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How to Start a Solar Farm: Cost, Location and Profit Potential

Written by: Carolyn Young

Carolyn Young is a business writer who focuses on entrepreneurial concepts and the business formation. She has over 25 years of experience in business roles, and has authored several entrepreneurship textbooks.

Edited by: David Lepeska

David has been writing and learning about business, finance and globalization for a quarter-century, starting with a small New York consulting firm in the 1990s.

Published on December 22, 2021

Investment range

$1,020,400 - $2,070,700

Revenue potential

$240,000 - $600,000 p.a.

Time to build

3 – 5 years

Profit potential

$216,000 - $540,000 p.a.

Industry trend

These are the key elements to think about when starting your solar farm:

• Location — Choose a location that has a lot of sunlight and minimal shading. You will require a large amount of land.
• Equipment — Invest in high-quality solar panels , inverters, mounting structures, monitoring systems, and transmission lines.
• Grants — Use grants such as the Database of State Incentives for Renewables & Efficiency (DSIRE) , US Government Grants , or check the website of your state or local government for any renewable energy grant programs they may offer.
• Register your business — A limited liability company (LLC) is the best legal structure for new businesses because it is fast and simple. Form your business immediately using ZenBusiness LLC formation service or hire one of the best LLC services on the market.
• Legal business aspects — Register for taxes, open a business bank account, and get an EIN .
• Licenses and permits — You might need federal permits from agencies like the Federal Aviation Administration (FAA) if your solar farm is near an airport or flight path. Also, check if there are any specific permits in your location that may address issues such as zoning, interconnection with the power grid, and environmental impact.
• Insurance — Get proper insurance to protect your business from damage caused by weather, theft, or malfunctions, and cover potential liability issues.

Interactive Checklist at your fingertips—begin your solar farm business today!

You May Also Wonder:

How profitable is a solar farm?

If you develop a solar farm, once it’s up and running, you should make $30,000 per acre per year. If you lease your land for a solar farm, you can make $2,000 per acre per year.

How do I get my land approved for a solar farm?

You will need to contact federal, state, and local regulators to start the permitting and approval process, which can take 3 to 5 years. You will also need to contact the local power company for approval.

How much land do I need for a solar farm?

The general rule is 6 to 8 acres at minimum. This is enough to develop a 1-megawatt solar farm.

How do I ensure proper installation and maintenance of solar panels?

Conduct a thorough site assessment to determine the optimal location for installation, considering factors such as sunlight exposure, shading, and structural integrity. Follow manufacturer guidelines and industry standards for the installation process, including proper mounting, wiring, and electrical connections. Regularly inspect and clean the solar panels to remove dirt, dust, or debris that can reduce their efficiency.

What are the environmental and sustainability benefits of a solar farm?

Solar farms provide several environmental and sustainability benefits, including:

• Renewable energy generation:  Solar farms harness sunlight to generate clean and renewable energy, reducing reliance on fossil fuels and greenhouse gas emissions.
• Carbon footprint reduction:  By displacing energy generated from fossil fuels, solar farms contribute to reducing carbon dioxide and other harmful emissions that contribute to climate change.
• Water conservation:  Solar farms have minimal water requirements compared to other forms of energy generation, reducing strain on local water resources.
• Land preservation:  Solar farms can be built on existing open spaces, including unused or degraded land, minimizing the need for new land development.
• Local economic benefits:  Solar farms create job opportunities during construction and ongoing operations, stimulating local economies and providing long-term revenue streams.

What are the best practices for managing and monitoring solar farm operations?

Best practices for managing and monitoring solar farm operations include regular maintenance and inspection of solar panels and equipment, monitoring energy production and system performance, implementing remote monitoring and control systems, establishing a preventive maintenance schedule, conducting periodic performance assessments and analysis, and providing staff training and education.

How can I assess the potential solar resource and energy production of my solar farm?

To assess the potential solar resource and energy production of a solar farm, you can conduct a solar resource assessment using historical solar irradiance data, perform a feasibility study including a site visit, and utilize solar modeling software or online tools that consider parameters like panel type, tilt angle, and shading.

Step 1: Decide if the Business Is Right for You

Pros and cons.

Every business has pros and cons that you should consider before deciding if it’s right for you.

• Eco-friendly – Solar power is good for the environment
• Good Money – Profit margins in solar are high
• Minimal Work – A solar farm need servicing just 3-4 times per year

High Startup Costs – Building a farm costs $1M and up

Solar industry trends

Since the US instituted a major tax credit for solar projects in 2006, the US solar industry has grown 100-fold, according to the Solar Energy Industries Association.(( https://www.seia.org/initiatives/solar-investment-tax-credit-itc ))

In terms of trends, the storage capacity of solar batteries has increased in recent years, which helps stabilize the solar grid on your farm and reduce wasteful production. In addition, a rising number of US households are installing solar panels. Shipments of solar modules for residences increased a stunning 33% in 2020, according to the Energy Information Administration. Homeowners can also sell excess energy from their solar panels to the power company, as 40 states allow homeowners to do so.(( https://www.eia.gov/todayinenergy/detail.php?id=49396 ))

Industry size and growth

• Industry size and past growth – Research firm IBISWorld values the US solar farm market at more than $11 billion, a 26% increase from its value a decade ago.(( https://www.ibisworld.com/industry-statistics/market-size/solar-farm-developers-united-states/ ))  
• Growth forecast – The US solar energy market is predicted to grow at least 17% per year through 2027, according to Mordor Intelligence.(( https://www.mordorintelligence.com/industry-reports/united-states-solar-energy-market )) 
• Number of businesses – There are nearly 7,500 solar farm developers in the US.(( https://www.ibisworld.com/industry-statistics/number-of-businesses/solar-farm-developers-united-states/ ))
• Number of people employed – US solar farms employ more than 42,000 people.(( https://www.ibisworld.com/industry-statistics/employment/solar-farm-developers-united-states/ ))

