Solar Farmland?
Solar is quickly becoming a major energy source. The market for solar energy has grown massively over the last few years and is still expected to grow by 15.4% CAGR in the US until 2030.
Source: Grand View Research
The West’s adoption of solar energy is actually dwarfed by the global growth of solar energy, with China leading the charge, as it is responsible for more solar power project pipelines than the rest of the world combined.
China has been ramping up its renewable energy capacity year on year, installing more solar power between 2023 and 2024 than the previous three years combined, and more than the total global capacity installed in 2023.
This has put the Asian giant on track to achieve an installed wind and solar capacity of 1,200 GW by the end of the year, putting it six years ahead of the government goal.
Source: Energy Wind Down Media
This has led important publications like The Economist to literally call it a new age. We explored what new technology will make it a reality in “The Solar Age – A Bright Future To Mankind”.
Source: The Economist
Progress in semiconductor manufacturing and a growing economy of scale in the production of solar panels has led to a steady decline in photovoltaic costs, which have become 30x cheaper since 1990. As a result, photovoltaic technology is now dominating the solar industry.
Source: EIA
However, solar energy is starting to meet an issue. This is because solar is relatively low in energy density when looking at land usage.
In fact, it is one of the least efficient energy sources regarding land usage, with only equally carbon-neutral wind, hydropower, and biomass scoring worse.
Source: Wouter Beel Gravendeel
This leads to situations where farmland or natural habitats get covered with solar panels for utility-scale solar farms. So, while this reduces carbon emissions, it comes with many unwanted side effects, from the destruction of natural habitats to the risk of erosion, especially in mountainous areas.
For example, in the Fujian province of China, you can see the entirety of these hills covered in solar panels.
Source: The Atlantic
Shortage Of Arable Land
This is a growing problem, as we are already losing a lot of arable land every year, as much as 100 million hectares yearly. The largest factor in these losses is not solar farms but erosion, desertification, urbanization, poor farming practices, etc.
However, this does not mean that the solution to one problem (carbon emissions) should become a problem for another major issue (arable land losses).
Some solutions are obvious, like utilizing rooftops, especially industrial buildings, but also residential ones. Using desert lands can be another option, but these are also fragile ecosystems, and removing dust consumes a lot of locally rare water resources.
These can be part of the solution, but for solar to replace fossil fuels entirely, it will need to keep growing at a double-digit rate for decades. And land usage will become an issue.
So, the best solution would be to mix agricultural and power production, using a method called agrivoltaics (agriculture + photovoltaics).
Source: Dezeen
Farm Buildings
The simplest way to integrate solar power into farms would be first to leverage farm buildings’ remarkably large rooftop surfaces. From hay storage to garages and barns, many farm buildings have tall, large, uniform rooftops that are perfect for installing solar panels.
Source: X/Twitter
While maybe not technically agrivoltaics, this is a first step that should have been taken yesterday.
This should also be a key component in switching farming away from fossil fuels through a few complementary initiatives that will anyway be required for other forms of agrivoltaics:
- Electrification of tractors and farm machinery.
- This will highly depend on better batteries, as too heavy or not autonomous enough tractors would make the option not economically viable.
- This could also be done through increased adoption of farming robots, a topic we explored in “Investors Should Take Note: Robotics Is Taking Over Farming”.
- Cheap energy storage to store the needed power for sunless days or winter.
- This can especially be achieved with thermal batteries, which could be used to store solar power and keep farm facilities like indoor animal shelters warm in winter.
- More decentralized and robust electric grids, to be able to bring to the network the production done in remote farms.
- Adequate financing, as farms are already low margin and high capital expenditure business, most farmers will be reluctant to invest if interest rates are too high.
- Carbon pricing might play a role as well, by allowing farmers to reduce their emissions with solar panels.
Farming Power
The main issue with mixing farming and solar power generation is that in theory, both are competing for the same resource: sunlight.
Sunlight is after all the energy source of the plants being farmed, be it crops or the grass in a pasture. In a way, farming is already harvesting solar energy, although in the form of edible biomass instead of electricity.
So at first glance, it might seem like a pipe dream. But when digging deeper, it is more complex than just plants needing the sun taken away by the solar panels.
Photoinhibition
While it is a convenient simplification, plant photosynthesis can be explained as a simple scheme like
“Input light, water, & CO2 -> output sugars”, the process is actually a very complex one.
Something that happens very often in real open-field conditions is a phenomenon called photoinhibition.
This is when the sunlight is too intense for the plant to absorb, causing the production of damaging radical oxidant molecules. This damages the photosynthetic ability of the plant and reduces crop yields.
