Solar Electric Investment Analysis for Small Farms

View the project final report

Commodities

Practices

• Energy: energy conservation/efficiency, energy use, renewable energy, solar energy
• Farm Business Management: agricultural finance, budgets/cost and returns

Due to increasing energy costs, renewable energy policy, and decreasing cost of solar, many small farms are considering investments in solar electric to power their farms. An overarching goal for the Solar Electric Investment Analysis for Small Farms project is to increase farmers’ knowledge of solar development to guide informed decision-making with future energy investments. The project is coordinated at a multi-state level to customize and deliver professional development programing across the North-Central region. Content is delivered to local staff from Extension, Natural Resource Conservation Service, USDA Rural Development, community banks, and accountants servicing small farms. Activities include developing state specific bulletins based on the creative commons publication, Solar Electric Investment Analysis. Additionally, through webinars participants will learn about estimating solar production, system costs, value of electricity, incentives, solar financial analysis, and advanced modeling tools to simulate a solar project. The train-the-trainer approach incorporates the bulletin into six interactive webinar sessions, delivered to each target audience. During webinars, participants are engaged in hands-on-training with a solar software modeling tool developed by the National Renewable Energy Laboratory. Outcomes include the development of solar bulletins for participating North-Central states, informed participants will model a solar project and evaluate its merit on both a financial and environmental basis, trained participants gain confidence to speak to small farms about solar energy, enhancing small farm profitability and quality of life by helping farmers to acquire the knowledge and skills needed to evaluate the financial benefits and risk of investing in solar.

Renewable energy adoption has positive environmental attributes and gives many a sense of being part of a new cleaner energy future. These feelings have led to excitement for many farmers, especially small and sustainability minded farmers. Yet this project does not measure success by the number of installed projects, but instead by the number of well studied investment decisions. No two solar electric systems are exactly alike due to differences in location, tilt, shading, policy, utility requirements, insurance, taxes, and system price. For this reason it is important to model the systems to help potential solar owners take into account all the details. Farmers interested in renewable systems also have varied motivations for their systems which might include lowering the greenhouse gas footprint, becoming more independent, marketing, lower energy bills, and financial investment. The decision to install renewables should be made after considering the motivation for wanting such and installation. The balancing factor with any business will be the financial analysis and the combination of motivation combined with financial metrics will allow small farms to make better informed decisions. 

Short Term Objectives

• Awareness and knowledge: Program participants will know solar energy terminology, financial metrics terminology and how to evaluate a solar array. 
• Attitude and skills: Program participants will be able to model a solar array on their own and determine financial metrics like payback period, and net present value. 

Medium Term Objectives

• Teaching: Program participants will use their knowledge and skills to perform solar electric analysis. Additionally, they will communicate with farmers about the attributes of a solar electric system. Teaching may come in many forms such as one on one consultations, presentations, newsletters, articles, television, and radio. 

Long Term Objectives

• Change in Behavior: Small farms will consider solar investments. Small farms will perform their own evaluation or work with others to do an evaluation of the financial merits of a solar electric system. The farmers will make their decision after considering all their motivations and their financial analysis.