In 2018, 1.6% of the total electricity generated in the U.S. was powered by solar energy. Now, that number may seem small, but considering how often and how much energy we use on a daily basis it is actually quite substantial. What’s more, solar power is only increasing in popularity—and not just among those looking to make greener choices, but with savvy and innovative real estate developers.
Solar power has consistently “ranked either first or second in capacity added to the U.S. electric total every year since 2013.” As such, many states are beginning to see the advantage of solar farms, specifically their low costs and low cost distribution-level interconnections. With the right piece of land, landowners and developers can take advantage of solar power’s growing popularity.
Developing a commercial solar farm is similar to many development projects in that your plans must abide by local zoning laws, covenants, or restrictions.
A Solar Energy Primer
A basic understanding of solar energy is absolutely vital to ensuring a reasonably sized project, as well as a realistic goal for yourself. Here are some basic numbers and terms that can help you better understand solar power and how it’s measured:
- The sun continuously emits approximately 173,000 terawatts of energy, which is a more than adequate amount to cover the world’s average use of 15 terawatts a year. Though there is a bounty of energy waiting, it is difficult to collect.
- There are two methods of collecting solar energy, photovoltaic solar cells and solar thermal, and they both require vast amounts of sunlight with little to no interference.
- Energy output is often measured in gigawatts per hour (GWh) or in megawatts. 1 gigawatt equals 1,000 megawatts.
- According to The Energy Department’s National Renewable Energy Laboratory (NREL), a farm using photovoltaic cells would need at least 2.8 acres of land to produce 1 GWh per year. Therefore, a farm would need to cover approximately 32 acres to produce enough electricity for 1,000 homes.
Picking the Land and Land Rights
On average, one megawatt of solar energy can power about 200 homes, so most experts recommend using 6-8 acres of land per megawatt. Acquiring the solar panels to produce a megawatt will total around $3 million dollars. In general, for development costs to balance out, your farm should produce at least one megawatt, if not more. If you’d like your farm to have the capability to cover more homes, you’ll need many, many acres of land to develop.
Landowners will often lease out their property for the development of wind and solar farms in order to generate a profit out of unused land. Whereas wind farms allow extra space for the landowner to use, solar farms take up much more ground space, and therefore may result in a landowner charging more for your use of their land. If leasing land, experts recommend you choose sites that are low in agricultural or mineral value, as they will often cost significantly less and allow for a larger return.
Some of the best advice about developing solar farms comes from attorneys who specialize in the matter. They argue that “in order to maintain the deductibility of land cost for federal income tax purposes, it has usually, historically been best that the project entity not acquire fee title to the land.” However, larger projects may be interested in buying the fee title, as it might have advantages when it comes to economic and water rights.
To develop and run a commercial solar farm, an energy facility permit must be filed and approved. In most cases, developers can file through their state or local jurisdiction, but if the property sits on federal land a permit must be submitted to the federal government.
Permits and application processes vary from state to state. Some states in the U.S. have councils who directly oversee and approve where energy facilities can be built. Midwestern states often have their public utilities commission oversee the application process for energy facilities. In some places, state approval is enough to begin development. In others, both state and local permits must be filed and approved separately.
In addition to the permit process, the federal government, as well as each state and local government, may apply environmental and land use rules to your project.
The federal government will work to ensure the project isn’t encroaching on Army Corps permits or endangered species by requiring the completion of an environmental review. They will analyze how the development will impact the built and natural elements around the site, such as wildlife, water, and roads/traffic patterns. State and local governments will conduct their own environmental review and analysis of the project.
The whole purpose of developing a commercial solar farm is to give people the ability to use your product to power their home. In order for that to happen, solar farm developers and owners must work with local utility companies to connect your project to the utility grid.
Though it is illegal for them to deny you the right to connect, they may warn against it. In many areas of the United States the cost of interconnection is sky high. Knowing the fees associated with interconnection can help you gain a better idea of the viability of your project.
The best way to identify the potential cost of interconnectivity is to examine the utility service’s online interconnection maps, if they have them. You’ll need to locate wires on your property and identify which voltage they are from on the map. From there you can decipher how much interconnectivity will cost.
Solar power is only increasing in popularity—the uses and possibility for greatness keep increasing as well. In order to collect enough solar energy to make a real impact, more and more solar farms need to be built. Real estate developers have a great opportunity to make a real difference, as well as jump on a growing trend, by getting into the solar power arena.