The U.S. energy system is rapidly evolving, shifting toward low-carbon, renewable sources led by solar energy. A significant portion of this growth is taking place on farmland and in rural communities, fueled by federal policies such as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act, alongside solar investment tax credits. However, a key driver of this expansion is the declining costs of solar installation, which have made solar projects increasingly economically viable.
According to the Solar Energy Industries Association (SEIA), solar power has led to new generating capacity additions to the grid for the past three years. In 2023, solar accounted for 55% of all new electric capacity, marking the first time in 80 years that a renewable energy source dominated new capacity additions. By the first quarter of 2024, solar represented 75% of new capacity, increasing its share of U.S. electrical generation from 0.1% in 2010 to over 6% today.
A 2021 study released by the U.S. Department of Energy and the National Renewable Energy Laboratory suggests that with significant cost reductions, supportive policies and widespread electrification, solar could provide up to 40% of the nation’s electricity by 2035 and 45% by 2050.
The study said to reach this level, solar deployment must average 30 gigawatts (GW) annually through 2025, increasing to 60 GW per year between 2025 and 2030, reaching a total of 1,000 GW by 2035. By 2050, solar capacity would need to expand to 1,600 GW to support a zero-carbon grid with increased electrification of end uses like motor vehicles and building heating.
Solar on ag land
A recent Market Intel article by the American Farm Bureau Federation (AFBF) said to meet the growing demand, farmland meets the needs of solar developers as it is flat, clear and close to existing grid infrastructure.
“While solar energy leasing can help farmers who own land diversify their income, it can be a double-edged sword for farm operators, as more than half of cropland is rented,” AFBF wrote. “As solar development in rural areas grows, it drives up demand for land. And as demand goes up, so do land values and rental prices—representing another increasing input cost for farmers.”
AFBF cited statistics in May 2024 by USDA’s Economic Research Service (ERS), which reported that from 2009 to 2020, 43% of solar installations were on former cropland and 21% on pasture or rangeland.
ERS estimated that as of 2020, solar energy occupied about 336,000 acres of rural land, but this figure is outdated, with solar capacity more than doubled since then. Based on recent estimates, approximately 1.25 million acres of farmland have now been converted for solar use, representing about 0.14% of U.S. farmland.
AFBF noted that solar developers are offering landowners significantly higher payments than traditional farming leases, often guaranteeing long-term leases of 30-35 years, which could drive up cash rental prices.
According to the July 2024 Purdue Ag Economy Barometer, 16% of respondents reported discussing farmland leases for solar energy production within the last six months, a slight decrease from the 19% and 20% reported in April and May, respectively. Lease rates have steadily risen since data collection began in 2021.
In July, 69% of respondents were offered long-term lease rates of $1,000 per acre or more, a significant increase from 27% in June 2021. Additionally, 27% of respondents reported being offered lease rates of $1,500 per acre or more.
According to AFBF, solar companies’ rental rates are far above the nationwide average cash rental rate of $146 per acre for non-irrigated land.
Agrivoltaics
AFBF noted that while there are several concerns related to solar and agriculture, promising developments could lead to a sustainable future for both industries. Agrivoltaics, the practice of combining agricultural production with solar energy generation on the same land, is gaining traction. Many agrivoltaic projects currently involve sheep grazing, but research is underway to include cattle grazing and crop production.
The American Solar Grazing Association held a webinar in April 2024 detailing the results of their solar grazing census conducted in 2023. The results found that 100,000 acres of solar sites are being grazed in the U.S. by over 80,000 sheep in 27 states.
One such project recently approved is by Enel North America, which is set to introduce over 6,000 sheep for vegetation management at eight solar plants across Texas. Enel North America is collaborating with Texas Solar Sheep Co., a family-run business specializing in vegetation management for large solar sites, to enhance sustainable practices in renewable energy.
Texas Solar Sheep will manage more than 10,100 acres of solar land with their flock, making this one of the most substantial single contracts for dual-use solar, as noted by the American Solar Grazing Association.
According to Enel, their solar grazing program has shown significant progress in soil health, with some sites achieving over a 200% increase in organic matter. The presence of sheep also supports pollinator-friendly environments by enabling native plants to mature and flower. It also contributes to local economies by offering sheep producers a new source of income.
“Solar energy can be a great tool in the reduction of greenhouse gases, but it risks decommissioning our most productive agricultural lands,” AFBF wrote. “As we navigate towards clean energy solutions, it is critical that we prioritize the preservation of agricultural land.
“America needs renewable energy sources, and it also needs resilient farms and ranches to continue providing the food, fiber and fuel we all depend on,” the group continued. “Ultimately, the issue is not whether we have solar energy production, but where and how we have solar energy production.” — Charles Wallace, WLJ contributing editor
