Solar Park

Solar Park

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Solar Park

A photovoltaic power station, also known as a solar park, solar farm, or solar power plant is a large-scale photovoltaic system (PV system) designed for the supply of merchant power into the electricity grid. They are differentiated from most building-mounted and other decentralised solar power applications because they supply power at the utility level, rather than to a local user or users. The generic expression utility-scale solar is sometimes used to describe this type of project.

In some countries, the nameplate capacity of a photovoltaic power stations is rated in megawatt-peak (MWp), which refers to the solar array’s theoretical maximum DC power output. In other countries, the manufacturer gives the surface and the efficiency. However, Canada, Japan, Spain and the United States often specify using the converted lower nominal power output in MWAC, a measure directly comparable to other forms of power generation. A third and less common rating is the megavolt-amperes (MVA). Most solar parks are developed at a scale of at least 1 MWp. As of 2018, the world’s largest operating photovoltaic power stations surpass 1 gigawatt. As at the end of 2019, about 9,000 plants with a combined capacity of over 220 GWAC were solar farms larger than 4 MWAC (utility scale).[1]

Most of the existing large-scale photovoltaic power stations are owned and operated by independent power producers, but the involvement of community- and utility-owned projects is increasing. To date, almost all have been supported at least in part by regulatory incentives such as feed-in tariffs or tax credits, but as levelized costs have fallen significantly in the last decade and grid parity has been reached in an increasing number of markets, it may not be long before external incentives cease to exist.

Siting and land use

The land area required for a desired power output, varies depending on the location,[20] and on the efficiency of the solar modules,[21] the slope of the site[22] and the type of mounting used. Fixed tilt solar arrays using typical modules of about 15% efficiency[23] on horizontal sites, need about 1 hectare/MW in the tropics and this figure rises to over 2 hectares in northern Europe.[20]

Because of the longer shadow the array casts when tilted at a steeper angle,[24] this area is typically about 10% higher for an adjustable tilt array or a single axis tracker, and 20% higher for a 2-axis tracker,[25] though these figures will vary depending on the latitude and topography.[26]

The best locations for solar parks in terms of land use are held to be brown field sites, or where there is no other valuable land use.[27] Even in cultivated areas, a significant proportion of the site of a solar farm can also be devoted to other productive uses, such as crop growing[28][29] or biodiversity.[30]


Agrivoltaics is co-developing the same area of land for both solar photovoltaic power as well as for conventional agriculture. A recent study found that the value of solar generated electricity coupled to shade-tolerant crop production created an over 30% increase in economic value from farms deploying agrivoltaic systems instead of conventional agriculture.[31]


In some cases several different solar power stations, with separate owners and contractors, are developed on adjacent sites.[32][33] This can offer the advantage of the projects sharing the cost and risks of project infrastructure such as grid connections and planning approval.[34][35] Solar farms can also be co-located with wind farms.[36]


Most Solar parks are ground mounted PV systems, also known as free-field solar power plants.[44] They can either be fixed tilt or use a single axis or dual axis solar tracker.[45] While tracking improves the overall performance, it also increases the system’s installation and maintenance cost.[46][47] A solar inverter converts the array’s power output from DC to AC, and connection to the utility grid is made through a high voltage, three phase step up transformer of typically 10 kV and above.[48][49]

Solar array arrangements

The solar arrays are the subsystems which convert incoming light into electrical energy.[50] They comprise a multitude of solar modules, mounted on support structures and interconnected to deliver a power output to electronic power conditioning subsystems.[51]

A minority of utility-scale solar parks are configured on buildings[52] and so use building-mounted solar arrays. The majority are free-field systems using ground-mounted structures.[44]

Power conversion

Solar panels produce direct current (DC) electricity, so solar parks need conversion equipment[51] to convert this to alternating current (AC), which is the form transmitted by the electricity grid. This conversion is done by inverters. To maximise their efficiency, solar power plants also incorporate maximum power point trackers (MPP tracking), either within the inverters or as separate units. These devices keep each solar array string close to its peak power point.[63]

