Is solar profitable. Thin-Film Solar Panels

Can You Make Money With Solar?

Leigh Matthews is a sustainability expert and long time vegan. Her work on solar policy has been published in Canada’s National Observer.

A rooftop solar array could save you tens of thousands of dollars in electricity costs over the panels’ lifetime. You’re unlikely, however, to make money with solar. Most utility companies still charge a basic fee for service even if you put more energy into the grid than you take out. Read on to learn more.

Table of Contents

• When net metering works too well
• Should you apply for net metering?
• Net metering and battery storage

• How batteries help

Ah, the 5 cents per kWh question. Can you actually make money by installing solar panels? Specifically, can you make money from a residential rooftop solar array?

The short answer is maybe, but it’s becoming more unlikely.

A lot of this depends on if net metering is available where you live, and how the net metering or net billing program works.

When net metering works too well

Here’s an example, based on my own experience, of where early adopters of solar took advantage of net metering and sort of ruined it for the rest of us.

My electricity provider (BC Hydro, a monopoly) used to pay customers nearly 10 cents per excess kWh generated by renewables such as solar and wind. Unfortunately, the company stopped this a few years ago as a handful of people were making tens of thousands of dollars with outsize arrays far beyond their personal use needs. Now, anyone who applies to the net metering program must include their household energy consumption.

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Why? Because the utility company has switched to tracking a home or business’s net energy and using any excess power generated to offset the cost of your bill. There are no payments, even if you make more power in a year than you use. Instead, your best-case scenario is that you break even (excepting the application fee for net metering and any unavoidable service charges).

So, to answer the question of whether you can make money with solar, it depends. Basically, even though a small solar array on my roof would create energy the utility company could sell to other customers, I wouldn’t see a profit from it.

The upside, though, is that I might not have to pay for electricity for the next 20 or 30 years. And, for you, there may be a greater pay-off, depending on your utility provider and household energy use.

Can you make money with solar?

A rooftop solar array could save you tens of thousands of dollars in electricity costs over the panels’ lifetime. You’re unlikely, however, to make money with solar. Most utility companies still charge a basic fee for service even if you put more energy into the grid than you take out.

Should you apply for net metering?

In general, if your utility provider offers net metering (also known as net energy metering or NEM in some places), you’ll want to apply. You’ll get the most out of net metering if:

• You have a south-facing roof in good shape with a few years of life left (at least)
• Your roof is big enough for a standard/common solar installation (about 240 square feet)
• Your roof is free from shade for most of the day
• You have another location on your property where solar panels can go
• You can install PV panels on an adjacent property connected to the same service (only some utility companies offer this option).

Before installing anything though, check with your utility provider, and see if any of your neighbors have installed rooftop solar arrays recently. I say recently for a reason: Beware exemptions and special clauses that support net metering payments only to those who applied prior to a certain date.

You can also talk to local solar installers as they should be up to date with net metering policies. These companies obviously have a vested interest in convincing you to install solar, but they’re still a great resource for information on how net metering actually works where you live.

Where I live, anyone who began net metering prior to 2019 will still receive 9.99 cents (CAD) for every excess kWh generated up until 2024. Anyone applying after that date gets nothing. Instead, excess energy flowing into the grid is only used to offset bills.

Is there a third way? Absolutely.

Factors That Determine the Profit Per Acre of a 1 MW Solar Farm?

One cannot conveniently state the amount a 1 MW solar farm is expected to make yearly if you do not know the amount of electricity the solar farm is expected to generate. A 1MW system can generate between 1,300,000.1,600,000kWh per annum. This equates to around 3,500 – 4300 kWh/day on average.

When it comes to setting up a solar farm, location plays a major role which is why feasibility studies and market survey are essential before settling for a location.

Usually, if your solar farm is located in an area that is known to be sunny year in year out, you are sure of generating enough solar energy and, you may not have to struggle to make good money from the business. But if you locate the solar farm in a location that hardly sees sunlight, then you will sure make lower money from your 1 MW solar farm.

Alternate Power Sources in the Area (Competition)

Another important factor that will determine how much a 1 MW solar farm is expected to make yearly is the type of alternate power sources available in the location.