Trends and challenges

Trends in solar farms include:

• Increasing use of solar batteries with higher storage capacity
• More US households installing solar panels
• Strong demand for clean, renewable energy
• Growing concern over climate change

Challenges in solar farms include:

• High initial investment in solar panels
• Supply chain issues to impact solar panel production

Consumer spending

• Average consumer spend – An American family spends $1,450 a year on electricity.(( https://www.forbes.com/advisor/home-improvement/average-cost-of-solar-panels/ ))
• Potential customer base – Almost half of Americans were considering solar panels.(( https://www.forbes.com/home-improvement/features/will-americans-go-solar/ ))
• Average prices – A solar panel in the US costs $20,498 on average.(( https://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/ ))

Price differences across the country

• More expensive – A 10-kw solar panel is most expensive in Washington D.C., Indiana, New Mexico, New York, and Rhode Island, with the price ranging from $31,500 to $34,100.
• Less expensive – The lowest prices for a solar panel are in Arizona, Florida, Nevada, Delaware, and Utah, with prices ranging from $23,300 and $26,300.(( https://news.energysage.com/how-much-does-the-average-solar-panel-installation-cost-in-the-u-s/#cost ))

What kind of people work in solar farms?

• Gender – 77% of solar energy engineers in the US are male, while 23% are female.(( https://www.zippia.com/solar-energy-engineer-jobs/demographics/#gender-statistics ))
• Average level of education – 65% of solar energy engineers hold a bachelor’s degree.(( https://www.zippia.com/solar-energy-engineer-jobs/demographics/#degree-level-types ))
• Average age – The average age of a solar energy engineer is 43 years old.(( https://www.zippia.com/solar-energy-engineer-jobs/demographics/#age-statistics ))

How much does it cost to start a solar farm business?

Startup costs for a solar farm range from $1 million to $2 million and more. The lower end is for a one-megawatt farm, which is the minimum you need for the power company to be interested, and assumes you already have 6-8 acres of land. The higher-end is for a two-megawatt farm and includes a down payment for the land purchase. If you instead decide to lease your land to a utility company, they will pay for the farm’s development and your costs will be next to nothing.

How much can you earn from a solar farm business?

The per-acre profit of a solar farm runs between $20,000 and $40,000, with an average of $30,000. After costs your profit margin should be about 90%.

Development

If you have a 20-acre property and you develop only eight acres into a solar farm, bringing in $30,000 per acre. Your annual revenue will be $240,000, and your profit will be $216,000. As you gain more customers, you could fully develop the entire 20 acres. You’ll be earning $600,000 in annual revenue and $540,000 in profit. You could expand your farm over time by using your profits to purchase more land and add to your grid, thus increasing your income substantially.

If you lease your land, you can probably earn $2,000 per acre per year. With 8 acres at $2,000 per acre, you’ll make $16,000 in annual revenue and at least $14,000 in profit. If you lease out the entire 20 acres, you’ll make $40,000 in annual revenue and $36,000 in profit. It’ll be a good source of passive income.

What barriers to entry are there?

There are a few barriers to entry for a solar farm. Your biggest challenges will be:

• Costs to develop a solar farm are high
• A sun-drenched swathe of land
• Permission from the utility, which can take years

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Step 2: hone your idea.

Now that you know what’s involved in starting a solar farm, it’s a good idea to hone your concept in preparation to enter a competitive market.

Market research will give you the upper hand, even if you’re already positive that you have a perfect product or service. Conducting market research is important, because it can help you understand your customers better, who your competitors are, and your business landscape.

Why? Identify an opportunity

You should research whether your land is right for a solar farm. You should look for:

• Minimum of 6-8 acres, flat and no flood-risk
• At least four peak sun hours daily
• No regulations in terms of conservation
• Within a few miles of the power grid

What? Determine your solar farm revenue strategy

You need to determine if you want to lease your land or develop your solar farm. By leasing your farm, you can start with minimal cost, but make far less money. With a farm, your revenue potential is much higher, but your upfront costs are significant.

How much should you charge for solar?

The price you charge for power will be dictated by how much the power company is willing to lease your land for. A good lease could mean $2,000 per acre per year. Strong revenue for a developed solar farm is $30,000 per acre per year. 

Once you know your costs, you can use this our profit margin calculator to determine your mark-up and final price points. Remember, the prices you use at launch should be subject to change if warranted by the market.

Who? Identify your target market

Your target market will be power companies and solar developers. You should find them via internet search and contact them directly via phone or email.

Where? Choose the location for your solar farm

The location of your solar farm is a critical factor in its success. Look for a location with plenty of sunlight, minimal shading, and adequate land availability. Consider the proximity to the power grid and transmission lines, as well as any regulatory requirements for solar farms in the area.

Additionally, assess the local demand for renewable energy and the potential market for your solar farm’s electricity. Consider the economic and political climate in the area, as well as any incentives or subsidies that may be available.

When selecting your location, consider factors such as access to water, soil quality, and any environmental considerations. The right location can help optimize your solar farm’s energy production and ensure the sustainability of your operation.

By carefully choosing the location of your solar farm, you can establish a profitable and sustainable business that contributes to the growth of renewable energy and helps combat climate change.

Step 3: Brainstorm a Solar Farm Company Name

Here are some ideas for brainstorming your business name:

• Short, unique, and catchy names tend to stand out
• Names that are easy to say and spell tend to do better
• The name should be relevant to your product or service offerings
• Ask around — family, friends, colleagues, social media — for suggestions
• Including keywords, such as “solar” or “solar power”, boosts SEO
• Choose a name that allows for expansion: “Bright Future Solar Farms” over “Commercial Solar Farms” or “Residential Solar Farms”
• A location-based name can help establish a strong connection with your local community and help with the SEO but might hinder future expansion

Once you’ve got a list of potential names, visit the website of the US Patent and Trademark Office to make sure they are available for registration and check the availability of related domain names using our Domain Name Search tool. Using “.com” or “.org” sharply increases credibility, so it’s best to focus on these. 

