Flocking to Solar: Steinhöfel Climate Park’s Agri-PV Project Paves the Way for Agricultural Energy Trading

By Daniel Burge | 4Q 2024 | IN-7553

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In August, it was announced that the Steinhöfel Climate Park development would be connected via a substation to the wider German electricity grid. The park combines solar generation capacity with animal grazing and crop cultivation across a farmland area of 500 hectares.

This marks a milestone for Europe's largest Agricultural-Photovoltaic (agri-PV) project, which will span eight German districts and provide up to 753 Megawatt Peak (MWp) of installed system output to the regional grid. The park is a joint venture between SUNfarming, a specialist developer of agri-PV systems, SPIE, a developer of energy and communications services, and E.DIS Netz, the regional grid operator.

The Steinhöfel park provides a glimpse of how farms may come to produce yet another essential staple for local and regional economies-clean electricity.

Agri-PV is not a new concept; it was first conceptualized in the 1980s. But today, with ever-cheaper solar panels available, projects are gaining traction as landowners attempt to balance land usage with on-site energy generation. The benefits are tangible: the more that land use can be intensified, the greater the return.

The simplest form of agri-PV is allowing grazing, either by sheep or cows, beneath installed solar farms. In many cases, livestock can more cheaply control vegetation at these sites than mowing. This has led to the emergence of grazing contracts, where operators pay shepherds to transport their sheep to their sites. This is a growing industry. In August, Enel North America signed the largest U.S. solar grazing contract, providing 6,000 sheep to graze across its 8 Texan solar sites.

However, the Steinhöfel project displays how layered, complex, and integrated agri-PV ecosystems can exist. Combining grazing and animal husbandry, crops, and fruit cultivation with electricity generation, the park is designed so that each element supports the others. Pivotally, connection to the grid allows the project not only to be independent of the wider system of energy transmission, but also able to trade within it.

Should other agricultural enterprises flock to solar? For producers of certain crops, no. Wheat, for example, requires abundant sun, so that even if solar panels were tilted, the negative impact on crop yields would likely outweigh the benefits of installation. But in many cases, such as where farms specialize in animal husbandry and crops that require shade, agri-PV can complement operations. Steinhöfel park's development in Brandenburg, where the sandy soil is suited to grazing and shaded crops, reflects this. In these circumstances, and where space is limited, PV on-site generation is worthwhile for almost any farm.

Trading electricity is more complicated. On one hand, involvement in on-site generation and energy trading can be lucrative. In recent studies of the United Kingdom, researchers found an average improved profitability of 210% per unit of land for areas with installed solar capacity. Farmers, usually victims of chance weather events, could now benefit from uncertainty, receiving large windfalls for bolstering grids during times of high demand. As agricultural profit margins are generally slim, these are enticing financial incentives.

On the other hand, energy trading is complex. Markets fluctuate depending on weather patterns and seasonality, requiring effective, by-the-day monitoring of meteorological data to predict demand. Supply agreements often need negotiating with aggregators ahead of time. Battery storage will be required to account for unstable weather and avoid seasonal gluts. All these factors will require outside expertise or training, in addition to access to monitoring, metering, and efficiency management software. This is a considerable barrier to entry for small-scale farms, which may lack the resources and time required.

However, these drawbacks are a matter of capital and capacity, not overall feasibility. Larger farms with more access to finance, space for storage, and larger workforces will be better able to monitor markets, negotiate contracts, and generally operate their new energy businesses. While installing capacity above crops like wheat will be unsuitable even at scale, medium and large enterprises that emphasize animal grazing and shade-loving vegetation are ideal candidates. This is not to say size is essential to benefit from on-site generation; many smaller farms will be able to establish independent energy supplies and boost operational profits. But agri-PV energy trading, by necessity, will mainly be the domain of larger players.

For now, the Steinhöfel park remains in the late planning stages, but other agricultural landowners should watch its development closely to see what to emulate, and which steps to avoid. Time in the market will matter-those that enter early will benefit from exposure to current participants and the intricacies of the industry. Being ready to move could make all the difference.