Aside from solar energy which is power generated from the sun, we have Geothermal energy from heat inside the earth, Wind energy, Biomass from plants and Hydropower from flowing water. If residents of the area where you have your solar farm have a cheaper source of power, they would want to price down your power supply.

5. The Business Model of the Solar Farm

There are different business models that a solar farm can adopt and these business models offer different results. For example, the amount a solar farm that also runs franchise makes yearly will be different from the amount a strictly one location solar farm will make from 1 MW solar farm.

This goes to show that the amount a solar farm will make from 1 MW solar farm is dependent on the business model of the solar farm.

6. The Advertising and Marketing Strategies Adopted by the Solar Farm

Another key factor that will determine the amount a 1 MW solar farm can make yearly is the advertising and marketing strategies adopted by the farm. Trust me, there are several advertising and marketing strategies that can help a business increase their earnings, but you may be expected to spend more.

But the results you will make will far outweigh the amount you spent on advertising and marketing. Of course, you don’t expect a solar farm that is engaging in aggressive advertising and marketing to make same amount yearly with one that is passive with its advertising and marketing.

Today’s energy mix

The globe’s energy mix has responded to the bargain on renewables. In 2019, 72 percent of new energy capacity came from renewable sources and global renewable power capacity has more than tripled in the last 20 years.

In the United States, renewable power has been ramping up, too. In 2007, wind made up less than one percent of energy capacity, and even less for solar, while coal contributed half. While 2020 estimates are still preliminary, it’s likely that the total output from renewables (including solar and wind as well as other sources like hydropower and biomass) surpassed coal, which only contributed about a fifth of power generated. “2020 … will have been the best year ever for new wind installations in the US and the best year ever for new solar installations,” says John Rogers, an energy analyst at the Union of Concerned Scientists.

But these changes are still not enough to reduce greenhouse gas at the rate needed to curb the worst impacts of climate change.

While coal plants have been shuttering across the country, the fracking boom has brought in a glut of cheap fossil gas. While this abundant and affordable fuel emits up to 60 percent less carbon dioxide when burned compared to coal, it still contributes to climate change, including from the notorious methane leakages from its facilities Oil also still accounts for a large share of polluting emissions due to its use in powering cars and trucks. In fact, transportation accounts for more emissions than any other sector in the country.

Delays to a green transition

Despite a massive drop in costs, renewables haven’t replaced fossil fuels at the rate you might expect. That’s because the investments, policies, and very infrastructure of the energy industry as a whole are very much skewed in favor of fossil fuels.

While it is cheaper to build renewables when considering a new plant, that metric doesn’t necessarily apply to running a fossil fuel plant that already exists, explains Ashley Langer, an energy economist at the University of Arizona. Sometimes, she adds, the regulatory structure of utilities actually makes it more profitable to keep a coal or natural gas plant running.

Langer says this is especially true for the state-regulated monopolies that supply power in about half of US states. These investor-owned utilities are guaranteed a certain rate of return on their investments in power facilities, which basically guarantees continued earnings in exchange for running those plants. Even if the actual market costs of their energy sources would make operations costly, these monopolies are set up so that that’s not really a concern.

“The thing that’s really preventing us from rapidly transitioning is what we call the lock-in effect,” says Paul. “We have existing fossil plants where we’ve already paid to build them and the cost of producing one more unit of electricity is cheaper from using existing infrastructure than building new infrastructure in most cases. So given that we’ve already paid the upfront cost of this fossil fuel infrastructure, the economics don’t quite line up yet where we’re going to facilitate a Rapid phase out of fossil fuel plants prior to the end of their life cycle.”

That may change soon, though. The cost of building new renewables is becoming increasingly competitive with the cost of adding additional capacity to existing fossil fuel facilities. In the 2020 Lazard analysis, the lifetime costs (when including subsidies) of power are 31 per megawatt-hour for utility solar and 26 per megawatt-hour for wind. The cost of increasing capacity was 41 for coal and 28 for natural gas.

In addition to being already heavily invested in fossil fuels, there is a lot of inertia in the system due to long-term contracts between utilities, energy producers, and mining companies. And since the country’s total energy use is not increasing that much every year, there isn’t much incentive to build new renewables.

Market forces and monopolies aside, there are few other, more tangible barriers to a widespread renewable roll out.

