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Solar Energy Grows on North American Farms

Trevor Curwin,|Special to CNBC.com
Friday, 13 Apr 2012 | 2:35 PM ET

Talk about a field of dreams.

A California solar power project developer is teaming with farmers to expand use of the alternative energy.

Recurrent Energy solar power plant on a farm in northern California.
Source: Recurrent Energy
Recurrent Energy solar power plant on a farm in northern California.

“It’s basically an opportunity to farm the sun,” says Recurrent Energy CEO Arno Harris, about his firm’s plans to build 500 megawatts of solar photovoltaic, PV, installations on farms in California and the Canadian province of Ontario.

The firm has contracted dozens of farmers in both areas, building five- to 20-megawatt solar PV installations on otherwise marginal farmland.

Ontario pays a premium to renewable energy producers, while California’s aggressive goal of providing 33 percent of its electricity needs from renewable energy resources by 2020 makes it an attractive market.

As a solar project developer, Harris says his firm, a subsidiary of electronics giant Sharp Corp., is always hunting for the right parcel of land to lease for a solar power plant.

Typically, the ideal land would need to have power transmission lines nearby, easy road access, positive community reaction, and clearly defined ownership.

Farms often provide all of those conditions, he says.

Glenda Stewart, a fourth-generation land owner near Elk Grove, Calif., says when Recurrentfirst targeted her family’s farm, they were hesitant.

“They approached us to see if there was any interest,” she says. “Originally, we weren’t.”

Their land, part of an 1865 land grant her family bought from a veteran of the War of 1812, had last been worked by her family years ago. It was being leased out to other farmers, but any new leasing idea would only work for the family if it remained farmland.

“We liked the idea of keeping the land ‘green,’ she says. “But we also liked the idea that the community would get green energy.”

Recurrent's Harris says those concerns are typical among farmers, which is why his firm targets lower value agricultural land on larger farms.

“It is the sweet spot,” he says, adding that it doesn’t interfere with existing farming or grazing on prime lands. “It’s a way of getting yield from land that’s not paying enough.”

According to Recurrent, it takes about four acres to produce one megawatt from the solar installations, so Stewart’s 15-megawatt plant takes about half of her family’s 120-acre farm.

Using agricultural land also reduces water access issues, another common issue with solar PV plants.

Solar panels need to be cleaned regularly to ensure effective power generation, and agricultural landowners — especially in California — often fight for water access for irrigation.

Recurrent’s Harris says solar panel maintenance techniques have improved to the point where they use little water, and recycle that water in a closed system.

“Solar [panels] still use a lot less water than any crop,” he notes.

Mini solar-PV building booms like this will likely continue, say some analysts, but the market will need to prepare for the end of government subsidies that prompted Recurrent’s expansion.

Matt Feinstein, solar analyst at Lux Research, predicts utility-scale projects like these will mostly be undertaken in emerging markets like China “as conditions favor fewer, larger-scale projects that allow more control over financing and regulatory factors.”

A downshift in subsidies, like Ontario’s so-called feed-in tariff to make solar power competitive with other forms of energy, and California’s legislated renewable energy goals, will move solar development to the developing world.

For markets in North America, Feinstein says smaller projects — often referred to as distributed generation or “behind the meter” since they help owners defray their own energy use and may not be part of a larger power grid — will be the norm as energy costs continue to rise.

Even smaller projects will help level the playing field for solar power in some markets.

“Opportunities remain, and extended success is possible for stakeholders, but the market’s shifting geographic profile, combined with a forced withdrawal from subsidy addiction, means strategic, surgical moves are needed,” says Feinstein.

Recurrent’s Harris agrees, saying these conditions have his firm eyeing Arizona and Texas for the next round of farmland solar projects.

“The entire Southwest becomes interesting as we reach grid parity,” where solar energy costs are equal to that of electricity from other energy forms, he says.

Despite the challenges, Lux’s Feinstein says he still sees global utility-scale solar capacity doubling from 6.3 gigawatts in 2011 to 13.8 gigawatts in 2017.

For farm families like Stewarts, the benefits of generating green energy are great, but the best part is that once the 20-year solar lease expires, the land can return to agricultural use.

That was the thinking when Stewart’s father, who died in early 2012, signed the agreement with Recurrent.

“He wanted to a find a way to keep the ranch in the family,” says daughter Glenda, adding that of the original 160-acre land grant, a quarter had been sold off previously, a common fate for farmland, often a farmer’s only real asset.

But she says with this solar project, the land’s options are more open.

“Years down the road it could revert to [agricultural] land,” she says. “It was a win-win for everyone.”