How To Invest In Solar Farms In 2023

Key Points

• Solar farming is a popular alternative investment that utilizes solar energy to generate power.
• Solar farms can generate income year-round and help reduce the country's reliance on fossil fuels.
• Investors can invest in a publicly traded company associated with solar energy, invest in an ETF, build their solar farm, or lease their land to a solar farm.
• There are two types of solar farms: utility-scale farms that provide power to large areas and community-scale farms that power smaller communities.
• Solar farm returns vary based on several factors, such as land, weather, type of panels, and geographic area, but you can earn an average of $43,500 per year for a 1-megawatt farm.

There are many alternative investments to choose from outside of stocks and bonds. Farmland is a popular choice due to its negative correlation to the stock market and ability to appreciate in tough economic times.

A farm can be used for several purposes, such as growing crops or raising cattle. But some farms capture energy – that is, solar energy.

Solar farms are large-scale outdoor power plants fueled by a natural source: the sun.

These farms use photovoltaic (PVC) panels installed on the ground in a cleared lot.

Solar farm investing means you'd be part of a movement to find alternative energy sources instead of our country’s continued reliance on finite fuel mined from the ground.

Sunlight is one of the most potent alternative energy sources and is becoming increasingly popular among investors and homeowners.

Unlike the solar panels you’ve likely seen on rooftops of homes, solar farmers can produce enough electricity to power an entire town or even a larger region.

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Why Invest In A Solar Farm?

Solar farming has grown quite rapidly over the last few years. As a sustainable energy source, investors and governments alike are interested in the benefits of solar farming. In fact, since 2006, the US government has offered individuals significant tax incentives for investing in solar panels. Aside from tax incentives, here are some other solid benefits of solar farm investing:

• Solar farms support the use of a natural source of energy and reduce the country’s reliance on fossil fuels that will one day be depleted.
• The sun provides limitless energy and more than we could ever use
• Investing in solar farms could be an intelligent way to diversify your portfolio
• In ideal locations that get plenty of sunshine, farms can generate income 12 months per year
• If you already own land, payment could be higher than using it for crops or other purposes
• Over the last decade, there has been explosive growth and interest in the solar industry

Ways To Invest In Solar Energy Farms

While more complex than stocks and bonds, investors have a few options for investing in solar energy farms. On the more straightforward side, investors can invest in a publicly traded company associated with solar energy. And on the more intensive side, you can build your solar farm.

Here are six ways to invest in solar energy:

1. Just like mortgage lending institutions, there are lots of companies offering loans to build community solar farms. You must compare loan fees and interest, as they can vary wildly. Some local utility companies offer investors a profit-sharing model with residents. Please get in touch with yours to see if this option exists where you live.
2. Shasta Power Solar Development Investments is another option. Its mission is to grow your investment portfolio and make the world better. Shasta Power is leading the transformation from coal energy to a sustainable future.
3. iShares sustainable ETFs focus on specific themes, including environmental causes. These ETFs can be bought and sold through most brokerages available today.
4. Another option would be to invest in a publicly traded company focusing on solar energy. A few of these companies include First Solar, Brookfield Renewable, and SolarEdge.
5. The most costly option would be to build your solar farm! This takes significant capital and extensive research. In addition to securing a big enough plot of land, you must ensure you have a proper business license and legal requirements to engage in this type of business. Building a 1-megawatt solar farm will cost roughly $800K – $1M. A 1-megawatt farm must have at least 6-8 acres of land.
6. You can also lease the land to a solar farm if you have unused land.

Some people also choose to invest in solar on a smaller scale through solar panels in their homes. While it represents a high initial cost, it can drastically reduce your monthly energy bill. And once your solar panels are paid off, you will experience the ROI. Investing in solar panels also offers tax incentives. But, again, you can contact your CPA to learn more if you like.

Types of Solar Farms

There are two different types of solar farms. The main difference is the size of the farm.

The two types are utility-scale farms and community-scale farms. Utility-scale farms are massive farms that provide power to large areas. On the other hand, community-scale farms are much smaller and power smaller communities.

The other key difference is the consumer of the energy. Community farms provide solar energy to those who pay for its service in a local group. Utility farms typically work with local utility companies.

Solar Farm Returns

All solar farms are different. For example, the amount a solar farm can earn depends on several factors, such as land, weather, type of panels, and geographic area, to name a few.

An average 1-megawatt solar farm can earn roughly $43,500 per year. But, of course, this figure varies wildly depending on the abovementioned factors.

The Copper Mountain Solar facility in Nevada, an 816-megawatt farm, is currently the biggest solar farm in the U.S.

If you lease your land to a solar farm, you can earn roughly $1,000 to $2,000 per acre per year.

Solar Farm Investing: Final Thoughts

Unlike other energy sources, the sun provides limitless energy and far more than we could ever use. Additionally, as an energy source, it doesn't require high operational costs or fuel to capture.

While building your solar farm can be incredibly complex, there are other ways to get started.

Some utility companies allow residents to participate in a profit-sharing model or reduced energy cost plan.

You can also get started by investing in a publicly traded company that focuses on solar energy.