Grid-Scale Solar "Basics"

What Is Grid-Scale Solar Development?

Grid-scale solar developments (GSSD) (also called utility-scale solar) are often called "solar arrays." They normally consist of about one hundred to several thousand acres of ground-mounted solar panels that produce electricity for transmission into the power grid for use off-site. A grid-scale solar development typically generates more than 5 megawatts (MW) of electricity, which can be sold to a single downstream user or placed onto the grid for wider use by numerous customers (reference 1).

A 1-megawatt grid-scale solar installation typically:

• Takes up about 4–6 acres of land
• Includes approximately 3,000–4,000 solar panels
• Costs more than $1 million to build

How Much Solar Energy Do We Have Now and How Quickly Is It Growing?

Solar energy is one of the least expensive and fastest-growing forms of energy in the United States. In 2024, combined utility-scale and small-scale solar accounted for approximately 6.9% of total U.S. electricity generation — up from 5.5% in 2023, a 27% increase year-over-year (reference 2) . Wind and solar together supplied 17.2% of all U.S. electricity in 2024, and that figure rose to a record 17% from wind and solar alone in 2025 (reference 3).

The U.S. solar industry installed nearly 50 gigawatts (GW) of new capacity in 2024 —a 21% increase from 2023 and the second consecutive year of record-breaking growth. Solar accounted for 66% of all new electricity-generating capacity added to the U.S. grid in 2024  (reference 4). The utility-scale segment alone installed a record 41.4 GW in 2024 (reference 5).

In 2025, the U.S. solar industry installed 43 GW of new capacity, marking the fifth consecutive year that solar was the top source of new power added to the grid (reference 4).

Looking ahead, cumulative U.S. solar capacity is projected to more than triple — from 236 GW installed at year-end 2024 to over 739 GW by 2035 (reference 4).

Pennsylvania reached a milestone of 2 gigawatts of installed solar capacity in July 2025 — enough to power approximately 350,000 homes — just 17 months after crossing the 1-gigawatt threshold (reference 6). As of early 2026, Pennsylvania has approximately 3,086 MW of installed solar capacity, ranking 22nd nationally, with a projected 4,404 MW of additional capacity expected over the next five years (reference 7).

Site Selection

Solar developers seek sites that minimize development costs and maximize return on investment. Agricultural and open land continues to be preferred because it is most suitable for new land use transitions (reference 1).

Desirable site characteristics:

• Relatively flat or gently sloping terrain (preferably less than 7% slope) facing east, south, or west
• Within 1–3 miles of a substation with unused capacity to transmit power
• Clear, consistent local government regulations regarding setbacks, fencing, panel coverage, and permitting — developers value regulatory certainty ¹
• Minimum of approximately 10–15 acres; larger parcels are more attractive (reference 8)

Advances in solar panel technology have made GSSD viable in all regions of Pennsylvania. The solar irradiance levels found at Pennsylvania's latitudes are sufficient to make projects economically feasible (reference 1). 

Why GSSD Here? Why Now?

Pennsylvania has more open space than many states in the Northeast and Mid-Atlantic,

yet is close to major population centers. The installed cost of solar panels has dropped dramatically — more than 90% since 2010 for utility-scale systems, based on levelized cost of energy (LCOE) data (references 9 and 10). Utility-scale solar system prices reached approximately $1.05–$1.18 per watt DC in Q4 2024 (reference 4).

Pennsylvania has long been an electric power exporter, sending excess electricity to surrounding states. The state, therefore, has much of the critical electrical infrastructure needed to support solar facilities. As solar companies propose new sites, they look for the most commercially viable pathway to connect to existing electrical transmission infrastructure, since those connections represent a significant cost of any grid-scale solar project (reference 1 ).

Growing electricity demand from AI data centers and broader electrification of the economy is further accelerating solar development, as solar is well-positioned —especially when paired with battery storage — to meet this demand (reference 4).

