It shouldn’t come as a surprise that The Kickass Entrepreneur is writing about how to start a solar energy farm. It combines some of Jeff’s favorite investments: real assets, infrastructure, renewable energy, and a steady stream of reliable cash flow.
A real asset is a physical asset that an investor or business owns and is value-generating. Some examples of real assets include:
- Apartment buildings
- Solar farms
Investing in a solar energy farm has the following benefits:
- It can earn excellent cash on yield.
- The contracts are typically for a long duration.
- The cash flows the farm generates are usually tied to inflation.
- It has lower volatility because the revenue is predictable.
- It can provide an excellent return
There has been a rapid growth in the solar industry over the last 10 years.
How Do You Invest in a Solar Farm Investment?
The easy way to invest in a solar farm, or renewable energy company, is to just buy a stock of a company like Brookfield Renewable Partners.
Brookfield operates one of the world’s largest renewable power platforms. We’ve discussed Brookfield as a company and stock investment in other posts. The purpose of this post is to fill in the gaps and explain how to take advantage of the solar industry yourself by creating your own solar farm, and not to review how to invest in real assets from an investment perspective. You can read this article though: What are Real Assets, and How to Diversify Your Wealth by Investing in Them?
Before we dive into the solar farm business, perhaps you might like to hear Tom Mills discuss his 120 Acre Solar Farm in Camilla, Georgia. He definitely understands nuances of what’s involved. This YouTube video is two-minutes long, and is worth the time:
How Do You Start a Solar Farm Business?
What Is a Solar Farm?
A solar farm refers to land where there are multiple ground-mounted solar tracking towers. This can be a working farm or other kinds of unimproved or open land.
A solar farm is a photovoltaic power station, essentially a big decentralized solar array that supplies electricity to a power grid. Most massive arrays are owned by utilities. These farms include ground-mounted solar arrays. They are so large they can easily supply power to several households.
The concept of a solar farm can be associated with a residential community-sized solar farm and also large utility-scale solar.
Why is there such a rise in solar farms, and why would anyone start a solar energy farm business?
There are large croplands that do not generate a lot of income, and solar farms are now replacing these lands. It is easier to make money with solar panels on these farms, and in addition, solar farms are also being placed on vacant industrial land or sites that have not been in use for many years.
Most of us are aware of solar panels mounted on rooftops. The truth is that solar panels on homes and solar farms have the same purpose.
Solar Farm Return on Investment
Investing in solar energy or farms involves a lot of money.
Solar farm investment should be done cautiously and after a lot of financial planning, since starting a solar farm will mean you have to investment of a minimum of $1 million.
The good news is that the ROI is worth the investment as the recurring revenue will pay dividends for years.
Instead of just using the electricity for powering your air conditioner or refrigerator, the solar panels will be used for creating power to be sold to the electricity utility. Thus, the power you make can be used by someone else, as well.
When you have solar panels on the roof, you have a second electricity meter. On your farm, you will have your first meter, as usual, and you will buy electricity from the utility like before. The second meter will measure the power the panels make. You will get paid by the utility for the power that goes through this meter. So when you have solar panels, you are not just a consumer, but you are a producer as well.
The 7 Steps Required Prior to Starting a Solar Farm
To start a solar farm, you need to follow a few quick steps to ensure success.
1. Make Sure You are Thorough with Your Research
Before you start the solar farm, you need to carry out the research thoroughly. You need to:
- Be aware of the capital you need to invest in.
- Find out the cost per acre of solar panels,
- Solar farmland requirements,
- Other investors in solar power projects,
- Facts related to solar farm return on investment.
- Problems you might face and how to overcome them.
Remember, you need honest answers to all your questions before you can get started, so let’s continue with the article, and hopefully, we will answer some of your questions.
2. Get the Business Plan Ready
Once you have all your answers, you need to prepare the business plan. Though you might have all the knowledge, considering the nature of the business, it is wise to involve professionals in developing the business plan. The plan will provide you a cost estimate and an approximate ROI. The plan needs to cover at least 10 years of business.
3. Legal Requirements
It is important to get legal backing for your farm.
Your company should be registered as a legal entity.
Once you have completed the business plan for your solar plan investment farm, you should begin the process of getting your business registered as a legal company. It is also important to get the permissions necessary for starting the solar farm. You might have to employ a lawyer to handle these processes for you.
4. Find the Land for Space
Solar farm companies need space to set up the panels. Thus, there is a requirement for land to get started.
Often a question arises related to the area required for a 1 MW solar power plant. At least 15 acres of land is necessary to start. Those who have the capital ready can purchase the land straightaway. If you do not wish to purchase, you might be able to lease the land. However, the leasing agreement should be for at least 50 years. This will ensure there will not be any need to dismantle the solar panels too soon.
5. Construct the Structure
Next, it is time to erect the photovoltaic power structures. You can find many companies to contract with the mounting of the solar farm. The company is also responsible for most of the renovation and maintenance tasks. It is preferred to work with a single company for such a long-term project. Working with many companies is overly complicated.