Find a Domain

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Finally, make your choice among the names that pass this screening and go ahead with domain registration and social media account creation. Your business name is one of the key differentiators that set your business apart. Once you pick your company name, and start with the branding, it is hard to change the business name. Therefore, it’s important to carefully consider your choice before you start a business entity.

Step 4: Create a Solar Farm Business Plan

Here are the key components of a business plan:

• Executive Summary: Outline the goals and strategies of your solar farm business, emphasizing renewable energy production and potential contributions to the regional power grid.
• Business Overview: Describe your solar farm’s operations, including generating solar energy and selling it to utilities or directly to consumers.
• Product and Services: Detail the core service of electricity generation using photovoltaic panels, and any additional services like energy storage or leasing solar equipment.
• Market Analysis: Assess the demand for renewable energy in your region and identify potential buyers like local utilities, businesses, or government entities.
• Competitive Analysis: Compare your solar farm to others in the area, focusing on factors like energy output capacity, technological efficiency, or location advantages.
• Sales and Marketing: Outline your approach for securing contracts and partnerships with energy buyers and other stakeholders in the renewable energy sector.
• Management Team: Highlight the experience and qualifications of your team, especially in areas like renewable energy, project management, and environmental regulations.
• Operations Plan: Describe the operational process of your solar farm, including installation, maintenance of solar panels, and energy distribution.
• Financial Plan: Provide an overview of financial aspects such as investment costs, revenue models, and long-term profitability projections.
• Appendix: Include supplementary documents like site plans, environmental impact studies, or power purchase agreements that support your business plan.

If you’ve never created a business plan, it can be an intimidating task. You might consider hiring a business plan specialist to create a top-notch business plan for you.

Step 5: Register Your Business

Registering your business is an absolutely crucial step — it’s the prerequisite to paying taxes, raising capital, opening a bank account, and other guideposts on the road to getting a business up and running.

Plus, registration is exciting because it makes the entire process official. Once it’s complete, you’ll have your own business!

Choose where to register your company

Your business location is important because it can affect taxes, legal requirements, and revenue. Most people will register their business in the state where they live, but if you are planning to expand, you might consider looking elsewhere, as sunnier states could offer real advantages when it comes to solar farms.

If you’re willing to move, you could really maximize your business! Keep in mind, it’s relatively easy to transfer your business to another state.

Choose your business structure

Business entities come in several varieties, each with its pros and cons. The legal structure you choose for your solar farm will shape your taxes, personal liability, and business registration requirements, so choose wisely.

Here are the main options:

• Sole Proprietorship – The most common structure for small businesses makes no legal distinction between company and owner. All income goes to the owner, who’s also liable for any debts, losses, or liabilities incurred by the business. The owner pays taxes on business income on his or her personal tax return.
• General Partnership – Similar to a sole proprietorship, but for two or more people. Again, owners keep the profits and are liable for losses. The partners pay taxes on their share of business income on their personal tax returns.
• Limited Liability Company (LLC) – Combines the characteristics of corporations with those of sole proprietorships or partnerships. Again, the owners are not personally liable for debts.
• C Corp – Under this structure, the business is a distinct legal entity and the owner or owners are not personally liable for its debts. Owners take profits through shareholder dividends, rather than directly. The corporation pays taxes, and owners pay taxes on their dividends, which is sometimes referred to as double taxation.
• S Corp – An S-Corporation refers to the tax classification of the business but is not a business entity. An S-Corp can be either a corporation or an LLC , which just needs to elect to be an S-Corp for tax status. In an S-Corp, income is passed through directly to shareholders, who pay taxes on their share of business income on their personal tax returns.

We recommend that new business owners choose LLC as it offers liability protection and pass-through taxation while being simpler to form than a corporation. You can form an LLC in as little as five minutes using an online LLC formation service. They will check that your business name is available before filing, submit your articles of organization , and answer any questions you might have. 

Form Your LLC

Choose Your State

We recommend ZenBusiness as the Best LLC Service for 2024

Step 6: Register for Taxes

The final step before you’re able to pay taxes is getting an Employer Identification Number , or EIN. You can file for your EIN online or by mail or fax: visit the IRS website to learn more. Keep in mind, if you’ve chosen to be a sole proprietorship you can simply use your social security number as your EIN.

Once you have your EIN, you’ll need to choose your tax year. Financially speaking, your business will operate in a calendar year (January–December) or a fiscal year, a 12-month period that can start in any month. This will determine your tax cycle, while your business structure will determine which taxes you’ll pay.

The IRS website also offers a tax-payers checklist , and taxes can be filed online.

It is important to consult an accountant or other professional to help you with your taxes to ensure you are completing them correctly.

Step 7: Fund your Business

Securing financing is your next step and there are plenty of ways to raise capital:

• Bank loans : This is the most common method, but getting approved requires a rock-solid business plan and strong credit history.
• SBA-guaranteed loans : The Small Business Administration can act as guarantor, helping gain that elusive bank approval via an SBA-guaranteed loan .
• Government grants : A handful of financial assistance programs help fund entrepreneurs. Visit Grants.gov to learn which might work for you.
• Venture capital : Offer potential investors an ownership stake in exchange for funds, keeping in mind that you would be sacrificing some control over your business.
• Friends and Family : Reach out to friends and family to provide a business loan or investment in your concept. It’s a good idea to have legal advice when doing so because SEC regulations apply.
• Crowdfunding : Websites like Kickstarter and Indiegogo offer an increasingly popular low-risk option, in which donors fund your vision. Entrepreneurial crowdfunding sites like Fundable and WeFunder enable multiple investors to fund your business.
• Personal : Self-fund your business via your savings or the sale of property or other assets.

