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Reducing Farm Financial Risk with Solar-Electric Generation

Chris Bruynis, Wm. Bruce Clevenger, and Eric Romich

Summary

According to the U.S. Energy Information Administration 2013 Annual Energy Outlook Report, the national average cost for electricity in the industrial sector, which includes agricultural and irrigation, is projected to increase from 6.4 cents per kWh in 2013 to 12.8 cents per kWh in 2040. An increase in energy costs will generally raise the prices of agricultural products and reduce farm income, limiting the potential for growth. Energy inputs are important to agriculture, with direct and indirect energy-related expenses representing an average of more than 13 percent of total farm production expenses in 2005–2008. To stabilize energy costs and maximize farm profitability, many agricultural producers are now considering investments in energy efficiency and on-farm solar electric generation. Advances in technology and policy mandates requiring solar development have contributed to system costs reductions. According to a U.S. Department of Energy SunShot Initiative, the average price per kWh of a large-scale solar electric project has dropped from $0.21 c/kWh in 2010 to $0.11 c/kWh in 2013.

Extension professionals in Ohio have developed outreach and education programs to educate farmers, and agricultural lenders on solar energy. Educational efforts have focused on distributed generation, net metering, and the financial considerations for solar energy development. Programs were delivered through workshops, demonstrations, factsheets, and podcasts about solar energy. These programs were designed to increase participants’ knowledge of solar energy development, the potential financial risk reduction to the farm business, and the ability to promote informed decision-making with future investments.

Details

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