Sun and wind aren’t consistent throughout the day or the year, and sometimes the best places for power don’t actually have many people living there. The windiest parts of the country—often in the interior regions like the Great Plains—have fewer people to use that power than crowded coastal cities. The aging American electrical grid doesn’t currently have the ability to distribute power from renewables over long distances, says Matt Oliver, energy economist at the Georgia Institute of Technology.

These challenges of intermittency and geography are not insurmountable—batteries and water can store energy, and better transmission systems can be built. But the solutions will require massive investments to develop and build the needed infrastructure.

Making the leap to clean power

In the midst of pandemic-induced high unemployment and low interest rates, renewables and their now-cheap could finally have their moment.

“It is rare to have a policy option that leads to more jobs, cheaper for consumers, and a greener, safer planet,” writes Max Roser in the Our World in Data article. If affluent countries invest in renewables now, he adds, those technologies will grow even more affordable and therefore more likely to be adopted worldwide to meet increasing energy demands.

In the US, the federal government can play a huge role in these investments. It can borrow at low interest rates and use that advantage to help energy transition projects at state and local levels. Paul explains that this could take the form of a national climate bank, backed by the federal government, that issues bonds for local decarbonization efforts. Senators Edward Markey of Massachusetts and Chris Van Hollen of Maryland just introduced a bill proposing to launch such a bank.

The federal government can also make direct investments in clean energy. Langer says one major way political leaders can ensure an energy transition is by providing consistent subsidies to solar and wind. The wind industry in particular has struggled due to inconsistent government funding. “Wind subsidies in the United States have been highly uncertain,” says Langer. Congress will pass subsidies leading to a boom in wind industry growth, but then later allow those subsidies to expire—leading to bankruptcies.

Helping renewables flourish might be the easy part, though. President Biden has stated a goal of bringing the United States to 100 percent clean energy by 2035. Meeting this goal would require sending lots of fossil fuel plants into early retirement.

That’s one thing for coal, which is already on its way out, but Langer points out that the proliferation of new natural gas since 2005 is going to be a challenge for those big climate goals. Those new plants could easily run for decades, as long as there’s nothing stopping energy producers and utilities from making a profit. To make matters more challenging, forced closures could affect people’s energy bills. “If you retire the natural gas plants sooner, rates will rise,” says Langer. “It’s either going to come out of your taxes or it’s going to come into your electricity bills.”

Of course, just letting the plants keep running and the planet keep warming will in the long run be far more costly to humanity than shutting fossil fuels down. But those shutdown costs are still a reality in the near future. All four economists PopSci talked to for this article said that instituting a fee on carbon would help make sure that polluters are paying their fair share of that price. This could take the form of a cap and trade market or a tax on every ton of emissions produced. Right now, there’s no tax on carbon pollution, which means all the costs of increased atmospheric carbon are instead shouldered by ecosystems and individuals, who pay in ways like rising air conditioning and health care costs. (It’s like socialism, but only for the powerful and polluting, you could say).

While enacting a price per ton of carbon would affect energy bills and at the pump, some governments have developed progressive solutions to this. In British Columbia, for instance, proceeds from the country’s carbon fee are paid out to the public as tax dividends.

With oil low, some argue that this is a prime time to buy out the fossil fuel industry entirely. A one-time buyout would allow the federal government to shut down fossil fuel plants rapidly and put a stop to their political influence. “We need to dismantle the existing fossil fuel economy,” says Paul. “And if we don’t … the market force behind building that green economy is going to be slow.”

is a freelance science writer and editor. You can check out more of her work at her website.

What Is the ROI on Solar Farms?

The average ROI for a solar farm is approximately 10% to 20%. On average, a solar farm can take around five to 10 years to pay off, but once it’s paid off, you can reap the benefits of free electricity and a potentially hefty profit.

An average one-MW solar farm can earn between 20,000 to 60,000 or an average of 43,500 per year if you sell the energy to the grid. A solar farm with one MW of capacity is between six to eight acres. This means you’ll make roughly between 5000,500 to 10,000 per acre.

Landowners who have a leasing agreement with a solar developer should expect to earn less—anywhere from 250 to 3,000 per acre yearly—due to the fees and leasing expenses.

