Thursday, April 25, 2024

Solar panels light up drystock income

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Modelling of lower density installation shows almost a trebling of profits.
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While “paddock to plate” is a common enough phrase in the agri-sector, “pasture to panel” may become another phrase for the lexicon, thanks to the latest research on solar photovoltaic panels and farming.

Research conducted through the Our Land and Water National Science Challenge has highlighted that what are often thought of as mutually exclusive activities can be integrated successfully and profitably on many farms in New Zealand. 

The researchers examined how agrivoltaics – the integration of agriculture and solar energy production –  can be implemented in the farming landscape.

Research lead Anna Vaughan of agribusiness consultancy Tambo NZ said solar panels have often been viewed in a similar light to pine trees in terms of their impact on reducing the area of productive, food-producing land.

“What we modelled the findings on was not the traditional solar farm set-up, which has more panels upon its site, about 20% more than what we worked on.” 

The lower density that this research was modelled on enables stock to continue to graze, albeit at a reduced rate, and for fertiliser to be applied between panels.

The researchers carried out case study analysis on a dairy farm and a drystock farm, both in  Canterbury. 

After analysing cashflow before and after installation of panels on portions of each farm, they found the drystock property benefitted the most in terms of cashflow and net profit from converting to agrivoltaics.

With 5.8 effective hectares committed to panels, the 1300ha property enjoyed a lift in total taxable profit from $223,000 to $643,000. 

The dairy farm operation experienced a significantly smaller increase in its profitability, with only 2ha of area committed to panels. 

The increase in the dairy farm’s debt required to service the panels offset the marginal increase in earnings before debt, depreciation and interest that occurred with the panels’ installation. 

This meant net profit with the panels actually declined from $688,000 to $623,669.

The figures for both farm types allowed for borrowing for the entire cost of the panel project.

Panels on the dairy farm were required to sit significantly higher, and were more vulnerable to wind shear, meaning a higher installation cost.

“With the dairy farm it is also really a case of the farm’s existing profitability already being significantly higher than the drystock operation,” Vaughan said.

She said her interest in the research was piqued by rising concerns over solar panels’ impact on productive farmland.

“I did not have an expectation on what the financial figures would be and was pleasantly surprised at the results.” 

She said workshops on the topic with farmers have been well subscribed and have resulted in positive feedback when farmers learnt how they could successfully combine livestock and panels.

But she said there are also some unknowns about the land use combination that need figuring out. These include how easily fertiliser can be applied without damaging the panels, and whether there is any long-term impact on pasture growth as a result of the panels’ shading effect.

“One paper out of the United States has looked at farming lambs under panels and showed a reduction in pasture growth, but lamb liveweight gain was still similar and it was thought the shading effect may have delivered a benefit to them. 

“There is also an awareness there that there is a substantial end-of-life waste issue around the photovoltaic panels.” 

Estimates are the world will have about 78 million tonnes of panel waste to deal with by 2050 as their use increases significantly.

Other uncertainties relate to the impact of installing panels on productive land, and how this would fit with policies around protection of highly productive land in NZ.

One area she said could be worth examining further was the ability to combine the panels with high-value crops grown in their midst.

The full report can be read here.

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