The Leasing Process

When considering leasing land for solar energy development, landowners should not sign anything without obtaining qualified legal advice. A solar lease is a legal obligation that may last 25–40 years and can deeply affect how the land can be used (reference 1). Many properties will be optioned for solar development, but only a fraction of those projects will actually be built. Landowners should treat any proposed contract as if it will be developed, but should not rely on solar payments in their financial planning until a project is confirmed (reference 1).

Letter of Intent

A landowner may receive a letter of intent (LOI) from a solar developer. Typically, the LOI:

• Is brief (often one page), but may include legally binding provisions
• May discuss general financial terms of a potential lease
• Often includes an exclusivity clause (preventing the landowner from engaging with competitors), a non-interference clause, and a nondisclosure agreement specifying that future terms cannot be disclosed to others

Landowners should seek to modify nondisclosure terms so they can discuss the agreement with family members, attorneys, and financial advisors. Any document requiring a signature should be reviewed by an attorney (reference 1).

Option Agreement

An option agreement is a private legal agreement between the landowner and the developer. No government entity is required to approve its terms. The option agreement grants the developer the option to lease the land for solar development.

Typically, the option agreement:

• Lasts 2–5 years, with the opportunity for the developer to extend
• Is 2–15 pages in length
• Brings a financial payment to the landowner upon signing

It is critical for landowners to understand that signing an option agreement typically means agreeing to all terms of the underlying lease contained within the option contract. The landowner must be satisfied with the lease terms before signing the option agreement. Once signed, the developer has the land legally tied up, and the landowner generally cannot sign an option with a different company for the same land—nor can the landowner typically exit the agreement (reference 1).

Preconstruction Activities

Studies

The option period allows the developer to conduct due diligence on the proposed site.

During this time, the developer will typically:

• Conduct title searches to identify any other interests in the land (mortgages, right-of-way, easements, leases, mineral rights)
• Submit the project into the PJM Interconnection new services queue to assess substation capacity
• Explore the municipality's and county's requirements for solar projects
• Consider local residents' reactions to the project
• Develop an engineering plan and seek investors
• Potentially negotiate a solar power purchase agreement (PPA) with a buyer for the electricity to be produced

It is also important to know that:

• The developer can withdraw from a signed option agreement at any time if they
• find a condition that prevents development as envisioned
• The developer might develop only part of the total land under option, reducing the landowner's total annual rent
• The landowner generally cannot exit or amend the option agreement after signing (reference 1).

Lease

The lease is the binding legal document between the landowner and the company. If due diligence is favorable, the developer may exercise the option and the underlying lease. The lease:

• Is typically 20–60 pages of complex legal language
• Typically extends for approximately 25 years, often with 5- or 10-year extension options available to the developer
• Addresses payments to the landowner on a per-acre-used annual basis

Current lease rates in Pennsylvania generally range from approximately $700 to $1,500 per acre per year, with strategically located parcels (near substations and transmission lines) potentially commanding higher rates (reference 8  and 11). Most leases also include annual rent escalators of 1–2.5% per year (references 1 and 11). The generic lease terms favor the solar developer, but with informed negotiation and legal counsel, landowners can improve the terms (reference 1).

PJM Interconnection and Its Role in GSSD in Pennsylvania

PJM Interconnection is a regional electricity transmission organization that manages the high-voltage electricity grid serving more than 65 million people in the Mid-Atlantic and parts of the Midwest — including all of Pennsylvania (reference 1) .

PJM administers the process for evaluating and approving requests by developers to interconnect new energy resources, including grid-scale solar, into the regional transmission system. This involves multiple stages of technical review. PJM's review process does not consider local land-use regulations that may affect the ability of a project to be permitted and constructed — that responsibility rests with local municipalities (reference 1).

Most projects submitted to PJM will not be built. Developers move forward only with projects that promise the greatest return on investment and can clear technical and regulatory hurdles. As projects are withdrawn from the PJM queue, new projects are added (reference 1).