There are two primary alternatives for configuring this conversion equipment; centralized and string inverters,[64] although in some cases individual, or micro-inverters are used.[65] Single inverters allows optimizing the output of each panel, and multiple inverters increases the reliability by limiting the loss of output when an inverter fails.[66]

System performance

Main article: photovoltaic system performance

Power station in Glynn County, Georgia

The performance of a solar park is a function of the climatic conditions, the equipment used and the system configuration. The primary energy input is the global light irradiance in the plane of the solar arrays, and this in turn is a combination of the direct and the diffuse radiation.[79] In some regions, soiling, i.e. the accumulation of dust or organic material on the solar panels that servers to block incident light, is a significant loss factor.[80]

A key determinant of the output of the system is the conversion efficiency of the solar modules, which will depend in particular on the type of solar cell used.[81]

There will be losses between the DC output of the solar modules and the AC power delivered to the grid, due to a wide range of factors such as light absorption losses, mismatch, cable voltage drop, conversion efficiencies, and other parasitic losses.[82] A parameter called the ‘performance ratio’[83] has been developed to evaluate the total value of these losses. The performance ratio gives a measure of the output AC power delivered as a proportion of the total DC power which the solar modules should be able to deliver under the ambient climatic conditions. In modern solar parks the performance ratio should typically be in excess of 80%.[84][85]

System degradation

Early photovoltaic systems output decreased as much as 10%/year,[4] but as of 2010 the median degradation rate was 0.5%/year, with modules made after 2000 having a significantly lower degradation rate, so that a system would lose only 12% of its output performance in 25 years. A system using modules which degrade 4%/year will lose 64% of its output during the same period.[86] Many panel makers offer a performance guarantee, typically 90% in ten years and 80% over 25 years. The output of all panels is typically warranted at plus or minus 3% during the first year of operation.[87]

The business of developing solar parks

Westmill Solar Park[88] is the world’s largest community-owned solar power station[89]

Solar power plants are developed to deliver merchant electricity into the grid as an alternative to other renewable, fossil or nuclear generating stations.[90]

The plant owner is an electricity generator. Most solar power plants today are owned by independent power producers (IPP’s),[91] though some are held by investor- or community-owned utilities.[92]

Some of these power producers develop their own portfolio of power plants,[93] but most solar parks are initially designed and constructed by specialist project developers.[94] Typically the developer will plan the project, obtain planning and connection consents, and arrange financing for the capital required.[95] The actual construction work is normally contracted to one or more EPC (engineering, procurement and construction) contractors.[96]

Major milestones in the development of a new photovoltaic power plant are planning consent,[97] grid connection approval,[98] financial close,[99] construction,[100] connection and commissioning.[101] At each stage in the process, the developer will be able to update estimates of the anticipated performance and costs of the plant and the financial returns it should be able to deliver.[102]

Planning approval

Photovoltaic power stations occupy at least one hectare for each megawatt of rated output,[103] so require a substantial land area; which is subject to planning approval. The chances of obtaining consent, and the related time, cost and conditions, varying from jurisdiction to jurisdiction and location to location. Many planning approvals will also apply conditions on the treatment of the site after the station has been decommissioned in the future.[75] A professional health, safety and environment assessment is usually undertaken during the design of a PV power station in order to ensure the facility is designed and planned in accordance with all HSE regulations.

Grid connection

The availability, locality and capacity of the connection to the grid is a major consideration in planning a new solar park, and can be a significant contributor to the cost.[104]

Most stations are sited within a few kilometres of a suitable grid connection point. This network needs to be capable of absorbing the output of the solar park when operating at its maximum capacity. The project developer will normally have to absorb the cost of providing power lines to this point and making the connection; in addition often to any costs associated with upgrading the grid, so it can accommodate the output from the plant.[105]

Operation and maintenance

Once the solar park has been commissioned, the owner usually enters into a contract with a suitable counterparty to undertake operation and maintenance (O&M).[106] In many cases this may be fulfilled by the original EPC contractor.[107]