Bank and SBA loans are probably the best options, other than friends and family, for funding a solar farm. You might also try crowdfunding if you have an innovative concept.

Step 8: Apply for Solar Farm Business Licenses and Permits

Starting a solar farm business requires obtaining a number of licenses and permits from local, state, and federal governments.

Solar farms are subject to strict review processes through federal, state, and local regulators. They also require permission from a power company. The process for approvals usually takes 3 to 5 years.

Federal regulations, licenses, and permits associated with starting your business include doing business as (DBA), health licenses and permits from the Occupational Safety and Health Administration ( OSHA ), trademarks, copyrights, patents, and other intellectual properties, as well as industry-specific licenses and permits. 

You may also need state-level and local county or city-based licenses and permits. The license requirements and how to obtain them vary, so check the websites of your state, city, and county governments or contact the appropriate person to learn more. 

You could also check this SBA guide for your state’s requirements, but we recommend using MyCorporation’s Business License Compliance Package . They will research the exact forms you need for your business and state and provide them to ensure you’re fully compliant.

This is not a step to be taken lightly, as failing to comply with legal requirements can result in hefty penalties.

If you feel overwhelmed by this step or don’t know how to begin, it might be a good idea to hire a professional to help you check all the legal boxes.

Step 9: Open a Business Bank Account

Before you start making money you’ll need a place to keep it, and that requires opening a bank account .

Keeping your business finances separate from your personal account makes it easy to file taxes and track your company’s income, so it’s worth doing even if you’re running your solar farm as a sole proprietorship. Opening a business bank account is quite simple, and similar to opening a personal one. Most major banks offer accounts tailored for businesses — just inquire at your preferred bank to learn about their rates and features.

Banks vary in terms of offerings, so it’s a good idea to examine your options and select the best plan for you. Once you choose your bank, bring in your EIN (or Social Security Number if you decide on a sole proprietorship), articles of incorporation, and other legal documents and open your new account.

Step 10: Get Business Insurance

Business insurance is an area that often gets overlooked yet it can be vital to your success as an entrepreneur. Insurance protects you from unexpected events that can have a devastating impact on your business.

Here are some types of insurance to consider:

• General liability: The most comprehensive type of insurance, acting as a catch-all for many business elements that require coverage. If you get just one kind of insurance, this is it. It even protects against bodily injury and property damage.
• Business Property: Provides coverage for your equipment and supplies.
• Equipment Breakdown Insurance: Covers the cost of replacing or repairing equipment that has broken due to mechanical issues.
• Worker’s compensation: Provides compensation to employees injured on the job.
• Property: Covers your physical space, whether it is a cart, storefront, or office.
• Commercial auto: Protection for your company-owned vehicle.
• Professional liability: Protects against claims from a client who says they suffered a loss due to an error or omission in your work.
• Business owner’s policy (BOP): This is an insurance plan that acts as an all-in-one insurance policy, a combination of any of the above insurance types.

Step 11: Prepare to Launch

As opening day nears, prepare for launch by reviewing and improving some key elements of your business.

Essential software and tools

Being an entrepreneur often means wearing many hats, from marketing to sales to accounting, which can be overwhelming. Fortunately, many websites and digital tools are available to help simplify many business tasks.

You can use industry-specific software, such as quickbase , 3 megawatt , or enact , to manage your solar installation and measure energy generated.

• Popular web-based accounting programs for smaller businesses include Quickbooks , Freshbooks , and Xero . 
• If you’re unfamiliar with basic accounting, you may want to hire a professional, especially as you begin. The consequences for filing incorrect tax documents can be harsh, so accuracy is crucial.

Develop your website

Website development is crucial because your site is your online presence and needs to convince prospective clients of your expertise and professionalism.

You can create your own website using website builders . This route is very affordable, but figuring out how to build a website can be time-consuming. If you lack tech-savvy, you can hire a web designer or developer to create a custom website for your business.

Your clients are unlikely to find your website, however, unless you follow Search Engine Optimization ( SEO ) practices. These are steps that help pages rank higher in the results of top search engines like Google. 

Here are some powerful marketing strategies for your future business:

• Identify Your Target Market : Understand who your primary customers will be. This could include local businesses, government entities, and residential communities. Tailor your marketing message to address their specific energy needs and concerns.
• Leverage Green Credentials : Emphasize the environmental benefits of solar energy. Highlight how using solar energy reduces carbon footprints and supports sustainable living. This can be a strong selling point for environmentally conscious consumers.
• Utilize Digital Marketing : Create a strong online presence with a professional website showcasing your solar farm’s capabilities, benefits, and services. Use social media platforms to engage with your audience, share relevant content, and build a community around renewable energy.
• Content Marketing : Develop informative content that educates your audience about solar energy, its benefits, and how your solar farm contributes to the energy landscape. Blog posts, videos, infographics, and webinars are effective tools.
• Partnerships and Networking : Collaborate with local businesses, environmental groups, and educational institutions. Networking can lead to partnerships that not only expand your market reach but also provide mutual benefits.
• Government Incentives and Policies : Stay informed about government incentives for renewable energy and use this information in your marketing. Educating potential clients about available subsidies or tax breaks can be a persuasive marketing tool.
• Community Engagement : Engage with the local community through events, sponsorships, or educational programs. Building a positive community presence can enhance your brand and increase local support.
• Testimonials and Case Studies : Share success stories and testimonials from satisfied customers. Case studies demonstrating the effectiveness and savings from your solar farm can be compelling evidence for potential clients.
• Competitive Pricing Strategies : Ensure your pricing is competitive and offers value for money. Consider flexible pricing models to attract a wider range of customers.
• After-Sales Service and Support : Highlight the quality of your customer service and after-sales support. Providing excellent service can lead to referrals and repeat business.