Municipal and Public Input on GSSD

After the option is signed and the developer has confirmed substation capacity availability, the municipality or township typically receives its first look at the proposed project. The local municipality, county, or the developer may offer a public meeting to discuss the plans.

Each state has different requirements for governmental review of solar projects. In Pennsylvania, municipal and township officials are responsible for reviewing all applications to build grid-scale solar projects and for regulating where and how solar projects can be built.

• The Pennsylvania Public Utility Commission is not involved in GSSD siting or permitting.
• PA DEP's role involves issuing stormwater management permits, as it would for any large-scale land development.
• The county conservation district is typically involved in planning to control erosion and sedimentation, and in the stormwater review process (reference 1).

Construction Phase

If the developer exercises the option and lease, project construction begins. During installation of a large project, the developer will have a hundred or more workers on site for a relatively short period.

The site is mechanically cleared of trees and shrubs as needed, and an exterior fence is installed. The land is surveyed to determine exact panel locations. Access roads are placed between panel rows for maintenance. Trenches are dug for wiring, and panel support posts are installed. Solar panels are bolted to galvanized steel and aluminum support structures ("racks") and wired together. Inverters and transformers are installed and all system components are connected. Once the system is tested, the facility is turned on. 

Current estimates are that it costs approximately $1 million or more per MW to develop a grid-scale solar project (reference 1).

Decommissioning Phase

Most leases run for 25 years, with extension options typically available to the developer. A solar lease will include provisions for termination and restoration. The agreement typically calls for the solar panel owner to restore the land to essentially the same condition as before panel installation. The lease may specify that funds for cleanup and restoration be held in escrow to ensure availability when needed.

Some municipalities have decommissioning requirements in their solar ordinances. Decommissioning requirements remain an active area of legislation in the Pennsylvania General Assembly. Check online for current updates (reference 1).

Conclusion

Solar energy is now the dominant source of new electricity-generating capacity in the United States, accounting for 66% of all new capacity added in 2024 (reference 4). Pennsylvania crossed the 2-gigawatt installed capacity milestone in 2025 and is projected to add more than 4,400 MW over the next five years (references 7 and 6). Developers value predictability and stability in local regulations as they plan to deploy grid-scale solar technology across the Commonwealth.

It is important for local officials to clarify grid-scale solar expectations in their zoning ordinances — to ensure orderly development, protect community interests, and provide the regulatory certainty that responsible developers need.

For More Information

Agricultural and Natural Resources Law. North Carolina State University Extension.

Community Planning for Solar Toolkit. University of Massachusetts, Amherst. 

Pennsylvania Landowners Guide to Utility-Scale Solar Leasing. Penn State Extension. Updated January 2025.

 Farmland Owner's Guide to Solar Leasing. National Agricultural Law Center.

Health and Safety Impacts of Solar Photovoltaics. North Carolina State University.

New York Solar Guidebook for Local Governments. NYSERDA.

Solar Energy Education Resources. Penn State Extension. 

Utility-Scale Solar Data Update. Lawrence Berkeley National Laboratory (LBNL).

Quarterly Solar Industry Update. National Renewable Energy Laboratory (NREL) /U.S. DOE.

Pennsylvania Solar Future Plan. PA DEP. 

U.S. Energy Information Administration. Electric Power Monthly. 

Glossary

Agrivoltaics — The co-location of solar panels and agricultural activities (crops, grazing, pollinator habitat) on the same land parcel, allowing dual use of the land.

Decommissioning–The phase of a solar project after the operational phase during which the panels and all associated equipment are removed from the site.

Due diligence–The research and analysis done by both parties in a legal agreement to thoroughly investigate the details of the transaction in question.

Easement–A legal right to some part of another's private land.

Escrow–Funds paid by the developer and held for use in decommissioning a solar site at the end of the lease term and restoring the land.

Gigawatt (GW)–A unit of power equal to 1 billion watts, 1 million kilowatts, or 1,000 megawatts.

