Solar Farm Income Per Acre in India: Lease vs Own (2026)

How much income does one acre of solar land generate in India?

One acre can host roughly 0.2 to 0.25 MW of ground-mounted solar, and the income it produces ranges from ₹25,000 to ₹30,000 per year on lease to up to ₹65,000 per year if the landowner builds and owns the plant under PM-KUSUM, per Government of India estimates.

TL;DR: There are two ways to earn from farmland with solar. Leasing to a developer pays ₹25,000-30,000 per acre per year (state tariff orders and tenders cluster here) with escalation clauses, for 25 years or more. Owning the plant earns several times more per acre but needs ₹3-4.5 crore per MW of investment and carries project risk, with estimated returns of 11-16 per cent on farmer-led plants. Most realistic projects start at 500 kW or 1 MW, so think in acres-per-MW terms: about 4-5 acres per MW.

Last verified: 15 November 2026

• How much solar fits on one acre
• Route 1: lease your land to a developer
• Route 2: own the solar plant
• PM-KUSUM Component A: the farmer income route
• Lease vs own: side by side
• What decides your actual income
• Frequently Asked Questions

How much solar fits on one acre

A ground-mounted solar plant needs about 4 to 5 acres per MW with standard row spacing, so one acre carries roughly 0.2 to 0.25 MW of capacity. Actual layouts vary with module size, tracking and land shape; our guide to land required for a 1 MW solar plant breaks down the layout arithmetic. As a real-world datapoint, officials implementing PM-KUSUM Component C in Karnataka quoted about three-and-a-half acres per MW for that programme's layouts (The Hindu, September 2026).

Two practical notes follow from this. First, nobody builds a commercial plant on a single acre; projects start around 500 kW to 1 MW, so "one acre of income" really means one acre's share of a larger plant. Second, a megawatt of solar in India generates in the range of 14 to 17 lakh units a year depending on location and design; our city-wise generation guide for North India gives per-kW numbers you can scale.

Route 1: lease your land to a developer

Leasing is the low-risk route: a developer builds and runs the plant on your land and pays you fixed rent for 25 years or more. You invest nothing and carry no project risk.

What the market actually pays:

Worked example for 5 acres leased at ₹30,000 per acre with 5 per cent annual escalation:

• Year 1 income: 5 x ₹30,000 = ₹1,50,000
• Year 25 rent per acre: ₹30,000 x 1.05^24 = about ₹96,750
• Total over 25 years: ₹30,000 x 47.73 = about ₹14.3 lakh per acre, or about ₹71 lakh for 5 acres (nominal, undiscounted)

The escalation clause changes the lifetime total more than the opening rent does: the difference between a 2 per cent and a 5 per cent annual rise compounds to lakhs per acre over a 25-year term. Land next to a substation or with clear road access commands a premium, because it cuts the developer's evacuation cost. Lease income is also weather-proof and input-cost-free, unlike cultivation, but it locks the land for the full term, so read the lease agreement for escalation, termination and land-restoration clauses before signing.

Route 2: own the solar plant

Building and owning the plant earns far more per acre, but you fund the project and carry its risk.

Key investment parameters, from the CEEW, IISD and CSTEP analysis of farmer-led solar plants (April 2026) (CEEW):

Worked example for a 1 MW plant on 5 acres, selling to the discom under PM-KUSUM Component A:

• Generation assumption: 15 lakh units per MW-year (mid-range for North India; scale from our generation guide)
• Tariff assumption: ₹3.10 per kWh (within the ₹2.95-3.25 range across states)
• Gross revenue: 15,00,000 x ₹3.10 = about ₹46.5 lakh per year
• From that gross you pay operations and maintenance, insurance, land costs, loan interest and asset management, and output declines slowly each year as modules age
• At the 11-16 per cent ROI range for such plants, the simple payback works out to roughly six to nine years of the 25-year plant life

The ₹65,000-per-acre figure from the Government of India's PM-KUSUM estimate assumes the farmer takes a bank loan and operates the plant well. Financing is the make-or-break input; our guide to solar project financing covers institutional lenders, and the PM-KUSUM subsidy guide explains the scheme's components and eligibility.