Focus on USPs

Unique selling propositions, or USPs, are the characteristics of a product or service that sets it apart from the competition. Customers today are inundated with buying options, so you’ll have a real advantage if they are able to quickly grasp how your solar farm meets their needs or wishes. It’s wise to do all you can to ensure your USPs stand out on your website and in your marketing and promotional materials, stimulating buyer desire. 

Global pizza chain Domino’s is renowned for its USP: “Hot pizza in 30 minutes or less, guaranteed.” Signature USPs for your solar farm could be:

• Stable supply of clean, renewable energy 
• Efficient solar storage solutions
• Maintenance-free and environment-friendly 

Step 12: Build Your Team

If you’re starting out small from a home office, you may not need any employees. But as your business grows, you will likely need workers to fill various roles. Potential positions for a solar farm business would include:

• Maintenance Workers – Maintain your solar panels and grid
• General Manager – Oversee maintenance, accounting

At some point, you may need to hire all of these positions or simply a few, depending on the size and needs of your business. You might also hire multiple workers for a single role or a single worker for multiple roles, again depending on need.

Free-of-charge methods to recruit employees include posting ads on popular platforms such as LinkedIn, Facebook, or Jobs.com. You might also consider a premium recruitment option, such as advertising on Indeed , Glassdoor , or ZipRecruiter . Further, if you have the resources, you could consider hiring a recruitment agency to help you find talent.

Step 13: Run a Solar Farm – Start Making Money!

Solar power is the future of energy and it’s good for the planet since it’s clean and renewable. By starting a solar farm, you’re doing your community a service and making money at the same time. 

The US solar market is worth more than $11 billion and growing rapidly, which means your solar farm should provide sizable profits with little effort once it’s up and running. Alternatively, leasing your land for a solar farm costs essentially nothing but will add a nice stream of passive income . Now that you have the information you need, you’re ready to start building your solar empire!

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• Decide if the Business Is Right for You
• Hone Your Idea
• Brainstorm a Solar Farm Company Name
• Create a Solar Farm Business Plan
• Register Your Business
• Register for Taxes
• Fund your Business
• Apply for Solar Farm Business Licenses and Permits
• Open a Business Bank Account
• Get Business Insurance
• Prepare to Launch
• Build Your Team
• Run a Solar Farm - Start Making Money!

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How to Start a Solar Business. A-Z Guide

The solar industry is one of the fastest-growing industries globally, so it’s no surprise that new entrepreneurs consider getting involved in this boom every day. If you’re reading this right now, you’re likely thinking about riding this solar wave yourself, but you’re not sure where or how to start.   

While starting any business can be a large endeavor for anyone, this article will serve as an introduction and guide on starting a solar company, from the very beginning to how to generate leads and scale your company up from a one-man operation to a fully staffed and operational business.   

Whether you’re brand new to the solar industry and just earned the required PV licenses to work in your state, or you’re a solar installer or salesperson looking to branch out and start something new, there’s something in this guide for you.   

How to start a successful solar company  

Congratulations! Choosing the solar energy industry as the path for your business is a wise and responsible choice. Not only is it a growing industry with tons of room for success, but it also contributes to a cleaner, more sustainable environment.  

Before you jump right into it, though, let’s talk about one thing: goal setting. Without proper goal setting, your solar company will be like everyone else’s – with no direction and nowhere to go. You can’t just say what you want to do; you need to set deadlines and create action plans that will help you sustain the business. Can your actions meet your expectations?  

Examine past projects or events that were successful in this field and see if you can follow their pattern of success in creating your own goals. Also, keep an eye on other companies in this field who are doing well with their goals. If one of them has set up five branches around the globe in six months, don’t try to match them if you’re still new to this industry, as the chances are high that you won’t be able to meet their standards yet.  

Instead, aim for more realistic goals like hiring your first wave of staff within the first year; whatever works for you and helps build your confidence and reputation among clients and competitors over time.  

How to Get Started/First Steps  

Once you’ve set some realistic goals for yourself, it’s time to plan and get started. Here’s a quick list of every step you should consider before starting your business.   

• Settle on a business structure (sole proprietorship, partnership, corporation).  
• Write a detailed business plan. This is important as it will guide all your decisions and help you secure funding.  
• Educate yourself further on the solar industry and learn to analyze the market. This will help you understand how your business fits in and determine its prospects for success. Learn what your competition is doing and identify how to stand out from them; that is, offer something different or better than they do.  
• Design a solar marketing  plan . This should be based on a SWOT analysis; that is, an analysis of strengths, weaknesses, opportunities, and threats concerning other businesses in the same industry. If this sounds complicated, don’t worry too much, as there are plenty of online resources detailing exactly how to go about this step-by-step.
• Apply for funding if required. You can apply for grants or loans from various government agencies. If successful, you’ll then have to figure out what equipment/inventory you need to buy and build so you can have everything ready when the funds arrive. You may also need some initial investment capital which can come from personal savings or friends/family members willing to invest their money into your venture (be sure they’re aware of any potential risks, though!). Consider using crowdfunding platforms like Kickstarter, too – it could give your company exposure while raising money simultaneously!  

Writing A Solar Business Plan  

Writing a business plan is one of the first steps in starting a solar business . For many, this means creating a comprehensive, 30-plus page document covering all aspects of your proposed company, from market research to financing and marketing.  

However, there’s no need to panic – it’s possible to create an effective business plan without spending weeks at it. Below are the six most important things you need to understand when writing one:  

• Know your market  
• Know your competition  
• Know what makes you unique  
• Know how you’re going to finance your business  
• Know what equipment and tools you’ll need  
• Know how you’re going to find clients  

When writing your business plan, you must answer a few questions about what makes your solar installation business unique. What sets you apart from the competition? What expertise do you bring to the market? Why would people want to buy from you rather than someone else?  

