Developing a solar farm?

Question

In the town my parents live in (small town in East Tennessee) there is a small solar farm. It’s fenced and is only a few acres. Which makes me think it’s a smaller operation. I was wondering if anyone has any experience developing or owning something like this. The land is in a very non-desirable area pretty much in the middle of no where so I would assume the cost of the land is low but don’t know how the ROI would be after you had the infrastructure up and running. So do any of you have any experience with something like this?

Chris Martin · Answer

Maybe. It depends where you are. The industry is quite fractured and developers are mostly regional. There are exceptions for very large projects where national players like MasTec (who bought IEA, one of the largest solar and wind installers in the US), exist. I suggest you start with developers in your local area (your county and neighboring counties level) because they would be your most likely partner or parcel buyer.

Steve K. · Answer

This statement can be applied to any form of new energy development. Government assistance/tax credits are of course a consideration that is factored in to the cost/benefit analysis of any form of new energy generation, as all forms of energy are heavily subsidized and always have been, long before solar entered the equation.

Some food for thought: there is no such thing as an unsubsidized unit of energy in the U.S. Try building a coal-fired power plant or nuclear power plant without tax credits. We even use tax dollars to develop coal and nuclear plants in other countries. Oil and gas wouldn't be what it is without the government taking on much of the risk through the intangible drilling costs tax credit, and the depletion allowance act deductions, and literally hundreds of other tax benefits, loopholes and direct subsidies plus the fact they have access to public land to be drilled for pennies on the dollar, and the government cleans it up once they're done. The biggest form of energy production in Tennessee today, nuclear power, simply wouldn't exist without many, many trillions in tax dollars to develop, not to mention the government stepping up to insure and protect the plants, manage and protect the waste for half an eternity, and clean up the trillion dollar mess in case of another disaster. A true levelized cost of energy (what the true price would be if it were an actual free market) gets very complicated quickly and it's basically impossible to calculate accurately due to the energy industry being so heavily manipulated by incentives from the government for so long, across all forms of energy. So you can see why mentioning that solar benefits from tax credits without including the fact that every other form of energy does as well comes across as remiss to anyone who knows a little bit about energy.

A nice thing about renewables is that the price to develop these projects is dropping rapidly due to mass production of equipment, and they are unique in that they require less tax dollars over time. Solar and other renewables like wind have a clear road map to not needing government support at all in just the next few years whereas all other forms of energy are expected to require increased subsidization over time. I believe this is why policy-makers on both sides of the political aisle are starting to see the promise that renewables offer over traditional forms of energy, which are becoming increasingly expensive for the government to continue propping up and bailing out.

David Schaefer · Answer

I have clients seeking to exit parcels and our counties could use solar farming.  Does anyone know of any acquisitions agents for solar farm developers?  Thanks

Lynnette E. · Answer

The solar developments that I worked with were all in California and a one in Nevada.  I NEVER said I owned them.  I did the environmental permitting for large scale solar developments that were done on federal land.  Several were fully permitted and never developed because there were no buyers for the energy at the cost that was needed for the private companies to make a profit--and this was in a state with rolling blackouts during the summer.  Some of the companies were major ones--Chevron--but they would not build if the numbers did not work out to the energy being marketable.  Some they built, some they did not.  Others, like Ivanpah, could build after permitting, with extensive government incentives.  A 30% above the cost of non-renewable energy was, at that time, considered marketable, more than that and they did not generally build after permitting.

BTW, on government land leases there are requirements to mitigate impacts, so replacement land is required if the land used is habitat for certain species.  Some species must be relocated, some desert plants must be relocated.  At the end of the project's life the land must be restored to a natural state and the materials must be recycled if possible, eg. stripping out metal, etc.  There are a lot of EXTRA costs in CA in general, and the federal government as well.

I do not know anything about renewable energy development in VA, TN, NC, etc.  but I do know that the land used for energy development is not in the same competition with endangered and threatened species as the desirable land in CA.  So perhaps with less mitigation required there is not as much overhead.

Chris Seveney · Answer

@Kaleb Garrett

Have you confirmed with zoning this can be done? Most areas have never updated their zoning bylaws to allow solar to be a primary use. Typically it’s a secondary use meaning the land must have a primary use (like a home on it). We attempted this in one location and were rejected as solar was a secondary use and they would not allow it to be a primary use because of NIMBY even though it has no impact on the area

Chris Martin · Answer

Old post, but in the short-term the world changed with the recent passing of HR 5376. The short answer to Kaleb is that 'yes', people in BP Nation have 'experience developing or owning something like this.' In 2017 I designed and built a small 500kW solar farm in NC. End to end, I bought the land, secured permits, got the PPA and IA, SUP, and still own the project. Yes, the ITC is and was very helpful.

And to Lynnette, no, "Renewable energy is very expensive to develop." But I'd like to see Lynnette's projects to support your claim "the portfolio was a 30% increase in cost to the consumers" since in TN, NC, VA, NC PPAs are priced at avoided costs. @Lynnette E. tell us about your solar development projects. How did they work out? Do you still own them? How do you feel now that HR 5376 passed?

Lynnette E. · Answer

Yes, all forms of energy development do get funding by the government.  I did not mention that because the OP was only interested in solar development.

One state I used to live in had a mandate for a certain percent of their energy to be renewable.  The result of having this renewable energy in the portfolio was a 30% increase in cost to the consumers, and that was with the government subsidies for hydro, solar and wind and a lot of double counting.  Renewable energy is very expensive to develop.  And for solar, the technology is changing so rapidly that by the time it is installed it is out of date.

Kaleb Garrett · Answer

@Steve K. This is great. I was just throwing out an idea, but I will definitely look into that from TVA.

Lynnette E. · Answer

Before you go too deep into the process, look at how long the period of time is for the system to recover its cost from operational profit.  Many times this is more that the number of years the system will be operational.  THAT is why the federal government gave out tax credits for people to develop solar systems--commercial and private.  If you do not get that tax credit its usually not profitable.  Remember some organizations develop solar for their image and the feel good aspect, not the financial profit.

Steve K. · Answer

@Kaleb Garrett TVA has a program called Green Invest that helps landowners develop largescale solar projects. Originally the program was developed for Facebook and Google, to power their data centers there, but TVA has opened it up to the 7-state service area. First Solar has been developing most of the projects there, about 500MW, worth over $500M, so far with more coming on line soon.

Developing a solar farm?

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