How much does it cost to start a solar project developer?
About $775,000 all in for a small one, opened by one founder in an American city: $586,000 to open the doors and $189,000 to keep going for the 3 years it typically takes to pay its way. Below, every item at low, typical and high with where it comes from — and your own quote, for your country, your town, how you start and the money you have.
To open: $586,000
Interconnection applications, studies and deposits: $300,000 ($100,000–$600,000). LBNL Queued Up 2024: interconnection studies and deposits run tens to hundreds of thousands of dollars a project; only about one queued project in five is built (current file)
Land options and lease payments: $80,000 ($30,000–$150,000). Current file figure; option payments per acre per year until construction (estimate range)
Environmental, cultural-resource and permitting studies: $90,000 ($40,000–$150,000). Current file figure (estimate range)
Engineering and site layout: $50,000 ($25,000–$100,000). Current file figure (estimate range)
Legal: land leases and first project sale: $50,000 ($25,000–$100,000). Current file figure (estimate range)
GIS and energy-modelling software, first year: $15,000 ($5,000–$30,000). Our estimate: PVsyst/HelioScope-type modelling licences plus GIS and land-data subscriptions
Forming the company: $800 ($150–$2,500). An LLC's state filing is $50–$500 (state fee schedules), plus an EIN (free) and a registered agent; the World Bank measured the procedures at about 1% of income per capita, about $850 (Doing Business 2020); a lawyer's formation package $500–$2,000.
To keep going until it pays its way: $189,000
Running costs while sales build: $61,200 ($14,400–$204,000). Data and software subscriptions, Travel to sites, landowners and hearings, Liability and professional insurance, until it breaks even; sales are taken to grow evenly to cover them, so about half is needed. Break-even: LBNL Queued Up 2024: the typical project built in 2023 took nearly five years from interconnection request to commercial operation; a developer sells at notice-to-proceed earlier (estimate 2-4 years)
Your own living costs until it can pay you: $128,000 ($85,400–$214,000). A one-person household spends about $3,560 a month in America (BLS Consumer Expenditure Survey 2021–22); nothing is paid to you until the business breaks even.
All in: $775,000
About $775,000 all in ($325,000–$1,550,000): $586,000 to open and $189,000 to keep going for the 3 years it typically takes to pay its way.
With $10,000 of your own you are $765,000 short: borrowed as an SBA 7(a) or bank loan at 11% over 5 years, about $16,600 a month.
The trade's published range, before the months it takes to pay its way: $300,000–$1,000,000. Current file: $300k-$1M of development capital for a first pipeline of community-scale projects (NREL development-cost benchmarks; LBNL Queued Up 2024 on interconnection study costs and deposits)
How much does it cost to start a solar project developer?
About $775,000 all in ($325,000–$1,550,000) for a small one, from home, in an American city. To open: Interconnection applications, studies and deposits $300,000; Land options and lease payments $80,000; Environmental, cultural-resource and permitting studies $90,000; Engineering and site layout $50,000; Legal: land leases and first project sale $50,000; GIS and energy-modelling software, first year $15,000; Forming the company $800 — $586,000. To keep going for the 3 years it typically takes to break even: running costs while sales build $61,200; your own living costs until it can pay you $128,000 — $189,000. The trade's published startup range is $300,000–$1,000,000 (Current file: $300k-$1M of development capital for a first pipeline of community-scale projects (NREL development-cost benchmarks; LBNL Queued Up 2024 on interconnection study costs and deposits)), which leaves the months before it pays its way out.
What does SparkTower's simulator pay to open it?
The simulator pays the one-off opening costs before the first customer — the running costs and the founder's living it plays month by month: Interconnection applications, studies and deposits for a first pipeline $300,000; Land options and lease payments $80,000; Environmental, cultural-resource and permitting studies $90,000; Engineering and site layout $50,000; Legal: land leases, forming and the first sale $50,000; GIS and energy-modelling software and the office, first year $30,000. A first pipeline of community-scale solar projects: $300k–$1M of development capital before anybody buys one (NREL's development-cost benchmarks; LBNL Queued Up 2024 on interconnection deposits and study costs, which run tens to hundreds of thousands of dollars a project). Only the land options are kept: deposits and studies are spent on projects that, one in five, are ever built.
How much of that do you keep?
$80,000 of it — the kit, fit-out or stock it bought — is still yours afterwards, something a buyer would pay for and a lender would lend against; the other $520,000 is spent.
What if my own money doesn't cover it?
With $10,000 of your own you would be about $765,000 short. Borrowed as an SBA 7(a) or bank loan at 11% over 5 years, that is about $16,600 a month. Most founders borrow the rest. A small-business term loan runs about 11% a year over 5 years (SBA 7(a) loans are the prime rate plus 3 to 6.5 points), repaid every month from the start — before the business has found its customers. In SparkTower's solar project developer simulator the founder starts with $900,000 of their own money; the launch costs come out of it and leave $300,000 to trade on, with nothing borrowed.
Will it earn the money back?
That depends on what you charge, how many customers you win and what your rivals do. The free solar project developer simulator pays these costs before it opens, borrows what the founder's cash doesn't cover, and plays the business forward against real rivals, so you can see whether it earns them back before you spend them.
What it costs to start others like it