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  • Writer's pictureSarah Lozanova

Solar Farms: What They Are And How They Work

Updated: May 18, 2022

There is enough installed solar energy capacity in the United States to power almost 22 million homes. For the last decade, solar energy has had an average annual growth rate of 42%, according to the Solar Energy Industries Association.

However, the solar energy market consists of residential, commercial, utility-scale and community solar, and the growth rates have varied in different segments. Two of the critical markets are community solar and utility-scale solar because these projects tend to be large and produce a lot of clean energy.

There is currently a movement by many corporations and states to reduce greenhouse gas emissions and clean up the power grid to slow down climate change. Increasingly, there is a demand for cleaner energy sources from solar and wind farms.

As these projects become more and more widespread, it provides opportunities for solar companies to get involved. Understanding solar energy development can help PV companies grow their businesses and leverage opportunities. We’ll discuss what solar farms are, how they work and how they benefit the businesses and communities they serve.

What Is A Solar Farm?

A solar farm, also known as a PV power station or solar power plant, is a larger-scale solar energy installation. There are a variety of ownership models and the customers that benefit from the solar farm vary by the project.

There are two main types of technology: photovoltaic (PV) solar and concentrated solar power (CSP). The former uses solar PV panels to generate a current of solar electricity. By contrast, CSP uses mirrors to concentrate sunlight and produce steam to power turbines or engines. Solar PV projects are far more widespread throughout the United States.

Solar farms are usually ground-mounted PV systems located on vacant land without trees or any shading. The land for these projects can range from several acres to multiple kilometers and almost never includes rooftop solar projects.

Some of the largest existing solar farms are Solar Star in California across 13 square kilometers with 579 megawatts (MW) of generating capacity and Topaz Solar Farm in California on 15 square kilometers with 580 MW of capacity. The Samson Solar Energy Center in Northeast Texas is under construction and will generate 1,310 MW of renewable energy.

Different Types Of Solar Farms

There are a couple of primary types of solar farms with different business models. One supplies energy for off-takers and the other for end-users, like households and small businesses.


According to the Solar Energy Industries Association, there are over 37,000 MW of utility-scale solar projects in operation in the United States and another 112,000 MW under construction. Sometimes, these solar farms are combined with energy storage to meet high evening power demand or deliver backup power as needed. Utility-scale solar farms are usually at least one MW but can be far, far greater.

What sets utility-scale solar apart is that the solar electricity is sold to wholesale buyers at a fixed price, but not end-use consumers. Sometimes, companies such as IT companies or major retailers enter power purchase agreements (PPAs) for a specific solar project. This can often result in cost savings and is an excellent way to source sustainable energy.

For example, AT&T will have the largest share of the Samson Solar Energy Center, with 500 MW. This will help the company reach its target of being carbon neutral by 2035. In addition, Honda, McDonald’s and Google are also corporate buyers for the project.

Community Solar Farms

Community solar farms, also known as community solar gardens, provide power for members of the project, such as a group of households, organizations, and companies. This is an especially appealing option for renters, residents of multiunit buildings, homeowners with shaded properties, or low-income households. As of December 2020, there were 3,275 MW of installed community solar capacity in the United States, according to the National Renewable Energy Laboratory of the Department of Energy.

The leading states for community solar are California, Colorado, Florida, Illinois, Maine, Maryland, Massachusetts, Minnesota, New Jersey, and New York. Currently, about 22 states have policies that support community solar projects. Unfortunately, some states have policies that limit community solar or make it prohibitively expensive.

Subscribers are typically billed in one of two ways: by variable subscriptions or fixed subscriptions. With a variable subscription, the monthly payments vary by actual solar energy production. Therefore, most customers will pay more in the summer months when solar production is greater.

For fixed subscriptions, members pay the same amount each month based on their subscription size, regardless of actual power generation. Thus, a household will pay the same in January as they do in July, even if the solar modules produced more electricity in July.

What To Consider Before Building A Solar Farm

The criteria for installing a solar farm varies by state and local laws, such as setback requirements. Various federal, state, and local agencies may need to give approval for a project to move forward. Often, permitting and siting can take three to five years.

Typically, solar farms are located on privately held property. The amount of necessary land varies by the capacity of the project but commonly ranges between several acres of land to multiple square kilometers for very large projects. Solar farms need to be located near three-phase power and a transmission substation. Gaining a place in the utility queue is critical for utility interconnection and it sometimes requires upgrading the electric grid.

Ideally, the property for a solar project is relatively flat and cleared, and with minimal wetlands. For example, a solar farm on a north-facing slope would get less usable sunlight, impacting production. Sometimes, PV farms are constructed adjacent to working farmland because they pose no threat to livestock or crops.

Often, solar farm developers enter into PPAs with off-takers for power from a project. Although the owner of the solar farm and not the off-takers receive the solar tax incentives, off-takers benefit from clean power and do not have maintenance responsibilities.

Solar farm maintenance typically includes ensuring that the solar panels aren’t shaded, making needed repairs, and reviewing solar monitoring data. Some solar farm operators are experimenting with alternative approaches to mowing grass, such as planting native wildflowers that require less irrigation and mowing or using sheep to graze around the panels instead of mowers or herbicides.

How Much Does It Cost To Install A Solar Panel Farm?

On a cost-per-watt basis, solar farms are cheaper than residential and small commercial projects due to economies of scale. According to EnergySage, the average cost-per-watt of a solar farm is between $0.80 and $1.30, compared to a national average of around $2.76 per watt for a residential solar installation.

Potential Savings From Community Solar Farms

Households and businesses that join community solar farms can save some money on their utility bills, but typically less than purchasing a solar array. Usually, utility-bill savings are around 5% – to 15% compared to electricity from the local utility company and they save considerable greenhouse gas emissions because they conserve fossil fuels.

By contrast, residential solar systems often pay for themselves with the savings in about 8 – 10 years but are designed to last for about 30 years. That means that homeowners and businesses can enjoy a couple of decades of “free” energy.

Get Started With Your Next Solar Panel Farm Project

Some solar installation companies are looking to expand their businesses and get involved with solar farm projects. Because this is an area of tremendous growth in the solar industry, it can also present a lot of opportunities.

However, planning and siting a solar farm can be a very difficult process due to interconnection, and permitting, financial constraints. To help streamline projects, work with GreenLancer on your next solar farm project. Contact a representative today.

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