Agrivoltaics and Weather Risk: a Diversification Strategy for Landowners

Abstract/Summary:

Farms are facing increasing pressure from shrinking margins, extreme weather, and increased competition for land use, including from energy producers. There is evidence to suggest that co-locating solar power production and agriculture, known as agrivoltaic systems, may be a means to reduce concern over the latter. A model is developed to test whether colocation can reduce weather-related financial risk for a landowner, a largely unexplored question, while improving profitability. Stochastically generated weather variables and commodity prices are used to simulate net revenues for a solar only plot, a farm only plot, and an agrivoltaic plot. Application to four test cases (alfalfa/soybeans in Oregon and soybeans/strawberries in North Carolina) illustrate the potential impact of agrivoltaics.