Co-location of Solar Power and Food Production to Improve Economic Resilience of Farmers

Abstract:

Competition for land with many sectors, including energy, is a continuing challenge for agriculture, and many farmers are struggling to adapt to this along with other changes in the agricultural economy. Finding ways to diversify and increase farming revenue streams can increase farms’ profitability and resilience to uncertainty in both weather and commodity markets. The co-location of solar power and agricultural production on the same parcel land, a combination referred to as agrivoltaic systems (AVS), may be an effective way to achieve both objectives, providing a supplementary source of income to farmers from the sale of energy and generating an alternative revenue stream that is not arising from agricultural production. In addition, solar panels have been shown to reduce evaporation and increase soil moisture in the underlying ground, thereby insulating crops from drought-related losses and reducing the amount of irrigation needed.

A model has been developed to stochastically generate weather variables and commodity prices to evaluate both the average net revenue and the variability in net revenue generated in AVS. A probabilistic analysis compares net revenues for a solar only plot, a farm only plot, and an AVS plot over several regions considering different crops (Oregon/North Carolina, alfalfa/soybeans/strawberries). Results indicate that AVS can substantially increase farmers’ annual net revenues relative to a farm-only scenario (~229-4,945%), and in the case of more financially variable crops (e.g., strawberries), can also lower financial risk by lifting worst case net revenues (i.e. those in the 5th percentile of all realizations) by 48-53%. Given that AVS has the potential to increase farmers’ revenues and financial stability, it may provide a long term means of increasing the economic resilience of agriculture, especially for more vulnerable small to medium sized farms.