How Off-Grid Solar-Powered Electrification Can Drive More Revenue for Agriculture
Credit to Author: Tom McCalmont| Date: Tue, 16 May 2023 19:31:42 +0000
As the U.S. pushes to reduce greenhouse gas emissions by 50% by 2030, reaching that goal will require effort from all industry sectors. While transportation, electricity production, industrial manufacturing, and heating and cooling generate the majority of U.S. emissions, addressing the 11% contributed by agriculture is also critical to mitigating climate change impacts.
COMMENTARY
One way the industry can help reduce emissions is by electrifying heavy-duty farming equipment such as tractors and trucks that traditionally run on diesel. Powering this equipment and other farming processes with solar helps further reduce the use of fossil fuels.
However, farming is a low-margin business, so adopting new technology must make economic sense for growers, ranchers, and forest landowners. With the rising annual prices of feed, fertilizer, pesticides, fuel and labor, modern farming has become a high-cost operation. Production expenses were forecast to increase by 5.1% in 2022, the greatest level farmers have ever experienced.
The rate of return on farming assets is projected at less than 3.5% in 2022, in contrast to 10% to 16% returns from 2010 to 2012. This means that farmers and ranchers are seeing smaller revenues or returns for the investments made in the cost of production, and in assets used to produce a farm product. All of this is making it more difficult for growers to turn a profit.
While electric equipment offers many cost-saving advantages to farmers and is becoming more affordable, with additional government and utility incentives available, infrastructure challenges remain one of the biggest barriers to the widespread adoption of electric vehicles and equipment. Farms are often located near weak areas of the grid, and the expense of adding expanded utility lines to accommodate solar is simply too great for most growers. Therefore, off-grid solar options are key to fully realizing the emission and cost-reduction potential of electrification in agriculture.
Barriers to Electrification
Electrification can offer many benefits to the agricultural industry—but transitioning to any new type of technology poses challenges.
Charging vehicles with electricity is much less expensive than gas or diesel. The average price of diesel fuel increased from $3.25 per gallon to $4.99 per gallon in 2022. However, electricity prices are also high. U.S. industrial customers paid an average retail electricity rate of 7.26 cents per kilowatt-hour in 2021, the highest recorded since 1970.
Solar power can provide affordable electricity for farmers to power their vehicles and equipment while further reducing their carbon footprint. Commercial and industrial solar power now accounts for a third of solar power generation in the U.S. This is largely due to a 60% reduction in cost over the past decade and increasing government and utility incentives. Farmers can install rooftop solar on barns, sheds, and other buildings to provide long-term clean, affordable electricity to charge equipment or power energy-intensive processes such as processing, packaging, and chilling. In some areas, net-metering programs allow farmers to sell excess energy back to the grid to generate additional revenue. Ground-mount solar systems are another option for on- or off-grid power located close to loads.
While farms tend to be in sunny locations, solar solutions are still limited by grid line capacity, which must be adequate to handle the bi-directional energy flows both from the grid to the farm, and from the solar system to the grid. Many solar projects are limited in size because the utility line capacity of the grid in farm country simply cannot accommodate them. Rural farms are often located near the ends of utility distribution lines, and the electric grid is not simple or cheap to expand in those locations. Expanded or new utility lines can cost $1 million per mile or more, so the expense of adding more grid capacity to accommodate electric vehicle charging is often not feasible for farmers.
Electric vehicles used on farms, including autonomous vehicles like electric wheelbarrows, need to be located near or in the fields where they do work since they require frequent recharging during their operation. Driving or trucking the vehicles back to the barn each time they need to be recharged is cumbersome and inefficient and adds costs in labor, time, and fuel. Therefore, farmers need access to an affordable, convenient source of power to effectively electrify their equipment. An off-grid power source close to where equipment is used maximizes efficiency by avoiding wasted time and labor.
The Power of Off-Grid Solar
Newer technology offers greater flexibility with pop-up off-grid solar arrays with batteries and electric vehicle chargers that can be set up quickly and moved according to where workers need to recharge tractors and other field equipment. These solutions offer resiliency and scalability without costly construction and infrastructure upgrades that may be required for fixed solar installations.
Electric vehicles and off-grid solar powered charging can also help with labor costs. Labor is increasingly the first- or second-highest cost factor for farmers. The tension between the slim margins of farmers and the need to pay farm workers a living wage is a strong driver to reduce those labor hours and costs wherever possible. Electric vehicles can reduce labor costs by operating autonomously to make labor more efficient. A good example is the use of autonomous vehicles such as electric wheelbarrows that can help reduce the labor of repetitive tasks like harvesting grapes in a vineyard. Electric wheelbarrows charged with off-grid solar are much more efficient because they do not have to be trucked back to the barn at the end of day for recharging.
Federal and local incentives are available to provide help for farmers looking to make the transition to electric vehicles and install off-grid solar systems. The federal Rural Energy Assistance Program (REAP) offers clean energy grants and loans, which the Inflation Reduction Act (IRA) doubled to $500,000 for efficiency projects and $1 million for renewable energy systems. These incentives are stackable with local credits. For example, because California’s agricultural industry is the fifth-largest contributor to the state’s greenhouse gas emissions, electricity provider Central Coast Community Energy (3CE) offers local farmers rebates to help them transition to electrification.
Amid high production costs, electrification has the potential to help farmers reduce expenses, giving them a leg up in their ability to realize greater revenue and profits.
Reducing Emissions While Generating Revenue
Our ability to reduce U.S. agricultural emissions lies with farmers, ranchers and forest landowners, but the high cost of modern farming means that transitioning to electrification must make economic sense for these business owners that provide critical food sources to our nation.
Off-grid solar-powered electrification has the potential to save farmers thousands of dollars a year in electricity, fuel and labor costs, providing a quick payback on their investments. As farmers, ranchers and forest landowners continue to discover where electrification fits into their business operations, new off-grid technology will enable them to overcome barriers to widespread adoption and enable success through economic and environmental benefits.
—Tom McCalmont is the CEO and co-founder of Paired Power, a manufacturer of innovative products that pair solar power with electric vehicle and energy storage technology. He has been a successful entrepreneur and engineer within the solar industry for more than two decades.
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