What It Takes to Go Off the Grid With Solar Panels
Off-grid solar systems offer energy independence and savings amid rising electricity costs.
Chi Odogwu is a digital consultant, professor, and writer with over a decade of experience in finance and management consulting. He has a strong background in the private equity sector, having worked as a consultant at PwC and a research analyst at Renaissance Capital. Additionally, he has bylines in well-known publications, including Entrepreneur, Forbes, NextAdvisor, and CNET. He has also leveraged his writing talent to create educational email courses for his clients and ghostwritten op-eds published in top-tier publications such as Forbes, CoinDesk, CoinTelegraph, Insider, Decrypt, and Blockworks. In addition to his writing, education, and business pursuits, Chi hosts the top-rated Bulletproof Entrepreneur Podcast. Through this podcast, he engages in insightful conversations with talented individuals from various fields, allowing him to share a wealth of knowledge and inspiration with his listeners.
Finding creative ways to save money on bills is one of the best ways to fight the current cost of living crisis plaguing Americans.
As our reliance on our devices increases, it’s easy to forget that every outlet feeding a device drains your ever-shrinking bank balance. Pretty soon, you’re scrambling to pay the increased electric bill at the end of the month. Inflation data published by the US Bureau of Labor Statistics show that the cost of electricity rose by 13% from February 2022 to February 2023.
Going off the grid is one way families can use alternative energy sources, such as solar panels, to meet their home or business electricity needs. If you transition to an off-grid electricity system you’ll need to take the bold step of severing ties with your local energy provider and switching to a self-reliant energy source.
Can solar panels save you money?
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Although this transition requires significant upfront costs, the return on investment might be worth it in the long run. Here’s what to know if you’re thinking about buying a solar panel system and disconnecting from the power grid.
What is an off-grid solar system?
An off-grid solar system is a self-contained energy system that independently produces and stores electricity.
Can solar panels save you money?
Interested in understanding the impact solar can have on your home? Enter some basic information below, and we’ll instantly provide a free estimate of your energy savings.
Off-grid systems function by using solar panels, often mounted on the rooftop, to absorb energy radiated from the sun and convert it to direct current electricity before transferring it to a battery for storage. An inverter converts the energy stored in the battery to alternating current electricity to power your home.
There are four main components of every off-grid solar system:
- The solar panels and mounts that hold the panels in place.
- The charge controller, which regulates energy flow from the solar panels to the batteries.
- The battery, which stores the energy accumulated from the solar panels.
- The inverter, which converts the DC electricity stored in the battery to AC electricity that runs appliances.
As inflation continues to erode the dollar’s value, more people have embraced cost-effective sustainability practices. These off-grid solar system solutions offer the dual benefit of positively affecting the environment and increasing energy independence.
Can you still be connected to the grid and have solar panels?
Grid-tied systems are not independent, standalone entities. Instead, they are connected to the utility grid and transmit excess energy generated by the solar panels back to the electric grid.- often selling it back, through a process called net metering, for credits on your power bill. The primary advantage of grid-tied systems is they are significantly cheaper because the owners do not need to buy expensive batteries to add to the system.
Off-grid vs. grid-tied solar systems: Which is better?
It all depends on your preferences and needs.
There’s no easy answer when deciding which system is better off-grid vs. grid-tied, said Rohit Kalyanpur, CEO of Optivolt, a Silicon Valley-based solar technology company. Off-grid solar systems are better suited for situations where the customer lives in a remote area and does not have reliable access to the electricity grid.
Both grid-tied and off-grid solar systems are eligible for a 30% federal tax credit on the total cost of the system. In order for batteries to qualify for the credit, they’ll have to have a capacity of at least 3 kilowatt-hours.
How to Sell Solar Power Into Your Grid and Make Money
From sloped roof installations to flat roof tilt-up arrays and building integrated models, possibilities for commercial solar power generation are varied and numerous. Companies joining in on the solar trend have the added bonus of selling excess power to the utility for money in the form of credits and savings.
The basic principle behind solar energy systems is relatively simple: solar panels installed on a roof or set of buildings generate DC power via photovoltaic cells; a solar inverter transforms DC power to AC, which travels to a breaker box, which supplies the company’s electricity.
