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In recent years, alternative investments have gained traction, offering individuals opportunities beyond traditional stocks and bonds.
Farmland has been a popular choice due to its stability and potential for appreciation. However, another type of land investment is on the rise – solar farms.
This article explores the world of solar farm investing, delving into the reasons to invest, ways to invest, and comparing it with traditional farmland investments.
Why Invest in a Solar Farm?
Solar farming, harnessing energy from the sun through photovoltaic (PVC) panels, has witnessed rapid growth, drawing interest from both investors and governments.
The benefits of investing in solar farms include:
- Supporting Sustainable Energy: Solar farms contribute to reducing reliance on finite fossil fuels, promoting clean and sustainable energy sources.
- Limitless Energy Source: The sun provides an abundant and renewable source of energy, ensuring long-term viability for solar farms.
- Portfolio Diversification: Investing in solar farms can be a strategic move to diversify an investment portfolio, tapping into the growth potential of the renewable energy sector.
- Year-Round Income: In regions with ample sunshine, solar farms can generate income consistently throughout the year, making them a reliable investment.
- Potential Landowner Benefits: If you already own land, leasing it for a solar farm can yield higher returns compared to traditional agricultural uses.
- Explosive Industry Growth: Over the past decade, the solar industry has experienced significant growth, driven by increasing awareness of environmental issues and government incentives.
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|$8,000+||View Investments||Yes||US Farmland, Timberland, Vineyards|
|$5,000+||View Investments||Yes||Commercial Real Estate Properties|
|$15,000+||View Investments||Yes||US Farmland|
|$10||View Investments||No||Private Real Estate Deals|
Ways to Invest in Solar Energy Farms
Investors can choose from various options to participate in the solar energy sector.
Here are six ways to invest in solar energy:
- Community Solar Farm Loans: Companies offer loans to build community solar farms, providing an avenue for investment. Interest rates and fees vary, so careful comparison is essential.
- Shasta Power Solar Development Investments: Shasta Power focuses on growing investment portfolios while contributing to the transition from coal to sustainable energy.
- iShares Sustainable ETFs: Exchange-traded funds (ETFs) focusing on environmental causes, including solar energy, provide investors with the opportunity to buy and sell shares through brokerages.
- Investing in Publicly Traded Solar Companies: Stocks of companies specializing in solar energy, such as First Solar, Brookfield Renewable, and SolarEdge, offer direct exposure to the industry.
- Building Your Solar Farm: While the most capital-intensive option, constructing a solar farm provides complete control and potential for substantial returns. However, it requires significant research, legal compliance, and a sizable land investment.
- Leasing Land to Solar Farms: Landowners with unused land can lease it to solar farms, earning a steady income without the responsibility of operating the farm.
Types of Solar Farms
Solar farms come in two main types:
- Utility-Scale Farms: Massive farms that provide power to large areas, often working with local utility companies.
- Community-Scale Farms: Smaller farms that cater to local communities, allowing residents to benefit from solar energy.
Solar Farm Returns
Returns from solar farms vary based on factors like land size, weather conditions, types of panels used, and geographic location.
On average, a 1-megawatt solar farm can generate approximately $43,500 per year. However, individual farm returns can differ significantly based on these variables.
For those leasing land to a solar farm, annual earnings can range from $1,000 to $2,000 per acre.
Investing in Solar Farms vs Solar Stocks
Investors often face the dilemma of whether to invest directly in solar farms or opt for solar stocks.
Investing in solar farms or solar stocks presents opportunities for individuals seeking alternative investments with potential long-term benefits.
The decision between the two depends on factors such as risk tolerance, capital availability, and the desire for direct involvement in the renewable energy sector.
As the solar industry continues to expand, investors have the chance to contribute to a cleaner, sustainable future while potentially reaping financial rewards.