The truth is that most of your competitors will have roughly the same level of experience as you. So, when thinking about what makes your business unique, think about why it’s in a good position to succeed.  

Perhaps you are passionate about sustainable energy and believe that our society should be powering itself with renewable energy sources like solar power. If so, make sure this passion comes through in your marketing materials and customer interactions because it might be what sets you apart from other installers who just see this as a way to make money. Make sure that potential customers know how passionate you are about what they are buying rather than being sold on price or naivety alone.  

Understand what tools and equipment you’ll need to invest in to get your business up and running. This includes what kind of stock of PV panels, inverters, wires, etc. you’ll want to have on hand to start with, as well as any common or specialized tools  and safety/construction equipment you’ll need to provide yourself and your team with.   

Your business plan should also include some plans about staffing your company for the upcoming year. How many salespeople do you think you’ll need? Do you want to build multiple small teams of installers to cover more ground, or do you just need one or two to start with? Will you hire an in-house marketer or rely on agencies and freelancers? How much are you willing to pay people to provide the level of quality you want your business to offer, and how much do you want to spend on advertising to get your name out there?   

Ready to launch your solar business? Unlock success with our solar software solutions now!

Funding Your Solar Business Startup  

There are many ways to go about funding your solar business. You can use your own cash (a home equity line of credit is a popular option), take out a small business loan, get an SBA loan, or even use crowdfunding or credit cards. If you’re unsure of how much money you’ll need to start up, it’s best to consult with a nonprofit organization that offers advice and guidance on the process (like SCORE).   

If you don’t have enough money to start an entire business right now, consider starting off as a subcontractor for another company until you’re able to stand on your own. This will give you some time to save up and gather the funds you need, but it will also keep you in the loop of what’s going on in the solar industry and help you build and maintain your own solar skills and knowledge.   

Learn about your local solar market  

You can have all the skills and certifications in the world, but if you don’t understand what your own, local solar market looks like, you’ll probably have some trouble starting a business that fits in with what your potential clients need. Market research can take many forms. Here are a few things to learn about when discovering your local solar market.  

• Size: How big is your solar market? How many solar companies already operate in your area?  
• Customers: Who are the people in your service area? What do they want? Where do they find their information and spend their time? How much do they like to spend?  
• Competitors: What do your competitors offer? Why do your potential solar customers choose your competitors for their solar projects?  
• Potential Gaps: Are there any gaps in the market that your competitors are neglecting? How can you fill them?   

Now that you know about the major solar markets in your area, what are some of the factors that make them more attractive to do business in than others? Each business has different needs and goals, and yours might differ from others. This is why your next step is to take a deep dive into your local market’s trends and big players.  

What are the trends in your local solar market?  

Understanding trends is important for any solar business. Solar is a growing industry, but how fast it grows and why depends on many factors.  

Solar market trends can be tracked using the following sources:  

• The Database of State Incentives for Renewables and Efficiency (DSIRE) tracks incentives in real-time. DSIRE has one of the most comprehensive and up-to-date lists of state, local, utility, and federal incentive programs that promote renewable energy. Explore their website to search for financial incentives related to solar applications where your company will operate.  
• Access the U.S Department of Energy’s SunShot Initiative website regularly to stay up to date on market data, reports, and current news in the solar industry.  
• It is also important to learn about which companies are active at both the national level and within your local area by reading trade journals like PV Magazine or subscribing to newsletters such as those published by SEIA, SEPA, and Canary Media. This will also help you stay updated on new programs, incentives, and new equipment.   

Learn about your competitors  

No business should be run without some competitor research. This is essential to the success of your solar business. You need to know who you will be competing with within your market, what they do, and how they do it. This will help you create a plan to beat them.  

Identify their strengths and weaknesses. While your competition should be taken very seriously, do not forget that for a new business, it is also essential that you identify your own strengths and weaknesses to fill any gaps in the market left open by other companies.  

Find out how they reach customers. What channels do they use? How effective are these channels? Which channels could you potentially use as well? Do they have a blog with content that helps them to generate leads? What are they missing on their blog, and how can you put together content to draw traffic to your own website?  

Generating Leads, Clients  

There are many proven ways of generating leads and potential clients, but the one that we have found to be most successful and cost-effective is online marketing. With online marketing, you can target your customers based on location, income range, age range, interests, titles, etc. These targeting options allow you to find your ideal customer easily and provide your services right when they need them.  

To generate leads with this method requires a few things: A website and landing page created for conversions, a blog where you offer useful information about solar energy, and some form of lead magnet that offers people something valuable in exchange for their contact information (like an eBook or report). An email marketing campaign designed to nurture leads over time until they are ready to make a purchase should also be set up to build trust with people who provide you with their information.   

You should also consider setting up a presence on social media since most people have accounts nowadays and visit these places often. Here, you can build a community, educate people, and display what services you offer, all for free. You can also run paid ads on these platforms to supplement your search engine marketing efforts and link back to your website as many times as you’d like in an effort to gather emails and phone numbers for your salespeople.   

How to Scale  

Scaling a solar business is no easy feat, but it’s not impossible either. Once you have a small team of passionate employees and a few processes in place, building up from below shouldn’t be too complicated or challenging. Here are the three main things you need to build at your solar company if you’re looking to scale.   

• Documentation: Keeping a record of everything is essential to growing a business. Document everything from sales processes, important information, and logins, instructions on how to complete certain tasks, manage inboxes and communicate with other teams in the company. All this documentation should be kept in a secure location, and everyone who needs to be in the know should have access. This prevents employees from leaving with essential information that no one else knows and helps new hires get onboarded effectively.   
• Structure: Even if you don’t have the employees to fill certain roles yet, build up a company structure that you aspire to have in the future. For example, if you only have one salesperson right now, plan for that person to get promoted to team lead and hire below them. When people start telling you that their workload is increasing, make plans to hire people to cover the added workload.   
• Trust: Your first employees should be people you believe can do a great job and people you trust to make decisions for you. As your company grows, you won’t be able to be as hands-on as you might have been when you started the business. Trust that the people you hired are competent enough to handle their departments, and let them build them up as necessary.   