Grid-scale solar (GSS)–Solar installation intended to supply power to the grid for use off-site from where the panels are; typically >5 MW. Also called "utility-scale solar."

Inverter–Electrical equipment that converts direct current (DC) produced from the sun's rays to alternating current (AC), which powers most electrical equipment.

Kilowatt–A standard unit of electrical power equal to 1,000 watts.

Letter of intent–Document sent by solar developer to landowner. Sometimes comes before the option agreement. Can be legally binding and lay out terms of a potential lease. The main purpose is often to establish a nondisclosure agreement specifying that future terms negotiated cannot be disclosed. Also called term sheet or preliminary agreement.

Megawatt (MW)–The standard measure of a solar array's generating capacity; equal to 1,000 kilowatts or 1,000,000 watts.

Nondisclosure agreement (NDA)–A provision common to many solar leases stating that the signer may not divulge sensitive information contained in the agreement.

Option agreement–A legally binding agreement between a solar developer and a landowner granting rights to the developer.

Photovoltaic (PV)–Pertaining to the direct conversion of light into electricity.

PJM Interconnection, LLC–A regional transmission organization that manages the high-voltage electricity grid reaching more than 65 million people in the Mid-Atlantic and parts of the Midwest. They also manage a long-term regional electric transmission planning process for the service area.

Power purchase agreement (PPA) — A contract between the producer of solar power and the purchaser of the electricity generated. It specifies how much energy the purchaser will buy and at what price.

Right-of-way–Permanent or temporary easement allowing certain access to private land.

Solar array–Numerous solar modules are grouped to collect the sun's energy. Sometimes called a "solar facility."

Solar developer–A company that sees a solar array from idea to construction, including identifying suitable land; conducting relevant technical studies for the site; obtaining necessary local, state, and/or federal permits; finding a buyer for the power to be produced; obtaining financing to build the solar array; and identifying a company to build the solar array. Many times, the developer sells the array to another company once building is set to start or once it is built.

Solar energy–"Radiant energy (direct, diffuse, and/or reflective) received from the sun."

Solar lease–A legally binding agreement between a solar developer and a landowner granting the developer the right to develop the land for solar energy production.

Solar module–Solar cells grouped to collect the sun's energy.

Solar panel–The part of a solar energy system containing one or more photovoltaic cells or modules. Its purpose is to harness solar energy for electricity.

Substation–Equipment that changes the voltage of energy. Electricity comes from the solar array to the substation and is converted into a higher voltage at the substation for transmission via high-voltagelines. Near the end user of the electricity, a substation would step the electricity down to a lower voltage usable by most appliances.

Utility-scale solar–See "grid-scale solar."

References

1. Penn State Extension. "Pennsylvania Landowners Guide to Utility-Scale Solar Leasing."

2. PV Magazine. "US solar generation up 27% in 2024, accounting for 6.8% of all electricity."

3. US Energy Information Administration. "Wind and solar generated a record 17% of U.S. electricity in 2025."

4 . Solar Energy Industries Association. "Solar Adds More New Capacity to the Grid in 2024 Than Any Energy Technology in the Past Two Decades".

5. Solar Energy Industries Association. "Solar Market Insight Report 2024 Year in Review."

6. Commonwealth of Pennsylvania. "Shapiro Administration and Public Utility Commission Announce 2 Gigawatts of Installed Solar Energy in Pennsylvania– Enough to Power 350,000 Homes."

7. Solar Energy Industries Association. "Pennsylvania State Solar Overview."

8. US Light Energy. "Solar Farm Land Lease Rates Pennsylvania: A Breakdown."

9. US Department of Energy. "Quarterly Solar Industry Update"

10. International Renewable Energy Agency. "Renewable Power Generation Costs in 2024."

11. Minimalist Focus. "How to Lease Your PA Land for Solar Development in 2025."

12. US Energy Information Administration. "Solar, battery storage to lead new U.S. generating capacity additions in 2025."