Sweet Answer from Solar Mango: (updated Jul 2015)
This is one of the most popular questions that have been asked to Solar Mango.
The short answer is as follows: Owning land should not be the most important reason for you to go for a solar power plant.
The long answer is as follows:
- The cost of land is only a small percentage of the overall costs of a solar power plant. As a result, even if you do not own land, you can purchase land elsewhere and construct a solar power plant. Ownership of land thus provides you with no competitive advantage
- What is more important than land ownership is the model through which you plan to generate revenues from your power plant for 25 long years. What is critical for a solar power project is that you have a clear business model and a power purchase agreement with a financially healthy offtaker. Without these, there is no business case for you to put a solar power plant, land or no land.
- Assuming you have tied together a good business model and a financially healthy offtaker for the power you generate, the land you own might still not be suited for a solar power plant if it is not located in the right region or if it is too far away from an evacuation substation.
Therefore, as a solar investment opportunity, large-scale solar power plants require significant capital investments, with cost of land being only a small percentage of this. What is critical is that you require a healthy return on your investment and ownership of land is hardly a differentiator for or contributing factor to returns.All the above only go to show that ownership of land should not be an important criteria for your decision to invest in a solar power plant.
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