.


Solar renewable energy certificates are granted per megawatt of solar electricity produced. State regulations known as renewable portfolio standards (RPS) require utilities to produce a certain percentage of their energy from renewable sources. These utilities will buy SRECs from producers of solar energy (such as those private and cooperative owners of solar farms) in order to prove to the State that they have met their RPS quota. Thus, SRECs can provide the owners of solar farms a substantial additional source of annual income.


In order to promote the continued development of renewable energy plants and farms, such as solar farms, the US Federal Government made a system of Investment Tax Credits available to solar developers. As of 2023, the scheme is being phased out, since it has achieved the goal of stimulating the USA’s growth in this economic sector. However, for installations started before the end of 2022, new solar developers may claim tax credits of up to 26% on their solar investment.

Additional Incentives

In addition to SRECs and SITCs, some federal states will continue to offer private investors and businesses tax cuts in return for investment in the solar sector, including the development of solar farms. Furthermore, some states and public utilities offer cash rebates to solar investors for the speedy installation and deployment of solar farms, which may cover anywhere up to 20% of the investor’s initial investment.

As special measures to increase solar energy production, Feed-In-Tariffs (FITs) may also be offered to solar investors, per kilowatt-hour of electricity a solar farm generates. It is worth researching, however, whether FITs require the investor to build their solar farms using locally-manufactured equipment, or not – this can often be a caveat of these specific incentives.

Solar farms are profitable and reliable in almost any region around the world. Source: Pexels

Solar Farm Development Terms: Defined

Solar Panels Per Acre of Land

Referring to how many solar panels may be installed per acre of land. The number depends on the type of installation (ground-mounted, for example), and the type of panels used. High efficiency mono-crystalline solar panels generate more power per acre, whilst polycrystalline panels (which are more common on solar farms due to the cheaper cost) generate less energy per acre.

Solar Farm Acres Per Megawatt

Referring to the number of acres required to produce 1MW (one-million watts) of solar electricity. Calculating the acreage per megawatt must take into consideration all of the equipment which shall consume space on the farm: primarily the panels and the structural components (note that solar farms tend to be very space efficient). Typically, a 1MW solar power plant installation will require around 4-5 acres, assuming that every kilowatt of solar electricity production will require about 100 square feet of space.

Solar Megawatts Per Acre of Land

Referring to the number of megawatts which can be produced on each acre of land. As always, the calculation depends on the efficiency and effectiveness of the solar panels installed, and the availability of sunlight in the area. The calculation of the space needed is also influenced by the efficiency of the solar panels and the efficiency of the technology. If, as discussed above, a 1MW solar farm requires on average 4.5 acres of land, then each acre would produce 0.222MWh of electricity per year.

Solar Farm Revenue Per Acre

Referring to the revenue generated by the entire solar farm, divided by the number of acres on the farm. As discussed, revenue depends largely on the initial investment costs, the electricity prices at which the energy generated it sold to consumers, and available incentives, credits, and tax breaks.

Solar Farm Profit Per Acre

Referring to the profit made by a solar farm, divided by the number of acres the farm uses. According to Landmark Dividend, the average solar farm profit per acre ranges between $21,250 and $42,500. Of course, these figures vary on a project-to-project basis.

Solar Farm Cost Per Acre

Referring to the cost of establishing a solar farm, divided by the number of acres the farm will cover. Given a 1MW solar farm costs on average at least $1,000,000 and requires about 4.5 acres, but may cost up to $2,500,000, then for a 1MW farm the cost per acre would range from roughly $222,000 to $500,000.

Solar Farm Lease Rates Per Acre

Referring to the costs to lease an acre of land for use in the development of a solar farm. Rates can vary dramatically depending on the several factors discussed above. However, we can state that in the US the cost of leasing one acre of land for solar development is about $500 per month. For a 1MW farm requiring 4.5 acres on average, this places the monthly lease rate at $2,250 per month.

High-efficiency monocrystalline solar panels greatly increase a solar farms profit per acre. Source: Pixabay

Building a Solar Farm: Questions to Ask a Solar Developer

How many acres of land do I need?

The acres required for a solar farm differ depending on the scale of the power plant itself and the efficiency of the panels used. In general, for a solar farm of 1MW at least 4 acres of land are needed, which includes the space required for additional equipment (i.e. on top of the solar panels).

How will my solar panels be kept clean?

In order to maintain the efficiency of solar panels, especially those which are situated close to the ground, routine cleaning is important. Rain water alone is insufficient, and so professional cleaning and maintenance with warm soapy water, a soft cloth and sponge, is necessary. Professionally cleaned solar panels have on average a 12% higher electricity output, arguably mitigating the costs incurred by hiring professional cleaning services.

How many panels can I put on this acreage of land?

The number of solar panels which may be installed on any given acre of land depends on two things: the way they are mounted, and what type of panels are being used. Highly efficient monocrystalline solar panels generate more electricity per acre than cheaper, less efficient polycrystalline panels.


Solar farms make for financially attractive investments. The return is steady, reliable and consistent, and may be supplemented with additional income from the trade of SRECs, or the availability of tax credits and other incentives in your area. Solar farms can provide small communities, national grids, and private enterprises a sustainable, infinite source of green energy for any number of uses.


Of course, the initial capital investment in solar farms is high, and detailed financial planning must take into consideration the time it will take for the solar farm investment to show any return. Just like any other investment, solar development requires careful consideration of present and future risk.


With renewable energy production on the rise, the time to invest in solar energy is, without a doubt, now. There are an abundance of options available to the investor considering the renewable energy sector, and one of the most secure, and long-term profitable projects you could take on is the construction of a large-scale solar farm.


Are solar farms profitable?

Yes, solar farms are profitable. The potential profit varies widely based on where you are located, how much land, how many panels can be added, and incentives in your specific state.

Are solar farms dangerous?

No, solar farms are not dangerous. World-class engineering goes into the construction of solar farms, and proper equipment such as circuit breakers, transformers, and maximum power point tracking controllers ensure that solar farms are sturdy, durable, and built to last a very long time.

Why is the US government’s ITC initiative ending in 2023?

The incentive tax credits available to investors in the renewable sector were created by the Federal government in 2006, in order to stimulate the initial growth of the renewable energy sector. Now that those in government see this goal as having been achieved, they are looking to end the scheme in 2023. However, developments

What are the optimal land conditions for building a solar farm?

Solid, sturdy, unobstructed land which is south-facing and close to existing infrastructures such as roads and the electrical grid is preferable for any solar farm development.


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Carlos Huerta


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