How To Start A Solar Farm In South Africa
What is a Solar Farm?
A photovoltaic power station, also known as a solar park, solar farm, or solar power plant, is a large-scale grid-connected photovoltaic power system designed for the supply of merchant power.
How To Start A Solar Farm In South Africa
1. Look at Your Competition
You can look at the websites for electric companies and see how much energy by percentage that they purchase from alternative sources. If they’re already purchasing energy from a solar farm, your research won’t be in vain you’ll learn who the major players are in various areas.
To be a successful solar farm, you’ll need to be able to negotiate with utility companies. When you expand your research into other solar projects, you may learn the names or names of companies who have been successful in completing this very necessary step. Tron Solar in Illinois is a great example.
2. Get Professional Certification
As an investor, you don’t need professional certification. But hiring a solar energy business consultant is a must.
To learn more about key positions necessary for a successful solar panel farm, check with the Solar Energy Industries Association.
3. Know Your Target Market
Markets include both rural and urban residential electric companies. Some solar projects are specifically for educational institutions or specific large industries.
4. Choose a Business Name
Choose several business names. That way, before you settle on a name, you can check to make sure the web domain for that name is available, and that a business by the same name hasn’t already been registered in your state.
5. Create a Business Plan
Here are key elements of your business plan:
Company Information: Management
Executive Summary – How the company will be organized and managed.
Customers – Residential, business or educational.
Plans for management from construction to operations
Long-range operating plans, including maintenance, financials and expansion.
6. Brand Your Business
Set up your website and launch your social media presence.
7. Form a Legal Entity and Register
You have a couple options and should enlist the advice of a tax specialist. You can operate the business as a limited liability company, a partnership or a corporation (s-corp or c-corp).
8. Open a Business Bank Account
You’ll need a separate bank account for your business and also a separate business credit card.
9. Find a Location
As we stated, most solar energy projects need plenty of acreage. And of course, that acreage must be suitable for solar business, such as agricultural or industrial. As a minimum, you’ll need at least 20 acres.
10. Make Sure Your Land is Suitable
What if you’ve found a large tract of suitable land, but it’s heavily wooded? Can you remove most or all of the trees, or are there restrictions on timber activities?
Is the land flat or rolling? For what percentage of daylight hours does the area receive sunlight?
11. Purchase Insurance
As with most businesses, you’ll need general liability insurance.
You may also opt for “all risk” coverage as your project is developing. For example, the components of the system will be insured during transport to your site, during installation, during testing and into operations.
Other insurance policies needed will cover you for equipment breakdown and business interruption.
12. Purchase Necessary Equipment
Panels
Inverters
Racking (to hold panels, often timed to shift with the sun)
Performance monitoring (to send an alert if there’s a malfunction in the system)
Grid connection equipment
Battery storage equipment
Property Security System
Grounds maintenance (to keep vegetation from growing within the solar equipment)
13. Hire Employees
You’ll need an EIN (employer identification number) to correctly file taxes once you hire employees. You’ll need: installation engineers, manager, solar consultants, maintenance professionals and customer service representatives.
14. Get Your Taxes in Order
You’ll also use your EIN when paying annual business income taxes to the IRS. You’ll pay payroll taxes.
You’ll pay property tax on your acreage.
Here’s where things can get dicey with tax assessment. If your panels and equipment can be easily removed (including being changed out for service or replacement), the asset may be viewed as personal property. If a tax assessing board views the panels and equipment as permanent, the asset will be taxed as real property (a much higher rate).
15. Apply for Licenses and Permits
Once you’ve gotten approval to build and operate, your biggest permit needed will be Interconnection to the power grid. This is a job for your solar consultant, and/or an attorney skilled in the permitting and negotiating process.
16. Build Your Solar Farm
Start cementing your brand by scheduling a ground-breaking solar installation event and hosting local media.
In addition to the equipment for your solar power plant, you’ll need fencing. With solar panels installed, you’ll need property maintenance and surveillance.
17. Market Your Business
Here are key elements of your marketing plan: sales strategy, ongoing market analysis, long-range planning, and industry engagement (attend local and national solar power conventions).
Join your local Chamber of Commerce.
18. Expand Your Solar Farm Business
A savvy solar developer uses annual profits to buy more land. Without land, you can’t expand.
Frequently Asked Questions (FAQs).
How much does it cost to start a solar farm South Africa?
Solar farm investment should be done cautiously and after a lot of financial planning, since starting a solar farm will mean you have to the investment of a minimum of R1 million. The good news is that the ROI is worth the investment as the recurring revenue will pay dividends for years.
How much does it cost to start a solar panel business in South Africa?
“According to Gauteng-based solar power specialist company NexSolar, the cost of solar power installation can range from around R63,000 to R200,000 depending on the size of the house and electrical output requirements.
Is a solar farm a good investment in South Africa?
Solar farms are an attractive long-term investment these days. The revenue on the solar farm is worth the investment as the recurring revenue will pay dividends for years. It has been said that this technology is the foundation that will allow for a clean energy economy.
How much money does 1 acre of solar panels make in South Africa?
Well, according to Landmark Dividend, the average solar farm profit per acre lands somewhere between R21,250 and R42,500.
Can I build my own solar farm in South Africa?
Starting your own solar farm is a great use of land. They help support clean energy goals and create healthier communities with access to affordable energy. Plus, even if you’re not well-equipped to build or maintain a solar farm yourself, that doesn’t mean you can’t lease out your land for solar farm use.
How much does it cost to build a 1 megawatt solar farm in South Africa?
4 crores is required for setting up a 1 MW Solar Plant, which means the estimated cost of 5 MW Solar Plant construction will be Rs. 20 crore.
How many acres do I need for a solar farm in South Africa?
Generally speaking, solar developers will require a minimum of 10 acres of usable land—or 200 acres for a utility-scale project. A good rule of thumb is that 1 kilowatt (kW) of solar panels requires an area of 100 square feet.
What is the ROI on solar farms in South Africa?
The average ROI for a traditional solar farm is between 10 to 20%. Most solar farms pay off their system within five to ten years, and then have at least 30 years of free electricity after that. These are just general estimates.
How long does it take to build a solar farm in South Africa?
How long does it take to build a solar farm? The construction timeframe depends on the project size and the number of workers deployed on site. For a 100 MW power plant, an 8 to 12-month timeframe is typical, with a peak construction period of 2 to 3 months.
Can you live next to a solar farm in South Africa?
Living next to a solar farm could be harmful to your health. Solar power plants give out electromagnetic radiation which may reduce life expectancy! This radiation doesn’t come from the panels themselves, but rather the industrial equipment used to store the energy the panels produce.
Do solar farms damage the soil in South Africa?
Only a minute amount of aluminum is released into the soil from a solar system, and it has not been shown to have any negative impacts on the earth. Though solar systems are safe to have around crops, they’re also a great way to help prevent land degradation while still making good use of overworked fields.
Why are people against solar farms in South Africa?
They have concerns that solar farms leak chemicals into the ground or that solar panel manufacturing is bad for the environment, but both of these arguments are untrue. Solar panels are made of aluminum, glass, and sand which doesn’t enter the ground and manufacturing is generally clean.