FREQUENTLY ASKED QUESTIONS

We are always happy to discuss solar leasing, community solar, farming, agriculture, technology and just about anything that concerns solar energy. This is our passion and we enjoy interaction that helps promote public understanding of clean, affordable renewable energy. Below are some of the most popular questions directed to our consultants and to our website.

What’s the difference between “commercial grade” and “utility-grade” solar plants?

  We’ve found that solar operators and developers tend to use these terms loosely and interchangeably. At present, there appears to be no industry mandated agreement on the parameters of these terms. It can be safely said that “Commercial” solar plants or farms are any which are larger than residential. Many operations are called “commercial grade” or “utility-grade” despite the production size, if the energy is aimed at a utility, business, community, etc. as the end user. “Community-Grade” is a term often used when the plant intends to provide power to specific manufacturing complexes, a shopping plaza, or housing developments. “Utility Grade” most often means that the power is intended to be placed into the grid of an electric utility company.

What does the abbreviation “PV” mean in solar energy publications?

The abbreviation “PV” stands for photovoltaic (PV). Solar photovoltaic is a more scientific way to say, “solar energy”, and is simply the process that a solar cell performs to convert sun energy into electricity.

What does “green energy” really mean?     

“Green energy” is a term used to describe the energy that comes from renewable sources, meaning that producing the energy causes little or no negative impact on the environment. It also means that production does not release toxic greenhouse gases into the atmosphere. or require multiple means of transport that contribute to further pollution.

What does “renewable energy” really mean?     

“Renewable” energy is commonly applied to energy resources that will not deplete over time. Natural resources provide the energy that is turned into electricity. Solar power, wind, hydropower, biomass, and geothermal energies are all considered to be “renewables” in the energy industry.

What’s the difference between a “solar farm” and a “community solar” plant?

In both instances these terms refer to solar energy facilities (larger than “residential”) that create power for limited end users. Both solar farms and community solar operations are larger in kW or mW generation capacity and aim their power toward a utility, business, community, etc. as the end user. “Community Solar” plants tend to be projects that “group” homes (or businesses) combine their investments and create a “garden” of solar panels that feed participants’ needs. Often the solar array is jointly owned by all participants, who pay a fixed price for their share of electricity used. As a practical matter, either term can indicate one or more end users, but the size of the plant is always well beyond that needed for a typical home.

Another way to identify a utility-scale solar facility is that they almost always have a power purchase Agreement (PPA) with a utility to guarantee a market for its energy for a fixed term of time. Both community and utility-scale solar farms tend to use 72-cell solar modules generally more cost-effective for larger installations due to the extra row of cells. Typical STC ratings currently are between 350 watts and 400 watts. Each weigh about 62 lbs. 72-cell panels require less racking rail of the same strength as those for 60 cell installations.

What kind of electricity does a solar farm or plant produce?

  Solar panels generate electricity in the form of direct current (DC) but our electric grid–and user household items run on alternating current (AC). All solar power systems use inverters that convert DC to AC, so the energy becomes usable. Sources differ widely on how much energy is lost in that conversion. Most industry sources agree that conversion loss can range from 3% to 7%, though low-quality inverters can cause loss much greater.  

What does the abbreviation “ITC” mean?

“ITC” represents the words “Investment Tax Credit”. ITC’s are available from the federal government and there are some ITC’s available on a state-by-state basis. Simply put, ITC’s allow certain solar users to take a deduction from their income using the applicable ITC. For example, the Federal ITC for solar projects that got underway in the year 2020 are eligible for the ITC of 26%. Projects underway after January 1, 2021 are eligible for an ITC of 22%.

Can we take depreciation for building our own solar project?

  Yes and no. Commercial solar energy projects are not eligible for IRS Section 179 deduction, thus the entire investment cannot be deducted in one tax year. Solar projects have been defined by the IRS as five (5) year properties, thus subject to the MACRS depreciation schedules. Depreciable Basis is the investment amount minus any ITC credit amount.

What does the abbreviation “CPW” mean?

The abbreviation “CPW” stands for “Cost-per-Watt” and typically means the amount of money a solar project will cost, including materials, components and labor. The CPW does not usually factor the cost of the land where the plant is located into the equation.

What does the abbreviation “STC” mean?

In the solar power industry, solar panels are labeled with numbers indicating how much power they will produce under ideal conditions (“peak sun”). This number is called the Standard Test Condition number or (STC). For example, a label showing an STC rating of 250 watts for the panel, means that one full hour of sun produces 250 watt-hours of electricity. Four panels would produce one kilowatt hour.

 What’s the difference between “Fixed Tilt” and “Variable Tilt” solar panel installations?

A “fixed-tilt” installation means that solar panels are installed at a determined angle and remain at that angle. “Variable-tilt” (“Trackers”) are available as single axis (built to follow the y-axis) and dual axis (built to follow both the x- and y-axes). The fixed systems collect energy at their highest rates during “peak sun” hours in the middle of the day. Trackers can collect higher capacity throughout the entire day because they follow the sun from dawn to dusk. Variable (Tracking) systems tend to have higher installation and maintenance costs, as well as larger up-front investment costs due more complex technology and moving parts.