6. Send Out Proposals to Individuals and Companies
While construction is being carried out, many individuals or companies may come with inquiries about the terms of service. Once the structure is totally erected, you can get in touch with individuals, companies, and industries about the services you offer. Also, it is important to include the payment method and service costs of using the power from your solar farm.
7. Choose a Name
Last but not least, if you wish to start a solar business, do not forget to have a suitable name for it. You need to have a name that distinguishes it from all other companies offering the same set of services.
Starting a Solar Farm Business from Scratch
When you start a solar power business from scratch, you need to learn a lot about the industry. You must have knowledge about installation, different products available, and solutions for business owners and homes. It is also about building a good relationship with the suppliers and different sales consultants.
When you start a solar farm, market research and feasibility are quite important. Services of a solar firm are useful for the following industries:
- High schools, colleges, and universities
- Blue-chip companies
- Corporate organizations
- Television stations
- Households and individuals
- Sports facilities
- Financial institutions, insurance companies, and banks
- Religious organizations
- Distributors and manufacturers
- Advertising agencies
- Government (public works department)
- Publishing Houses or Printing Press
- Contractors, developers, and real estate owners
- Research and development companies
How to Start a Solar Farm Business – Important FAQ
How many acres of land are needed?
A small-size farm might be set up on a few acres of land. However, a large utility-scale farm might require hundreds of acres.
How does the electrical connection work?
The location of the land is extremely important. It needs to be close to electrical panels or power lines so it can be feasibly connected to a specific centralized power source.
How is the plan maintained and cleaned?
Cleaning the plant is important so the efficiency of the solar panels can be maintained. Often solar-powered robots are used for cleaning the panels.
Solar Industry Details
The industry of solar farm developers refers to a number of companies involved with the installation and construction of a solar power grid system, which is commonly known as solar farms. The work carried out includes repairs, rehabilitation, reconstruction, and also new work.
If you are thinking about starting a solar farm, you need to know a few facts about the industry and why it is a wise decision.
The Benefits of a Solar Farm Business in America and Canada
- Solar is one of the fastest-growing renewable energy sources in America and Canada
- Solar energy provides affordable, reliable, and clean energy to more than 2.2 million homes in America and Canada (Ontario was home to the largest solar farm in the world).
- Solar has helped to create thousands of new jobs in America. In fact, the industry has contributed billions of dollars to the US and Canadian economy.
- The industry has grown immensely in the last five years.
- The demand for solar farms is now backed by government incentives. These include ITC or solar investment tax credits, which are responsible for private investment in solar technologies. With such incentives, solar power projects are accelerating, especially in the last five years.
- The technology is not yet cost-competitive.
Undoubtedly, solar power can help in making money for a long time. Here are a few more ways of making money from a solar power business:
Wunder Solar Investment
Wunder Capital is a popular, safe, and reliable way of making a solar investment. It helps investors make the right investment in solar projects. You will be able to make money and also do your bit to save the environment.
Wunder Capital is a reliable investment platform. It acts as a bridge between solar energy projects and investors. It creates solar investment funds, as it has some small-size solar companies on the board.
Wunder Capital is a popular financial technology company, and it plays a major role in managing every part of the investment process.
How Wunder Earns You Money: The Wunder Solar Investment
Wunder Capital is based in the US. It has more than 100 commercial solar installers and several developers as partners. The companies usually get in touch with the customers and carry out independent deals. Wunder Capital provides financial help to all these companies, as it provides capital through investment funds.
If you are not too confident about starting your solar company, you can still make profits as you invest in the solar companies of others. Investing in solar energy is always a lucrative option, but you need to know how to do it.
The investment you make will go to Wunder. Wunder uses the money to fund different midsize solar companies. Wunder Capital generally has three debt funds. Two of these funds are available for the purpose of new investments.
Leasing Your Land
Another way to make an investment in the solar sector is to lease your unused land to a solar farm. You will not be putting any physical money in the business. However, you just lease your land to those who need it. You can look for companies or investors in solar power projects who are eager to invest in solar farms.
However, before you choose to offer your land, you need to consider whether your land will be able to fulfill the criteria necessary for the purpose of solar installation. An independent site assessment company can guide you about solar power land requirements and can help you ascertain if your land is suitable for a solar farm. Once the land passes the test and is approved for installing solar panels, you need to look for solar developers. The financing companies and solar developers will provide all the necessary assistance for setting up a solar farm.
Other Ways to Invest in the Solar Farm Industry
If you are not interested in setting up a solar farm, you can still specialize in the solar industry.
Here is a list of niche ideas:
- Monitoring services
- Solar energy supply
- Installation of solar panels, repair services, and maintenance
- Roof-mounted panel installation
- Construction of concentrated solar power (CSP) plant
- Panel installation – ground mounted
- Panel installation – fixed rack
- Panel installation – solar tracking
- Power plant construction – crystalline silicon solar
- Selling and distribution of accessories of solar panel
- Power plant construction – thin-film
Although not really related, you might be interested in this article: How to Become a Decamillionaire, Grow your Net Worth to $10 Million, and Join the 1% Club
If you enjoyed this post, you might also enjoy this one: How Much Money Do You Need To Never Have To Work Again? Let’s Do The Math.
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