PM-KUSUM Component A: the farmer income route

Component A of PM-KUSUM is the scheme built for this income model. Individual farmers, cooperatives, panchayats and FPOs can set up grid-connected solar plants of up to 2 MW on barren, fallow, marshy, pasture or cultivable land, and the discom purchases the power at the tariff fixed by the state electricity regulatory commission under a 25-year PPA (Government of India PM-KUSUM document). MNRE has issued a model PPA and a model lease agreement for exactly this purpose.

Under Component C programmes, states and discoms have also run developer-installed models where the farmer only leases land; the BESCOM tender cited above is a live example of the state-fixing-the-floor-rate approach.

Lease vs own: side by side

What decides your actual income

• Distance to the nearest substation. Land near a 33/66 kV substation is cheaper to connect and commands higher lease rates or better project economics.
• Escalation clause. A 5 per cent annual rise roughly triples the year-25 rent versus a flat lease.
• State tariff. Farmer-plant tariffs ranged from ₹2.95 (Gujarat) to ₹3.25 (Madhya Pradesh) per kWh in the states CEEW studied; the same plant earns differently across state borders.
• Land type and title. Clear, single-owner titles on contiguous parcels close to feeders get built first.
• Generation performance. Soiling, outages and grid availability move annual output several percentage points either way; our rooftop vs ground-mount comparison explains what drives plant output.

A note for business readers. This page is about earning from land. If you run a factory, warehouse or commercial unit, the better-known solar economics run the other direction: a rooftop or on-site ground-mounted plant that offsets your grid purchases usually beats farm-tariff returns several times over. Start with our solar ROI and payback guide, the group captive model if your load is large, or Sun Wave Technologies' industrial rooftop solar page for Faridabad and Delhi NCR.

Frequently Asked Questions

How much does 1 acre of solar panels earn per year?

On the lease route, about ₹25,000 to ₹30,000 per acre per year, based on the Government of India's PM-KUSUM estimate and the average across SERC tariff orders. If the landowner builds and operates the plant, the Government of India estimates up to ₹65,000 per acre per year, though this requires funding a share of a ₹3-4.5 crore per MW project.

How many acres do I need for a 1 MW solar farm?

About 4 to 5 acres with standard fixed-tilt layouts, and somewhat less with dense modern module layouts; a Karnataka PM-KUSUM project cited roughly three-and-a-half acres per MW. Our land requirement guide works through the details.

What is the solar land lease rate per acre in India?

State-backed references cluster between ₹21,000 and ₹30,000 per acre per year with 5 per cent escalators, and private leases near substations have reached ₹60,000 per acre in Karnataka. The rate is negotiated, not fixed by law, so substation distance, land quality and lease length decide where you land.

Is solar farming profitable for farmers?

For landowners who lease, yes: it is stable, weather-independent income for 25 years or more with zero investment. For owner-operators, the CEEW, IISD and CSTEP analysis of state tariff orders estimates returns of 11 to 16 per cent for farmer-led plants, which is attractive but demands project discipline and financing access.

Can farmers get a subsidy to build a solar farm?

PM-KUSUM Component A supports farmer-owned solar plants up to 2 MW with central and state financial assistance on the capital cost and a 25-year discom PPA at the SERC-determined tariff. See our PM-KUSUM guide for current assistance levels and the application route.

What is PM-KUSUM Component A?

It is the decentralised solar plant component of the PM-KUSUM scheme: farmers, cooperatives, panchayats and FPOs set up grid-connected plants of up to 2 MW on their land and sell the power to the discom at a regulated tariff, creating a 25-year income stream. MNRE provides a model PPA and lease agreement for these contracts.

Which states pay the highest solar tariff for farmer plants?

Among the states analysed by CEEW in 2026, Madhya Pradesh's ₹3.25 per kWh led, followed by Haryana at ₹3.11, Uttar Pradesh at ₹3.10, Rajasthan at ₹3.04 and Gujarat at ₹2.95. Tariffs are reset periodically, so check your state's latest order.