There are several factors that can affect the cost of installing a solar farm. Even a small solar farm can cost millions of dollars. A 1 megawatt solar farm can cost between $890,000 and $1.01 million. By comparison, residential solar systems cost an average of $15,000 to $20,000, and that price can drop to less than $10,000 with solar incentives like federal tax credits.
In the following sections, we will discuss the main factors that affect the cost of large-scale PV systems.
The size of the solar project
While solar power systems for private homes typically have a capacity of kilowatts, the installed capacity of solar collectors reaches megawatts. According to the Solar Energy Industries Association (SEIA), one megawatt of solar energy is equivalent to 1,000 kilowatts (kilowatts), which is enough to power 173 homes.
Installed capacity is the most important factor in determining the cost of a solar park. At an average cost of $1.06 per watt, a 5 megawatt project would represent an investment of $5.3 million, but a 100 megawatt project could exceed $100 million.
You can classify solar farms based on the purpose of the project.
- Utility-scale solar farms are being built to sell electricity. The largest projects can reach hundreds of megawatts and power thousands of homes and businesses.
- Commercial and industrial solar parks are used to generate electricity on-site for commercial operations and are typically less than 10 MW in capacity.
Solar park website
On average, one megawatt of solar power can produce electricity for 173 homes, but output varies with local solar radiation conditions. SEIA analyzed how solar farm performance varies by state. One megawatt of solar power can power 250 homes in sunny states like New Mexico, California, and Hawaii, and one megawatt of solar power can power 100 homes in less sunny places like Washington.
For example, a solar farm designed to power 10,000 homes would require 40 to 50 megawatts in sunny states. In a location with less sunlight, you may need up to 100 megawatts of installed capacity.
Sunlight isn't the only factor that depends on location. If you're planning to build a solar farm in a high-wage area, your project budget may also increase due to local material and labor costs.
Types of solar cells
There are three types of solar panels based on the photovoltaic components used to convert sunlight into electricity. The type of solar panel you choose will affect the cost of your solar farm project.
- Monocrystalline panels: The most common type of solar panel, characterized by the highest efficiency and the highest price.
- Polyurethane panels. These devices cost less than the monocrystalline version, but offer less efficiency.
- Thin film sheets. Thin film panels have the lowest efficiency and cost of the three types.
Compared to polycrystalline and monocrystalline panels, thin film panels need to take up more space to achieve a certain performance. High-efficiency panels cost more, but you need less to achieve the megawatts you need for your project. Therefore, the three technologies can have similar installation costs per watt.
According to a cost analysis by the National Renewable Energy Laboratory, solar panels account for 35% of the cost of installing a solar farm.
Rules and licensing requirements
Solar farms typically have more regulations and permits than residential buildings.
Local regulations and permit requirements for solar energy vary by state. Some state governments have solar-friendly policies that encourage the installation of solar panels and simplify permitting requirements. But there are also places where getting permission to build solar parks is difficult and expensive. Check with your local government or energy supplier for more information on solar farm regulations and permits in your area.
