Solar Farm Profit Calculator

Are you an investor, developer, landowner, or analyst looking for a way to calculate solar farm profit based on real-world factors? Then you’ve come to the right place. 

We bring you a simple but powerful Solar Farm Profit Calculator that estimates annual revenue, annual O&M (operations and maintenance) cost, total annual costs, annual profit, and profit margin based on real-world data the calculator requires.

In this guide we briefly cover:

• What is a solar farm?
• What is the Solar farm profit calculator?
• How the Solar farm profit is calculated
• A real-world examples (step-by-step)

What is a solar farm?

A solar farm, which is also known as a solar power plant or photovoltaic (PV) farm, is a large-scale installation of solar panels that are connected to each other and generate electricity and forward it into the power grid. 

The solar farms typically sell the generated electricity to utilities or buyers based on power purchase agreements (PPAs) or on the wholesale market.

What is the Solar farm profit calculator?

The Solar Farm Profit Calculator is an online tool that is specifically designed to estimate the annual operating profit of a solar farm — it does not account for full lifecycle ROI or levelized cost of energy (LCOE).
Here is what it calculates:

1. Annual energy produced (MWh and kWh) from nameplate MW and capacity factor
2. Annual revenue = annual kWh × energy price ($/kWh)
3. Annual O&M (Operations and Maintenance) cost = capacity (kW) × O&M ($/kW-yr)
4. Total annual costs = O&M + fixed annual costs
5. Annual profit = revenue − total costs
6. Profit margin (%) = profit ÷ revenue × 100

How the Solar farm profit is calculated

The logic behind solar farm profit calculation is simple, as it uses standard formulas to compute the profit estimate based on your scenario. Let's see a real-world example that will clearly show you exactly how the solar farm profit is calculated:

A real-world example

Imagine a small utility plant of 5 megawatts (MW) with these details:

• Plant capacity = 5 MW
• Capacity factor = 26%
• Energy price = $0.057 / kWh
• O&M = $22 / kW-yr
• Fixed annual costs = $50,000

Step-by-step

1. Capacity kW = 5 × 1000 = 5,000 kW
2. Capacity factor (decimal) = 26 / 100 = 0.26
3. Annual MWh = 5 × 8,760 × 0.26
   • 8,760 × 0.26 = 2,277.6
   • × 5 = 11,388 MWh / year
4. Annual kWh = 11,388 × 1,000 = 11,388,000 kWh / year
5. Annual revenue = 11,388,000 × $0.057
   • 11,388,000 × 0.05 = 569,400
   • 11,388,000 × 0.007 = 79,716
   • Total = $649,116 / year
6. O&M cost = 5,000 × $22 = $110,000 / year
7. Total costs = 110,000 + 50,000 = $160,000 / year
8. Profit = 649,116 − 160,000 = $489,116 / year
9. Profit margin = 489,116 / 649,116 ≈ 0.7538 → 75.4%

Based on the inputs, the plant generates around 11,388 MWh/year and has an operating margin of about 75%.

Remember: CAPEX is not included, so the margin looks high because we did not subtract debt service or capital recovery.