What if you could get rid of one of your farm’s biggest monthly expenses? What if you could do this without significantly changing your day-to-day operations?
With solar energy, you can.
By swapping utility-generated electricity for renewable energy generated by your own solar system, you can all but eliminate your electricity bill each month.
While there are large-scale solar farms that act like mini power plants generating solar for off-site use, that’s not what we’re talking about here. We’re talking about installing your own solar system to produce energy used at your farm.
Agricultural solar energy systems are designed to generate enough power to run some or all of your farms’ operations, offsetting your electricity bill with clean energy. You’ll be the owner of your own solar system. And in return, you’ll get the full share of all the benefits solar panels have to offer.
That said, solar energy is not a good investment for every farmer. In this blog, we’ll take a look at some of the advantages and disadvantages of solar energy for farms and other agricultural properties to help you decide if it’s a wise investment for you.
The Advantages of Solar Energy in Agriculture
Solar Power Will Reduce Your Farm's Operating Costs
Whether it’s running exhaust fans for livestock or processing equipment for harvested crops, there are likely several months out of the year where electricity is one of the farm’s top expenses.
While solar power won’t eliminate your need for electricity, it will give you access to it for, well, free.
By installing a solar system, you can draw on the free electricity it produces each month to offset all or a portion of your monthly power usage.
After just a few years, depending on your system’s cost and energy usage, your system could have paid for itself, leaving possibly decades of its 25 to 30-plus-year lifespan left to produce free electricity. That frees up the money you would have spent on electricity to save or invest back into your farm.
You'll Benefit from Tax Savings
If you’re looking for a way to keep more of your hard-earned money by reducing your tax burden, consider installing solar.
The Solar Investment Tax Credit (ITC) will allow you to recoup 26% of the cost of your solar system through a credit on the following year’s or years’ taxes. However, it won’t be around forever. In 2023 this credit decreases to 22%, and in 2024, it’ll decrease to just 10%.
In addition to the ITC is another tax-saving incentive: 100% bonus depreciation. This allows you to accelerate all the federal depreciation savings to your taxes the year your system is placed into service.
Solar Will Future-Proof Your Farm for the Next Generation
While electricity prices vary from year to year, it’s fairly safe to say that they’ll continue to increase in the long run. What may be a manageable expense for your farm now may not be so for the farm 15 or 20 years from now.
If your farm is a family legacy that’s handed down from generation to generation, a solar system you install during your tenure will continue to benefit future generations. Or, if you’re looking to sell your farm and retire, a solar system can increase the value of your property, giving you a bigger cashout.
Solar is a Low-Maintenance and Low-Risk Investment
There’s no shortage of farm equipment you could choose to invest in. However, many of these large machines like tractors or processing equipment require two things: labor to operate them, and labor to maintain them.
Solar, on the other hand, works with no input from you and is relatively maintenance-free. While you can have your solar panels cleaned, regular rainstorms do a sufficient enough job in most places.
And as long as you install quality equipment your system should be protected by warranties in the event something does go wrong. Additionally, some solar installers offer protection on top of manufacturer warranties, like Paradise Energy’s Tripe Ten Guarantee. This protects against workmanship issues and the system’s production, as well as ten years of system monitoring.
Additionally, Investing in a tractor or other piece of farming equipment likely won’t result in the same tax savings as solar offers. The tax savings is money back in your pocket almost immediately, so that’s money you can reinvest back into your farm. If you install solar first, you could use the money saved in year one to purchase that piece of equipment without needing any additional capital.
The Disadvantages of Solar Energy in Agriculture
Solar Ground Mounts Take Up Land
There are two main types of solar systems: roof mounts and ground mounts.
With roof mounts, you can install the solar panels on any building on your farm, so long as it’s able to support the additional weight of the panels and receives a good amount of sun. Be it the roof of a poultry house or a barn that houses your equipment and materials, you can put a previously underutilized space to work.
If you don’t have a building with a roof conducive to solar, you may want to opt for a ground mount. However, this will take up land that you could otherwise use for farming, reducing your crop yield.
When evaluating whether or not installing solar on your farm is the right thing to do, weigh how much money you’d make by farming that land versus how much you’ll save with solar panels.
When it comes down to it, a system that’s designed to offset just your onsite electricity usage likely won’t take up a significant portion of land.
That said, some farmers still find ways to put the land around and beneath the solar array to use once the system has been installed. Some farmers grow shade-tolerant crops beneath the panels or even allow smaller, free-range animals to use the panels as shade. Note that this may require increasing the clearance of the panels, which also increases installation costs.
Solar Requires an Upfront Investment
Despite the cost-saving incentives and promising long-term savings, solar costs money to install.
Just how much is the initial cost? While this depends on a variety of factors, the most influential one is the size system you need.
Let’s look at a 100 kW system, which should produce enough electricity to cover a $1,200 electricity bill. Before any incentives, it’ll cost about $221,000. After the ITC and 100% bonus depreciation, it could cost just $107,598.
Think of it this way. Paying to have a solar system installed is like pre-paying for your electricity for the next five or ten years (this depends on your system’s payback period, which will vary with system cost and electricity usage). But in return, you’ll have free electricity for the next 20, 25, or more years.
Solar Panels Need Direct Exposure to Sunshine
Constant and direct exposure to sunshine is essential to the success of your solar system.
You’ll need to be picky when it comes to choosing a spot for your panels. Should they receive too much shade, they won’t be able to generate enough electricity to offset your electricity bill.
That said, you don’t need to live in Arizona or Florida to make going solar worthwhile. Solar can be a great investment even in particularly cloudy areas of the country.
You may need to install a few extra panels to make up for the production lost due to cloud coverage, but with falling installation costs and rising electricity prices, it isn’t likely to have a significant impact on your system’s ROI.
Find out whether or not your area gets enough sunshine for solar energy.
Additional Equipment is Needed if you Want Backup Power
A farmer’s work is never done, not even when the electricity goes out.
It’s easy to assume that if you have your own solar system, you’ll be able to use electricity even when the grid goes down. However, if you have a grid-tied solar system, that won’t be the case, unless you invest in additional equipment.
In order to maintain the safety of the utility employees, it’s required that your solar system shuts off until the grid is back up. That means even if the sun is shining brightly, you won’t be able to use electricity until the power goes back on.
One way around this is to install an energy storage system in addition to your solar system. These batteries will collect and store solar-generated electricity that can then be used to power select loads in the event of a power outage.
The downside to this is they’ll make installing your solar system more expensive, and won’t necessarily do much to improve your system’s ROI. However, there are some state incentives that could help reduce the cost of a battery installation.
If you don’t want the additional cost of batteries, installing a generator is a cost-effective alternative.
Should You Install Solar Panels at Your Farm?
There are advantages and disadvantages of solar power for farmers. On the plus side, solar is a set and forget solution to reduce your operating expenses and your taxes. In addition, you’ll be investing in the long-term sustainability of your farm and lessening its dependence on fossil fuels, whether that benefits the next generation in your family or you when you sell the farm.
On the downside, it’s a relatively substantial upfront investment that may end up taking a small portion of your land. Its need for sunlight may narrow your options as to where the system will be installed, and if you want backup power, you’ll need to invest more money in a solar energy storage system.
When it comes down to it, solar can be a great investment for your farm but isn’t for every farm.