Commercial Solar Parameters
According to power company Constellation Energy, companies need to take some issues into consideration before they take the path to a cost-effective solar-powered enterprise. The size of the system is a key factor in long-term cost savings and profitability, as it has to be large enough to generate sufficient energy to offset the costs of the investment. As of publication, the company says that a business should generate at least 1 million kilowatts of power annually to achieve any savings benefit. over, the installation should occupy at least 100,000 square feet of roofspace or 2.5 acres of cleared land.
While the feasibility requirements for solar power generation among businesses seems to favor larger companies over smaller ones, small businesses can get in on the game by using renewable energy credits. A solar renewable energy credit represents 1 megawatt of solar-generated power, a certain quota of which utilities are required to buy under Renewable Portfolio Standard mandates in some states.
Solar-producing businesses can sell their SRECs to utilities, and depending on prevailing market prices, reap profits. Solar services provider Geostellar speaks of several routes for selling SRECs: directly to the utility; through an agent or aggregator; or through an SREC exchange.
Netmetering Agreements with Local Utilities
Businesses generating their own solar power enter into a billing and metering agreement, called a netmetering agreement, with a local power utility when connecting a photovoltaic system to the grid. Under this agreement the solar-generating business agrees to be charged for net power usage: if it generates excess power than it uses, it is credited; however, this does not mean the utility sends a check, it just means energy costs are offset. In some cases, says electricity and gas company National Grid, depending on the type of production facility, the utility may opt to send a check.
When a solar-generating company sells electricity back to the grid, it is in essence receiving credits, rather than cash. These credits are different from SRECs. Solar technology company Solar World cites a savings of over 223,000 in utility bills over 25 years for a 77.8 kilowatt commercial system in North Carolina. Selling power is particularly advantageous for time-of-use payment structures where utility rates are highest during the day.
Because PV systems produce the most power during the day, producers are able to sell high at that time, extracting additional gains. When the solar installation produces less, at night, it is buying power from the grid at lower rates.
How to Start a Solar Company: Startup Costs and Revenue Streams
There are numerous approaches to solar businesses, and each will come with its own cost. First of all, there are two main ways to generate solar power: photovoltaic cells, and concentrated solar power. Both of these will have different customers, and therefore different business models entirely. We’ll FOCUS on the more common PV panels for the majority of this article.
Then, there are businesses within these two brackets that can be at almost any scale. A small, private solar company might be as cheap as 10,000 to set up, while a large corporation may need two or three million in early funds to get going.
There will obviously need to be a substantial spend on materials for the average solar panel business, for example, and if you’re not going down the franchise route, you may need to put down up to half a million on supplies before you can enter the market and cover your overheads.
To take an example, for a small company with an investment range of between 45,000 and 140,000, you may be looking at a revenue potential of 400k to 450.5 million.
Solar money comes in two ways: revenue streams and tax cuts. Both consumers and companies get tax credits for investing in solar, as well as other incentives that might come to them through renewable energy schemes, and we’ll go over profitability and revenue a bit more in a later section. First, let’s take a deeper look at the expenses.
Solar Business Expenses
So, what are some actual overheads you’ll need to expect? Essentially they’re similar to any hardware-based company. Your major expenses will likely be:
- Working capital – This is the money you’ll need to cover your initial equipment and hold it
- Sales and Marketing – You’ll have a cost for this after you complete your business plan and marketing strategy
- Your certifications – You will hopefully already be qualified, but if not, these can be costly and time-consuming
- Hardware – This might include a vehicle, the relevant tools, and whatever else you’ll need to install the systems if that’s the business model you’ll be using.
So, the good news is that for the small business owner, it doesn’t have to cost a lot to get into, and for the more ambitious with access to the funds, the sky is quite literally the limit. On top of this, every year the costs of solar equipment drop, making it always a good time to get started.
But there are other costs to consider before you jump in. Soft costs related to the permits, the finances, the installation of solar, and other business metrics such as customer acquisition costs, which can be significant in the industry. All of these costs affect both the bottom line and the sale price of your goods and can be very tricky to pinpoint.