Source: Frontiers In Plant Science
This means that on most summer days, especially in southern latitudes, the sunlight is too strong and damaging to the crops. It also means that most of the sunlight’s energy is “wasted” and not captured by the crop.
In this context, properly spaced solar panels will provide beneficial shadow, especially during peak sunlight hours.
Reduce Water Usage
The additional shadow should also limit the heat on the ground level, with extreme heat damaging to crop yields. And it can overall reduce the irrigation needs.
In some cases, the solar panel can even be a source of irrigation. This is due to the tendency of panels to condense water from the early morning dew and have it “rain” down below them.
This effect could be even more powerful if we were to use water-absorbing hydro-gel underneath the photovoltaic solar panels. This only uses the waste heat from the solar panel, not the light being used to produce electricity.
During the nighttime, the material collects water molecules. But during the daytime, when the sun heats up the solar panel, the water molecules evaporate and also take away excess heat energy with them.
Industry Tap
Cooling Solar Panels
Solar panels can help shield the plants from excess light and help them cool down and require less water.
However, the plants in the field can also improve solar panel efficiency. This is because solar panels too can suffer from excessive sunlight. What happens is that the optimal temperature for a solar panel is around 25°C (77°F). For every degree Celsius above, a solar panel’s efficiency typically declines by 0.3% to 0.5%.
This is often a problem for solar farms in hot desert areas, where temperatures of >40-45°C can seriously damage the economics of the project.
By evaporating water constantly and creating a moist ground cover, crops cool down the first meters of air above the ground. This can cool down the solar panel and increase yield by several percent, especially on the hottest summer days.
Integrating Husbandry & Solar Power
In non-desert areas, a regular issue solar farm operators meet is the need to keep grass growth under control, or else to see the grass shadow the solar panels.
This is most commonly managed by hiring people to run mowers to cut the grass. And ironically, more often than not, these are fuel-powered mowers.
An alternative is integrating the solar farm with grazing animals like sheep, geese, or cows. Instead of mowing the grass using fuel, it gets eaten and turned organically into milk, wool, meat, and leather.
This requires a little bit of dedicated design, as the operator will need to be sure that the animals do not chew on cables or damage the panels. But overall, the animals will be able to perfectly reach grass in every corner while generating an income from the land, instead of asking for a maintenance technician salary.
As an extra bonus, the panels will also provide the animals with shelter from the sun and rain.
Source: Rated Power
Support For Vines
One possible design, only starting to be explored, is to use the framing of the solar panels as a support structure for plants like vines and grapes.
This can reduce the labor required to install the vineyard, as the armature of the solar panels has a double function and is very sturdy. It will also provide the same benefit regarding shadows, reduce irrigation needs, etc.
Source: Vinetur
For now, such “vitivoltaics” (viticulture + photovoltaics) is still a relatively experimental idea, especially as it might affect the taste of the resulting wine. And with winemaking, it takes many years to fully assess the benefits and limitations.
Still, there are many ongoing tests with promising first results, like for example in Germany, France, Italy, and Spain.
Vertical Bifacial Panels
Agrivoltaics could benefit from innovations in solar technology. One of them is bifacial panels.
They are designed to produce light coming from both the front and the back of the panel. This can overall increase their energy yield.
It can also enable new types of installation, like for example putting the panels vertically, on an East-West axis.
Such installation can have many advantages:
- In many climates, the noon Sun “saturates” the panel’s ability to absorb light, reducing the interest of being facing full South.
- Better air circulation reduces the temperature of the panel, reducing yield loss from overheating.
- The panels can absorb reflected light, like from snowy fields.
- Snow is less likely to cover the panel.
- The East-West axis maximizes production in the morning and evening when the energy demand is the highest and solar production is “missing”.
Source: Wikipedia
When mixed into agrivoltaics, bifacial panels installed vertically could be a lot easier to integrate into traditional rows of crops, without interfering with plowing, weeding, and cultivating done by large tractors.
Floating solar
Floating solar farms have been discussed as an alternative to land solar farms, as large bodies of water like ponds and lakes are generally less valuable and productive than farmland.
Here, too, solar panels could be mixed with food production or, more specifically, aquaculture.
Source: Global Sea Food Alliance
In most aquaculture systems, the fish are fed with food produced somewhere else, making the production of algae in the water (from sunlight) not very important or even a net negative.
This could also provide the fish farm with a second revenue stream.
Nothing Is Perfect
Despite its many advantages, agrivoltaic installations will need to deal with a few issues that are likely intractable.
Complexity
Because they merge 2 relatively complex systems, agrivoltaic designs are harder to create and implement:
- It needs to find the right compromise between the sunlight needed by the crops and the densest possible solar panel arrangement.