Solar plants’ reliable solid-state systems require minimal maintenance, compared to rotating machinery for example.[108] A major aspect of the O&M contract will be continuous monitoring of the performance of the plant and all of its primary subsystems,[109] which is normally undertaken remotely.[110] This enables performance to be compared with the anticipated output under the climatic conditions actually experienced.[99] It also provides data to enable the scheduling of both rectification and preventive maintenance.[111] A small number of large solar farms use a separate inverter[112][113] or maximizer[114] for each solar panel, which provide individual performance data that can be monitored. For other solar farms, thermal imaging is a tool that is used to identify non-performing panels for replacement.[115]

Power delivery

A solar park’s income derives from the sales of electricity to the grid, and so its output is metered in real-time with readings of its energy output provided, typically on a half-hourly basis, for balancing and settlement within the electricity market.[116]

Income is affected by the reliability of equipment within the plant and also by the availability of the grid network to which it is exporting.[117] Some connection contracts allow the transmission system operator to constrain the output of a solar park, for example at times of low demand or high availability of other generators.[118] Some countries make statutory provision for priority access to the grid[119] for renewable generators, such as that under the European Renewable Energy Directive.[120]

Economics and finance

In recent years, PV technology has improved its electricity generating efficiency, reduced the installation cost per watt as well as its energy payback time (EPBT). It had reached grid parity in at least 19 different markets by 2014,[121][122] and in most parts of the world subsequently to become a viable source of mainstream power.[123]

As solar power costs reached grid parity, PV systems were able to offer power competitively in the energy market. The subsidies and incentives, which were needed to stimulate the early market as detailed below, were progressively replaced by auctions[124] and competitive tendering and leading to further price reductions.

Competitive energy costs of utility-scale solar

The improving competitiveness of utility-scale solar became more visible as countries and energy utilities introduced auctions[125] for new generating capacity. Some auctions are reserved for solar projects,[126] while others are open to a wider range of sources.[127]

The prices revealed by these auctions and tenders have led to highly competitive prices in many regions. Amongst the prices quoted are:

DateCountryAgencyLowest priceEquivalent US¢/kWhReference
Oct 2017Saudi ArabiaRenewable Energy Project Development OfficeUS$ 1.79/MWhUS¢ 1.79/kWh[128]
Nov 2017MexicoCENACEUS$ 17.7/MWhUS¢ 1.77/kWh[129]
Mar 2019IndiaSolar Energy Corporation of IndiaINR 2.44/kWhUS¢ 3.5/kWh[130]
Jul 2019BrazilAgencia Nacional de Energía EléctricaBRL 67.48/MWhUS¢ 1.752/kWh[131]
Jul 2020Abu Dhabi, UAEAbu Dhabi Power CorporationAED fils 4.97/kWhUS¢ 1.35/kWh[132]
Aug 2020PortugalDirectorate-General for Energy and Geology€ 0.01114/kWhUS¢ 1.327/kWh[133]
Nov 2020JapanMETI¥ 10.00/kWhUS¢ 9.5/kWh[134]
Dec 2020IndiaGujarat Urja Vikas NigamINR 1.99/kWhUS¢ 2.69/kWh[135]

Grid parity

Main article: Grid parity

Solar generating stations have become progressively cheaper in recent years, and this trend is expected to continue.[136] Meanwhile, traditional electricity generation is becoming progressively more expensive.[137] These trends led to a crossover point when the levelised cost of energy from solar parks, historically more expensive, matched or beat the cost of traditional electricity generation.[138] This point depends on locations and other factors, and is commonly referred to as grid parity.[139]

For merchant solar power stations, where the electricity is being sold into the electricity transmission network, the levelised cost of solar energy will need to match the wholesale electricity price. This point is sometimes called ‘wholesale grid parity’ or ‘busbar parity’.[140]

Some photovoltaic systems, such as rooftop installations, can supply power directly to an electricity user. In these cases, the installation can be competitive when the output cost matches the price at which the user pays for his electricity consumption. This situation is sometimes called ‘retail grid parity’, ‘socket parity’ or ‘dynamic grid parity’.[141] Research carried out by UN-Energy in 2012 suggests areas of sunny countries with high electricity prices, such as Italy, Spain and Australia, and areas using diesel generators, have reached retail grid parity.[140]