 What is an Option Agreement?

An Option Agreement is a type of contract that is often used when parties envision a future agreement. One party agrees to not to act or perform in certain ways, while the other may conducts necessary research negotiations in other matters that could bring a final agreement to fruition. Solar Option Agreements must set a term (usually 2-3 years) during which the developer is to conduct feasibility, environmental and other studies in anticipation of obtaining the necessary governmental permits to start construction of the solar farm. A rental amount is set for the period in which the option is effective.

What is a Solar Lease?

           All Leases generally are contracts giving one party an interest in the subject lands, without giving a full ownership interest, or a certain amount of time. The interest can be as narrow or broad as the parties agree. Solar Leases usually require a time (term) of 20-30 years since the parties intend to produce energy for a significant time. All Leases, including Solar Leases, are structured in different forms varying from company to company. Longer term leases, like that required for Solar development, often use a ten-year initial term with options to renew for 5,10 or more years. The Lessee has the right to exercise any renewal term. 

What does “PPA” mean?

The abbreviation “PPA” stands for “Power Purchase Agreement”. It is a contract between a electricity producer and the end user (usually a utility company) that sets the price and terms agreed by the parties. The price terms of any PPA can be escalating or fixed and include language to address various risk-sharing obligations of the involved parties. End users/buyers can be motivated by a variety of factors aside from price, such as dedicated supply and a desire for clean and renewable energy. Research shows that corporations and local governments are entering PPAs with solar plants in record numbers. Securing a PPA can help a developer obtain financing for a solar project.

How many types of Solar Panels are there?

  The answer is: many. Small residential construction typically uses panels containing 60 solar cells, as opposed to the 72-cell solar modules used in community solar and utility grade plants. Smaller panels often have only a 250 STC rating, while the 72 cell panels are between 350 watts and 400 STC. However, solar panels must also be examined for their Thermodynamic Efficiency. This means the maximum possible for the sun’s energy to be converted into electricity. Photons interact with solar cells in a way that can only generate electricity from the sun up to a certain point, after which thermal energy, or heat, is created. Currently maximum thermodynamic efficiency appears to be 86%.

The “types” of solar panels also differ by their makeup. Monocrystalline Solar Panels (a/k/a single-crystalline cells) are made from the purest silicon and known to deliver the highest efficiency at 22-27%. You can recognize them by their rounded edge and the dark color. Polycrystalline Solar Panels (a/k/a multi crystalline cells) have efficiency ratings of about 15-22%, and you can recognize them by the square cut and blue color. Thin Film Solar Panels also have ratings of 15-22%. Amorphous Solar Panels are not manufactured with cells, but rather are a thin layer of silicon sprayed or painted on a base material such as glass or metal. These panels are the least expensive but produce far less power, requiring a large number of them to equal the power output of other type panels.

How does the electricity generated leave the solar plant?

  Electricity leaving the solar generation facility is transmitted at voltages 66 kV or above through lines rated by load, carrying 138kV to 765kV. Electricity is transmitted to a substation, which acts as a step- down transformer reducing the load to usable voltage. The location of a Solar Farm or community solar project should be optimally close to suitable transmission lines and a relatively close to a substation. In addition, proximity to the end user/buyer is important for operators hoping to enter into a PPA.

How is size of a solar farm or community solar project measured?

  The “size” of a solar operation is usually defined in terms of its capacity–how much energy the entire plant can produce at one time. This is measured in watts. (1,000 watts = 1 kilowatt or 1 kW; 1,000,000 watts = 1 megawatt or 1mW). For example, a build described as a “25mW” project means that build can generate up to 25,000,000 watts of energy at one moment in time, at high noon on a sunny day.

What does the term “Peak Sun Hours” mean? Is it the same as daylight hours?

  You’ll often find “Peak Sun Hours” abbreviated as “PSH” in various solar energy literature. “Peak Sun” refer to those times of a day when the sun emits at least 1000 W/m² of sunlight intensity (energy or irradiance). This calculation is not the same as daylight hours. Regular sunlight hours are those hours between sunrise and sunset. In other words, these are simply all the hours that the sun is in the sky above you. The sun energy falling on the solar panels will continue to generate some electricity, but only during Peak Sun Hours do they receive the optimal amount of radiation for the highest energy generation.

What type of infrastructure is required for solar development?

           Any enterprise needs the right infrastructure to operate. Housing developments cannot be built without some access to water and sewage. Shopping areas and motels cannot operate without proximity to highways and traffic. In the context of solar energy, an appropriate infrastructure amounts to electricity transmission lines, power substations and of course a building, factory, housing plan or utility that will use the electricity being generated. The availability of such infrastructure, distance, or lack of it, can determine whether a certain property is a good candidate for a solar lease or other renewable energy project.

We will be happy to answer any further questions.  Please send a message on our contact page.