Fortunately, improvements in modern software are boosting the power of marketing and lead generation and resulting in savings to the company that can be passed on. Skilled talent is also a growing resource, which promises to contribute to these prospects similarly. As more industries become familiar with solar power, the infrastructure is adjusting to accommodate it, which is promising for the solar industry.
Your Solar Panel Business Revenue and Profitability
Let’s take a solar installation business as the template for this. Regardless of the model, installing solar units is the main source of income for the company. There can be leasing programs involved or an upfront payment; either way, labor, and materials costs are covered by the customer.
These fees vary from region to region, and of course on the specifics of the job at hand, but it’s safe to assume that a customer might pay between 15k and 50k for a private installation, and higher sums for larger projects such as corporate buildings.
The industry as a whole appears to be growing at around an average of 15% annually in the US, as more people adopt the new technology, and materials and technologies continue to advance. This is deepening the market to smaller consumers and branching out to poorer communities as costs decrease. A lease-based model brings in closer to 6% a year, but the nature of a fluctuating fossil fuels market will affect the number of panels leased and sold, which will affect the profit margins too.
As with most goods, purchasing in bulk will save some of the costs and improve your profits if you have space to store the goods safely and the customer base to sell them.
So, you have numerous factors to consider here – factors that will come together more clearly after you know more about what your approach will be to starting a company. We’ve put together a rough, 5-step guide on how to start a solar company below.
Step 12: Build Your Team
If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a solar farm business would include:
- Maintenance Workers – Maintain your solar panels and grid
- General Manager – Oversee maintenance, accounting
At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.
Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn. or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed, Glassdoor, or ZipRecruiter. Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.
Step 13: Run a Solar Farm – Start Making Money!
Solar power is the future of energy and it’s good for the planet since it’s clean and renewable. By starting a solar farm, you’re doing your community a service and making money at the same time.
The US solar market is worth more than 11 billion and growing rapidly, which means your solar farm should provide sizable profits with little effort once it’s up and running. Alternatively, leasing your land for a solar farm costs essentially nothing but will add a nice stream of passive income. Now that you have the information you need, you’re ready to start building your solar empire!
Solar Farm Business FAQs
If you develop a solar farm, once it’s up and running, you should make 30,000 per acre per year. If you lease your land for a solar farm, you can make 5000,000 per acre per year.
You will need to contact federal, state, and local regulators to start the permitting and approval process, which can take 3 to 5 years. You will also need to contact the local power company for approval.
The general rule is 6 to 8 acres at minimum. This is enough to develop a 1-megawatt solar farm.
Conduct a thorough site assessment to determine the optimal location for installation, considering factors such as sunlight exposure, shading, and structural integrity. Follow manufacturer guidelines and industry standards for the installation process, including proper mounting, wiring, and electrical connections. Regularly inspect and clean the solar panels to remove dirt, dust, or debris that can reduce their efficiency.
Solar farms provide several environmental and sustainability benefits, including:
- Renewable energy generation: Solar farms harness sunlight to generate clean and renewable energy, reducing reliance on fossil fuels and greenhouse gas emissions.
- Carbon footprint reduction: By displacing energy generated from fossil fuels, solar farms contribute to reducing carbon dioxide and other harmful emissions that contribute to climate change.
- Water conservation: Solar farms have minimal water requirements compared to other forms of energy generation, reducing strain on local water resources.
- Land preservation: Solar farms can be built on existing open spaces, including unused or degraded land, minimizing the need for new land development.
- Local economic benefits: Solar farms create job opportunities during construction and ongoing operations, stimulating local economies and providing long-term revenue streams.
Best practices for managing and monitoring solar farm operations include regular maintenance and inspection of solar panels and equipment, monitoring energy production and system performance, implementing remote monitoring and control systems, establishing a preventive maintenance schedule, conducting periodic performance assessments and analysis, and providing staff training and education.
To assess the potential solar resource and energy production of a solar farm, you can conduct a solar resource assessment using historical solar irradiance data, perform a feasibility study including a site visit, and utilize solar modeling software or online tools that consider parameters like panel type, tilt angle, and shading.