Every company starts from nothing. The difference between those that make it, and those that don’t lie in how well they are able to handle growth and scale up.   

Difficulties of running a solar company  

The solar sales industry is not for everyone. Not everyone has the work ethic, personality and attitude to succeed in this type of business. So if you are looking for your get-rich-quick scheme or something to do on the weekends, this isn’t it.  

The solar sales industry requires an extremely high level of commitment from your employees and incredible discipline, patience, and self-motivation. Every day, you will face rejection, challenges, and obstacles you never even thought about before venturing into business ownership. If you cannot handle adversity or have a low threshold for stress, then maybe running a solar company isn’t for you.  

On the solar industry side of things, supply issues might cause problems for the solar jobs you have in the pipeline, state and federal incentives or programs might be canceled or dry up, and there’s always the risk that some newer, better renewable energy technology pops up and leapfrogs right over everyone in the solar industry.   

On the business side, employees will quit, customers will occasionally be unhappy with your work, and money might be lost along the way. The difference between a successful business and an unsuccessful one is how the owners and CEO can effectively adapt and handle these issues.  

In Closing   

Starting a solar business requires a lot of planning, consideration, money, and effort, and it isn’t for everyone. The good news is that if you follow this guide, you’ll have a great foundation to start off with. While we can’t help everyone build their own solar companies, the tips we’ve laid out here are definitely a great starting point for anyone looking to grow and be successful in the solar industry.   

Looking to scope, sell and complete more solar projects than ever? Solargraf is the most user-friendly, robust, and fully integrated solution on the market. Book your  free demo today  to learn more about growing your business with Solargraf. 

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Solar panel business plan

Thinking about starting your own solar panel business? Here's a sample business plan for a solar panel business that you can use as a reference while creating your plan. Plus, you can download a free template here to craft an actionable solar business plan tailored to your needs.

Starting a solar energy business is an incredible opportunity for those passionate about sustainability and renewable energy!

It’s an amazing venture that merges innovation with purpose.

However, turning that vision of a green future into a profitable solar business requires more than just a passion for clean energy. It demands a well-structured business plan to tackle market challenges and manage your resources efficiently.

Curious about how to put one together?

No need to stress! This detailed guide and free solar business plan template will set you on the right path. Let’s get started!

What is a solar panel business plan?

A solar business plan is a formal document that details the strategic approach, financial outlook, and operational framework of a solar energy company.

It helps with the business objectives, overall market analysis, target customers, services, or product ranges- such as systems of solar panels, maintenance, or power solutions, promotional activities, and company structure. Also, other factors relating to solar.

This plan acts as a comprehensive blueprint for starting and scaling a solar energy business within a competitive and eco-friendly marketplace.

Why create a business plan for solar panels?

Having a solar business plan is the foundation of your solar energy business.

Here’s why:

• When you write a solar business plan, you force yourself to think through your business goals, target market , market needs, and services. This will give your solar business a clear direction and make it viable and sustainable.
• Funding is key to starting or growing your solar business. A business plan is often required by investors and lenders and provides a clear picture of your business’s profitability. They want to know how your solar business makes money and how you will deliver a return on investment.
• A business plan is a guide for your daily operations, it helps you streamline processes like sourcing materials, managing installation teams and maintaining solar infrastructure. It also sets up the framework for customer service and maintenance.
• Solar businesses face specific challenges like changing regulations, equipment costs, or weather-related impacts. With a solar business plan you can anticipate these risks and have strategies in place to deal with them so your business can adapt and grow.

With these advantages in mind, it’s time to explore how to build your solar business plan to set your business up for success.

How to write a solar panel business plan

When writing a solar panel business plan, it's important to cover all the key aspects of your business. Here’s a detailed guide on what to include:

Executive summary

An executive summary is the most important part of a solar business plan because it provides a snapshot of what your solar company is all about.

Although it comes first in the plan, it’s best to draft it after you’ve completed all other sections. This approach helps you give a well-rounded, clear summary of your business.

Keep the language simple, avoid complex terms, and make it engaging to spark interest.

In this section, you’ll want to focus on the following points:

• Your solar company's name and where it operates
• Your mission and vision for the business
• The business model and its current status (new business or established)
• The market potential and who your target customers are
• What sets your solar business apart from others
• The strategies you’ll use to promote and grow your business
• Key financial details (e.g., projected earnings and profitability)

In short, your executive summary should give readers a clear, concise overview that draws them into your plan.

Company overview

The company overview section gives a comprehensive picture of your solar business, covering everything from its foundational principles to future aspirations.

Here’s your chance to dive deeper into the business concept and ensure that readers—whether potential investors, customers, or partners—understand your vision clearly.

This section should highlight the following:

• A detailed explanation of your solar services
• Legal structure (LLC, corporation, etc.)
• Founders and key team members (if applicable)
• Type of services you offer (residential, commercial, or both)
• The backstory of your business (how and why it began)
• Significant milestones or achievements thus far
• Short-term and long-term goals for the business

Discussing your business location is important, as it can impact your customer base, local regulations, and even solar energy demand in the region.

In summary, the company overview provides a well-rounded understanding of your solar business, helping to establish trust and credibility. Keep it clear, informative, and engaging.

Industry analysis

In the industry analysis section, you'll need to provide an in-depth overview of the solar energy market that your business will operate in.

While this might seem like extra work, it brings several benefits.

Thorough market research helps you position your solar business within the broader renewable energy industry. It also allows you to grasp current trends, understand your target audience, and analyze your competition.