Solar Farm ROI Factors

Solar farm ROI depends on a multitude of factors that can impact how much you see in returns. These include:

• Type of solar farm
• Type of panels
• Land requirements and acquisition
• Size of your solar farm
• Proximity to the grid
• Regional climate and terrain
• Cost of the installation

Type of Solar Farm

Your ROI may vary depending on the type of solar farm you choose for your investment. There are three types of solar farms that you can invest in: utility-scale, community, and microgrid solar farms.

Utility-Scale Solar Farms

These solar farms generate electricity for public utility companies and can take up thousands of acres with sometimes even hundreds of thousands of solar panels. The U.S. Energy Information Administration, however, states that most utility-scale solar farms in the U.S. are five MW or smaller. A solar farm with a five MW capacity can yield between 100,000 to 300,000 annually.

Most utility-scale solar farms are managed by utility companies and go towards powering corporations and facilities. Since most solar farms have an ROI of around 10% to 20%, this type of solar farm yields a high profit and also falls at the high end of that range, but it’s usually too costly of a project for homeowners and small communities.

Community Solar Farms

Community solar farms are a type of distributed generation, meaning they don’t directly feed into a facility to give it power. Instead, the energy is distributed throughout a neighborhood, powering a community of households who all share in the ownership or leasing of the solar farm.

The EIA states that most community solar farms have a max capacity of two MW, which yields a profit of anywhere from 40,000 to 120,000 annually. These earnings are shared equally between the homeowners invested in the solar farm.

Leased solar farms usually have higher costs to rent the solar energy, and you also don’t benefit from paying off the solar farm in the long run. This means your ROI is lower than it would be through ownership, which falls in the middle of the ROI range. However, if you’re planning on moving, are a renter who can’t install solar panels, or are a homeowner who lacks space or sun exposure, this may be more financially beneficial overall.

Microgrid Solar Farms

Some community solar farms have a max capacity offewer than 100 kilowatts (kW). These microgrids are small but a step up from a rooftop solar panel system; if there is a power outage, microgrids work independently of the grid. As the smallest option, microgrids fall on the lower end of the ROI range.

Many solar power systems depend on the grid in some way, and you might see a nice ROI for a rooftop system that sells excess energy to the grid (also called grid-tied systems), but in case of a natural disaster or other emergencies, traditional solar panels won’t do the job.

Microgrid solar farms are a small-scale solution to keeping the power on without the higher budget needed for a community solar farm investment. They use battery storage as a backup during power outages to provide power to homes or communities during grid outages.

Types of Solar Panels

The type of solar panels you choose for your solar farm can also have an impact on your ROI. There are four types of solar panels for solar farms. Here’s a breakdown of how much each one costs and how efficient they are to help you determine which might give you the best return on your investment:

Monocrystalline Solar Panels

Monocrystalline solar panels are the oldest and purest form of silicon crystals on the market. These crystals are cut into wafer shapes to preserve the silicone. They convert 15% to 20% of the sun’s rays into energy.

• 450–450.50 per watt
• Often used in residential solar panels
• 20% costlier than polycrystalline solar panels
• 20% more efficient than polycrystalline panels
• Ideal for limited spaces
• Pure silicon cells
• 15% to 20% energy efficient
• 25- to 50-year lifespan
• High ROI

Polycrystalline Solar Panels

Polycrystalline solar panels are comprised of a series of melted silicon fragments that are shaped into squares using a mold. These panels are ideal for hotter climates and sport a 13% to 16% efficiency rating.

• Is a Solar Farm Worth the Cost?

  Ultimately, your solar farm project’s ROI depends on the execution. From the materials and equipment to the land acquisition to the amount of power you’ll need to generate to provide electricity to those planning on using your solar farm, making a mistake could cost you money and negatively impact your ROI.

  That’s why it’s best to speak with at least three solar panel installers near you. You want to hire the best solar installation company to ensure your project is on track for a high-yield investment without the high loss that can befall large projects of this nature.

  .90–450 per watt

• Most common solar farm panel type
• Most heat-tolerant
• Less energy-efficient than monocrystalline panels
• 13% to 16% energy efficient
• 25-year lifespan
• Moderate ROI