Planning: Solar project design and CapEx financing

The planning phase for a solar project requires 2 key considerations: (1) location planning and (2) financial planning. Both are critical and may occur concurrently during the planning phase, often informing each other. Location planning

Location planning requires consideration of many site-specific variables, particularly site availability and accessibility, energy generation potential, proximity to existing electrical infrastructure, weather conditions, and more.

Solar generation sites are often characterised as either centralised or distributed, which also affects planning. Centralised solar projects – also called photovoltaic power stations, utility-scale solar, solar farms, solar parks, or solar power plants – are typically large-scale solar installations, often in rural areas. Many solar projects, on the other hand, are small-scale, distributed systems such as rooftop, car park, or other private solar installations.

1. Location planning: Centralised systems

Centralised solar projects are typically ground-mounted and comprise many photovoltaic panels, producing at least 1 megawatt at peak potential. The scale of centralised solar projects requires substantial land with approximately 2 hectares needed per 1 MW of production potential. Land use and availability can be critical limiting factors. Fortunately, solar power plants can sometimes be installed in otherwise undesirable locations, such as over old landfills or other brownfield sites. There is increasing evidence that shade-tolerant crops can co-exist with solar arrays, referred to as agrivoltaics. More innovative locations include space-based installations and floating solar panel arrays on reservoirs or in oceans, though these are not typical.

Another unique consideration for centralised solar plants is transmission infrastructure. Photovoltaic power stations must transport energy to consumers that may be hundreds of kilometres away. Successful project planning must account for the proximity and state of existing transmission infrastructure and plan for the development of additional transmission infrastructure as needed. This process can be both politically and economically challenging as many communities are resistant to the development of new transmission infrastructure in their region. Furthermore, existing transmission lines may not be prepared for the influx of additional energy loads and may require expensive upgrades. Existing availability and/or development of transmission infrastructure can be a critical limiting factor for the success of large-scale solar projects.

1.2 Location planning: Distributed systems

Distributed systems are typically designed to supply energy on-site, with excess energy either stored in batteries or shared to the grid via distribution lines at low voltage (<150 kV). Unique considerations of distributed systems include the structural stability of the rooftop along with local ordinances and permits.

1.3 Location planning: General considerations

Some key factors in project planning are consistent across both centralised and distributed systems, such as the expected energy potential, weather conditions, and local regulations.

Solar energy potential can be easily calculated for a given location based on latitude, weather, shade from surrounding object, and installation angle. Some solar systems, particularly rooftop solar, are fixed, meaning that the solar panels stay in a fixed position regardless of season or time of day. The most productive angle is typically south-facing for northern hemisphere locations. More advanced systems, mostly seen in utility-scale installations, can automatically adjust the angles of individual panels to maximise solar potential.

Weather and environmental conditions are often accounted for in solar energy potential to adjust insolation due to average cloudiness, temperature, etc., though additional weather variables also need to be considered. Examples include assessment of the frequency and likelihood of severe weather that could damage photovoltaic equipment (e.g., hail, tornadoes, hurricanes, etc.). Additionally, local conditions like wind-borne dust or pollen accumulation that may affect PV performance are also critical. For centralised large-scale installations, accessibility to systems is also important, such as assessment of water flow patterns, vegetation growth, and ground stability.

Local regulations are also critical and may include environmental assessments, health and safety assessments, permit filings, and other planning considerations

2. Financial Planning

Financial planning ensures the project has the necessary capital to pay for the materials, labour, regulatory requirements, and other components to develop a new solar project. Government subsidies or programs can offset some costs. For centralised solar projects, utilities and/or dedicated financial institutions, such as banks, private equity firms, or venture capitalists, may provide the necessary capital. Investors can benefit financially from the income generated from the electricity, interest from the lien, and government incentives. For distributed systems, financing is typically provided by individual property owners, sometimes financed by loans. The cost of rooftop solar may be partially subsidised, depending on local laws. In some cases, the loan terms and generation potential can be favourable enough that the loan payment may be smaller than the typical cost of electricity.