Here are some key questions to address in this section:

• What is the global scale of the solar energy market?
• How large is the U.S. solar industry? Is it expanding or shrinking?
• How much potential growth has been identified in the market within the next 5-10 years?
• What are some of the new trends or developments in the solar market emerging recently?
• Who are the key competitors in the market?
• What are some of the key factors that may influence the solar market given ever increasing regulation or environmental policy?

Ensure you back up your analysis with solid research and actual data to provide a well-rounded understanding of the industry.

Competitive analysis

The competitive analysis focuses on the local solar energy market and examines how your business will stand out from the competition.

By understanding your competitors' strengths, weaknesses, pricing approaches, and customer base, you can uncover opportunities and shape strategies that set your business apart.

Here’s a guide to structuring this section:

• Identify both direct and indirect competitors in your area
• Evaluate what your competitors are doing well and where they have room for improvement
• Review their pricing models and how they approach customer relationships
• Analyze the customer experience offered by other solar companies
• Compare the services you offer and identify any unmet needs in the market

In addition to this, explain your business's unique strengths and how you’ll use them to create a competitive edge.

By doing this, you'll show investors and stakeholders that you're aware of the market landscape and have a clear plan to rise above the competition.You can also consider creating a SWOT analysis.

Here is an example:

Solar services and products

In this section, provide a detailed overview of the solar energy services and products your business plans to offer.

Clearly outline the range of services you’ll provide, such as installation, maintenance, or energy audits, along with the products, like solar panels or battery storage systems. Also, try to include pricing details and how you plan to meet your customers’ needs.

For example, your service offerings may include:

• Residential solar panel installation
• Commercial solar energy systems
• Solar system maintenance and repair
• Energy storage solutions (batteries)
• Solar energy consultations and audits

Team and management

Whether you have a small solar business or a bigger team, having a clear management structure is key to success in the solar industry.

In this section introduce the key people in your business, including the owners, managers, lead technicians and any other important team members. Make sure to outline their roles, responsibilities, experience and expertise and how each contributes to the overall success of your company.

For example:

• Owners/Partners Project managers for installations
• Lead solar technicians and engineers
• Customer support and sales teams
• Installation crews

Then introduce any advisors or consultants that advise your business.

Finally, present a chart to show how the key people in the company connect and work together. This will give a clear view of the leadership and management structure.

Sales and marketing

In this section, you'll outline how your solar business will attract customers and generate leads, ultimately driving more revenue.

You’ll need to create marketing and sales strategies that show your target audience and highlight the unique strengths of your solar services. These strategies will help bring in new clients and keep them engaged with your business.

Here are a few sales and marketing tactics for a solar business:

• Use social media platforms to showcase successful solar installations and customer testimonials
• Offer referral programs that reward customers for recommending your services
• Partner with local home builders, architects, or environmental groups
• Create a professional, SEO-optimized website to attract online traffic and leads
• Advertise on solar industry directories, renewable energy websites, and through Google Ads
• Attend local business expos, energy trade shows, or community events to network and raise awareness

Additionally, consider offering limited-time promotions, loyalty programs for repeat customers, or discounts for customers who install solar during peak seasons.

Operations plan

The operations plan outlines how your solar business will function on a daily or weekly basis, ensuring smooth management of all operational aspects.

A well-thought-out operations plan clarifies the workflow and processes that are important to the quality of your services.

In this section, you’ll want to cover the following key elements:

• Business hours and availability for solar consultations or installations
• Scheduling systems for client appointments and project timelines
• Customer service processes, including response times and support protocols
• Inventory and supply management for solar panels, tools, and equipment
• Maintenance of equipment and vehicles used in installations
• Any technology or systems used for project management, customer communication, and monitoring

By addressing these aspects, you demonstrate to stakeholders that your solar business has a solid operational plan in place to consistently deliver high-quality services.

Financial projections

To build a profitable solar business, it’s essential to have a comprehensive financial plan with realistic projections.

This plan should outline the financial aspects of your business, typically presented on a monthly or quarterly basis, and show how you will achieve your financial goals over the first 3-5 years.

Here are some key financial statements and reports you should include in your solar business financial plan:

Profit and loss statement (Income statement)

Cash flow statement, balance sheet for the end of year 3, download the solar panel business plan template.

Are you ready to create your own solar panel business plan but need some extra help? No need to worry; we’ve got you covered. Here’s a free solar panel business plan PDF template for a solar business plan to get you started.

This template is specifically designed for entrepreneurs looking to develop a strong solar business plan. Just download it, fill in your details, and modify it to suit your specific requirements.

Now that you understand all the key components of a solar panel business plan, you’re ready to draft your own comprehensive plan.

If you have any questions about how to structure your plan or need further assistance, consider using a Free AI business plan generator . It can help you quickly create an actionable and effective solar business plan.

So, don’t hesitate—begin planning your solar panel business today!

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Frequently Asked Questions

How profitable is a solar panel business?

A solar panel business can be very profitable, especially with the growing demand for renewable energy. Profitability depends on your location, market, and the scale of your operations, but many businesses see solid returns due to tax incentives and reduced costs over time.

How much does it cost to write a solar panel business plan?

The cost of writing a solar panel business plan varies. If you do it yourself, it could just take time and effort. Depending on the complexity, hiring a professional could cost anywhere from $500 to $2,000.

For more detailed insights, check out this article on How Much Does a Business Plan Cost - Free vs Paid Options to explore various pricing options.

How do you get funding for your solar business?

There are various options available to fund your solar business. A few options to explore include:

• Government grants
• Crowdfunding

Where can you find business plan writers for your solar power business?

You can find business plan writers on freelance platforms like Upwork and Fiverr or through business consultancy firms that specialize in renewable energy projects.

As the founder and CEO of Upmetrics, Vinay Kevadiya has over 12 years of experience in business planning. He provides valuable insights to help entrepreneurs build and manage successful business plans.

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