- It needs to keep space for the circulation of farm equipment that is often large and heavy.
- The farmers need to be educated about the technology potential, and accompanied in the process of converting fields to agrivoltaics techniques.
Productivity Loss
Despite plenty of potential synergies, it is likely that agrivoltaic will lead to lower farm yields and lower photovoltaic yields per square meter.
The total yield might be larger than for the same surface split between only one usage.
But still, this can cause issues like increasing the cost of connection of the panel to a larger surface or limiting the efficiency of pesticide and fertilizer spraying.
The extra complexity can also lead to more complex tasks, which can cost extra work hours and reduce the overall economic efficiency of the program.
Conclusion
Agrivoltaics are a likely direction large solar farms will take, especially in regions with arable lands that need to be preserved for food production.
It is however going to take time, as experts will need to optimize design, solar installer trained, farmers to be convinced, financing made available, etc.
The most likely scenario is adoption by early innovators while long rows of elevated vertical bifacial panels are integrated with minimal effort into traditional farms.
In the long run, it might become a much more common sight, especially when combined with a fleet of small robots.
They will use electricity from these panels to plant & monitor crops, control weeds with lasers, pick fruits, etc.
Source: Advanced.farm
Investing In Agrivoltaics
Agrivoltaics is still, for now, a relatively emerging field, with most solar professionals only starting to adapt to its potential.
So for now, solar farms are mostly in competition with agriculture for land. But in the future, the world’s 500+ million farmers might be providing the rest of the global population not only their food but also their energy.
You can invest in solar companies through many brokers, and you can find here, on securities.io, our recommendations for the best brokers in the USA, Canada, Australia, the UK, as well as many other countries.
If you are not interested in picking specific solar companies, you can also look into ETFs like Global X Solar ETF (RAYS), Invesco Solar ETF (TAN), or Global X China Clean Energy ETF (2809.HK), which will provide a more diversified exposure to capitalize on the solar and clean energy industry.
You can also read our article about the “Top 10 Solar Power Stocks to Invest In”.
Solar Companies
1. Daqo New Energy Corp.
This Chinese company is one of the world’s leaders in polysilicon production, the central component for solar panel manufacturing. This also makes Daqo one of the founding pillars of China’s domination over the solar manufacturing sector.
The company has been growing its production capacity very quickly, more than 8x since 2019.
Source: Daqo
Daqo’s position at the center of the solar panel supply chain enabled it to benefit greatly from the sector’s growth, with revenues growing from $0.68B in 2020 to $4.6B in 2022. After a surge in 2022, polysilicon prices have cooled down, causing the stock price to crash from its 2021 peak.
The company’s communication and website are a little lackluster, but not out of character for an industrial B2B company, more focused on its image inside the industry than with the larger public or foreign investors.
The stock have been trading compared very cheaply to P/E or cash flow. This is partially due to controversies, with the company linked to the use of forced labor in Xinjiang and talks in Washington DC of additional sanctions against companies operating in the region.
Investors should be aware that Daqo stock carries a very real geopolitical risk and a large financial upside due to its low valuation multiples.
2. JinkoSolar Holding Co., Ltd.
Jinko is one of the largest solar panel manufacturers in the world, and it is based mostly in China. To avoid tariffs, the company is diversifying its manufacturing base, with silicon wafer manufacturing in Vietnam and solar cell manufacturing in Malaysia and the US.
Source: Jinko Solar
In any case, the company is not overly exposed to Western markets, with China, Asia Pacific (APAC), and emerging markets making the bulk of the company’s business.
Source: Jinko Solar
Jinko has delivered 230 GW of solar cells in the company’s history and 20 GW in Q1 2024, up from 14.5 GW just a year ago.
This makes Jinko the #1 in the photovoltaic industry.
Jinko’s most advanced solar cell, the N-type, achieves a remarkably high 25.8% energy efficiency. It also offers bifacial panels.
In 2023, the N-type took over most of Jinko’s sales, representing 80% of the whole shipments, with more capacity coming from 56 GW production facility expected to reach full speed by the end of 2024 to make up 90% of delivery by year-end.
Total production capacity is expected to reach 120-130 GW, or almost half of the company’s cumulative production in its entire history.
Looking to green the profile of its product, Jinko Solar also released NeoGreen, the first N-type solar panel produced entirely with renewable energy (instead of the commonly used in China coal).
Jinko’s ultra-aggressive growth in production capacity reflects the company’s confidence in its N-type technology and ambition to seize the export markets of Asia, Africa, and South America. And the overall prospect of solar power to take over the world’s energy systems.