Prices for installed PV systems show regional variations, more than solar cells and panels, which tend to be global commodities. In 2013, utility-scale system prices in highly penetrated markets such as China and Germany were lower ($1.40/W) than in the United States ($3.30/W). The IEA explains these discrepancies due to differences in “soft costs”, which include customer acquisition, permitting, inspection and interconnection, installation labor and financing costs.[142] Regional variations reduced or changed as markets grew with the US system price declining to $1.25/W by 2016.[143]

Incentive mechanisms

In the years before grid parity had been reached in many parts of the world, solar generating stations needed some form of financial incentive to compete for the supply of electricity.[144] Many legislatures around the world have introduced such incentives to support the deployment of solar power stations.[145]

Feed-in tariffs

Main article: Feed-in tariff

Feed-in tariffs are designated prices which must be paid by utility companies for each kilowatt hour of renewable electricity produced by qualifying generators and fed into the grid.[146] These tariffs normally represent a premium on wholesale electricity prices and offer a guaranteed revenue stream to help the power producer finance the project.[147]

Renewable portfolio standards and supplier obligations

Main article: Renewable portfolio standard

These standards are obligations on utility companies to source a proportion of their electricity from renewable generators.[148] In most cases, they do not prescribe which technology should be used and the utility is free to select the most appropriate renewable sources.[149]

There are some exceptions where solar technologies are allocated a proportion of the RPS in what is sometimes referred to as a ‘solar set aside’.[150]

Loan guarantees and other capital incentives

Main article: Loan guarantee

Some countries and states adopt less targeted financial incentives, available for a wide range of infrastructure investment, such as the US Department of Energy loan guarantee scheme,[151] which stimulated a number of investments in the solar power plant in 2010 and 2011.[152]

Tax credits and other fiscal incentives

Main article: Tax credit

Another form of indirect incentive which has been used to stimulate investment in solar power plant was tax credits available to investors. In some cases the credits were linked to the energy produced by the installations, such as the Production Tax Credits.[153] In other cases the credits were related to the capital investment such as the Investment Tax Credits[154]

International, national and regional programmes

In addition to free market commercial incentives, some countries and regions have specific programs to support the deployment of solar energy installations.

The European Union‘s Renewables Directive[155] sets targets for increasing levels of deployment of renewable energy in all member states. Each has been required to develop a National Renewable Energy Action Plan showing how these targets would be met, and many of these have specific support measures for solar energy deployment.[156] The directive also allows states to develop projects outside their national boundaries, and this may lead to bilateral programs such as the Helios project.[157]

The Clean Development Mechanism[158] of the UNFCCC is an international programme under which solar generating stations in certain qualifying countries can be supported.[159]

Additionally many other countries have specific solar energy development programmes. Some examples are India‘s JNNSM,[160] the Flagship Program in Australia,[161] and similar projects in South Africa[162] and Israel.[163]

Financial performance

The financial performance of the solar power plant is a function of its income and its costs.[25]

The electrical output of a solar park will be related to the solar radiation, the capacity of the plant and its performance ratio.[83] The income derived from this electrical output will come primarily from the sale of the electricity,[164] and any incentive payments such as those under Feed-in Tariffs or other support mechanisms.[165]

Electricity prices may vary at different times of day, giving a higher price at times of high demand.[166] This may influence the design of the plant to increase its output at such times.[167]

The dominant costs of solar power plants are the capital cost, and therefore any associated financing and depreciation.[168] Though operating costs are typically relatively low, especially as no fuel is required,[108] most operators will want to ensure that adequate operation and maintenance cover[109] is available to maximise the availability of the plant and thereby optimise the income to cost ratio.[169]

Source: Photovoltaic power station, (last visited Mar. 24, 2021).

To learn more about pv systems and other methods of electricity generation, read the page Electricity Generation in the menu FinancialsAssets.

Here in Business Ideas, we present the idea of creating a passive income over a long period of time by building a solar park without state help like feed-in tariffs or tax credits.

To learn more about solar power plants with state aid, read the page Photovoltaic System in the menu Business Ideas.

To learn more about renewable energies, read the pages Solar Energy and Wind Energy.

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