Q&A: Exploring the promise of Agri-PV with BayWa r.e.

Recently, inspiratia sat down for a Q&A with Agri-PV expert Stephan Schindele, who serves as Head of Product Management Agri-PV at BayWa r.e. to explore the opportunities and challenges presented by this hugely promising market.

Agri-PV, or agrivoltaics, has cemented itself as one of the most exciting innovations within the solar photovoltaic sector. By using the same land for agriculture and solar power production, Agri-PV projects offer additional revenue streams for farmers, create efficiencies in land-use, and bolster food security and decarbonisation efforts simultaneously.

According to the Fraunhofer Institute for Solar Energy (ISE), global Agri-PV deployment reached 2.9GW in 2020, with early commercial projects having come online as recently as 2016.

BayWa r.e. is seen as an early mover in the Agri-PV space, having leveraged the resources and knowledge in agriculture from its parent company, BayWa AG. The company has announced its goal of reaching 35MW of installed Agri-PV capacity this year [2022].

In this conversation, Stephan Schindele addresses the promises of Agri-PV, but also the practicalities of getting these tricky projects over the line.

Could you briefly explain what an Agri-PV project involves?

A farmer, a solar developer, and a mutual motivation to harvest both the photosynthesis and the photoelectric effect on one area. And here we have to look at the broad light spectrum of the Sun: Theoretically there is no conflict for light, because photosynthesis needs the red light spectrum and the photoelectric effect uses the green light spectrum. So, if managed well, there is no competition, but win-win – harvesting two yields on one area.

Could you give a sense of the progress made in the European Agri-PV market to date?

Markets and governments have different speeds in understanding the opportunity for Agri-PV. In terms of milestones, the Fraunhofer ISE in 1981 published the scientific idea of Agri-PV 'dual harvest'. We then had the first projects in France and Germany maybe ten years ago. I had the great honour of working for Fraunhofer ISE and led one of these projects in Southern Germany with BayWa r.e. in 2016, where we helped prove the concept of dual harvest.

From this idea we went to invention, filing the first patents, and then we had the first commercial projects in France. Now the idea is spreading to the Netherlands, Austria, and Germany, where governments are picking up on this idea.

So, we've come from idea to invention to innovation, and now we are at the stage of diffusion, meaning that the first governments are providing funding, and I think that's another milestone.

What value does Agri-PV assets offer developers?

Easier permitting. We see with very large conventional PV projects you can only have so many, where there is perhaps not much societal acceptance. This will not be enough to fulfil the EU targets of renewable energy in the coming decades.

Also, farmers often have tax benefits when they inherit farms, and these tax privileges are not changed when we do an Agri-PV project. The land is very often considered an industrial area for electricity production in rural areas. At least in the European Union, we want to have a circular economy by 2050, so we have to use our resources very efficiently, and Agri-PV contributes to that. So, the benefit is mainly the easier permitting and the higher acceptance.

What incentives do farmers have to adopt Agri-PV technology?

Here we have to look at Asia, which has a very high population and not too much space for farming. We also see an ageing society, and farming is a very risky job. Farmers have to work a lot, have to be there for their animals around the clock, it is not easy to take holiday, and in the case of the farmer's sickness, who is running the farm? Farmers are also facing the risk of climate change, so it's a high-risk occupation.

But in my opinion, the farmers are very patient and motivated to go through this process, and we're happy to still have a lot of motivated farmers in Europe!

You assume that with high risk comes high return, but the return is not there, because a farmer compared to a food retailer does not have much market power. So, if you want to make farming more financially attractive, or more modern, then Agri-PV is part of a solution.

Young people also want to work in industry, to earn a decent salary and so on, which is why they move away from rural areas. Young people also care about the energy transition, and agriculture is key to the energy transition. If you want to make farming more attractive, then you make sure to establish Agri-PV because it helps the dual use of land.

What are the most predominant challenges in deploying Agri-PV projects?

It's the contractual risk management. When you compare with conventional PV projects where we have a lease with a landowner, we then run the project with no one interfering. Now imagine you have a harvester going through a PV system. What if a farmer crashes into a PV panel? Who will pay for that? We need health and safety regulation because it's a power plant with farmers moving around the area.

All these risks have to be included and managed. Of course, the farmer is not a legal expert, but as developers we are, so there's often a mismatch of communication. Its therefore a long process, and to find an agreement is trickier compared to a conventional PV plant.

But in my opinion, the farmers are very patient and motivated to go through this process, and we're happy to still have a lot of motivated farmers in Europe!

How has BayWa r.e. learnt to mitigate these risks in recent years?

Of course, with every project we learn something. Developing templates, testing templates, and sharing information. I work as a Product Manager in a global function, so I learn from different markets, so we're getting more efficient.

At the beginning it took a long time to teach our project developers – teaching them about the technology, the legal framework, the economics. But now they know it and communication is therefore easier. So, there have been very good developments.

Which European nations present the most potential for Agri-PV investment?

As a positive example, I would point out France. In 2017 they ran an innovation auction for Agri-PV, they have the highest Megawatt installation in Europe, and the most projects established. In France, three auction rounds have taken place, and we see good companies coming up.

As a negative example, I have to point to Germany, even though the new government is supporting Agri-PV. Still in Germany, there is a connection between the agricultural yield of the farm and the funding awarded to the solar generator, so they say you only get the feed-in tariff if you show every three years that the agricultural yield is still there and high.

Compared to ground-mounted and rooftop PV, Agri-PV is still a young kid in town, but it will also come to maturity one day.

I understand that we don't want any pseudo Agri-PV projects, but now the investment risk is placed on the farmer's activity, and that is not a good idea. If the farmer has an accident, he maybe doesn't produce for two years, and we lose two years of solar revenues. Now we cannot finance or motivate equity investors under such project conditions.

We need to have quality assurance to avoid pseudo Agri-PV, and this is why we have a standardisation process as part of the permitting process in Germany where we ask local authorities to check the qualities of the project using third-party verification. In our opinion, this should be sufficient quality control to get the permit to build the project.

Other governments are displaying more flexibility, for instance in the Netherlands or Japan, where there is a stimulus for multi-functional use of land for Floating-PV and Agri-PV technologies. These markets are seen as front-runners.

With the current situation in European energy markets, do you think Agri-PV will benefit from the updated visions for more solar deployment generally?

Yes, for sure. Simply because if we decarbonise Europe by 2045, as per the Green Deal, we know we must be very fast, having largely missed out in the last ten to fifteen years.

To take the example of Germany, we had our peak of PV rollout between 2009 and 2011, with 7GW, 10GW, and 8GW in those three years respectively. This was the peak and then it went down again. Now we talk about 22GW every year. At the moment, we are at six or seven, requiring a three-fold increase in capacity compared to today.

There are already limits in industry personnel, there are limits on microchips, and people are getting sick from COVID in supply chains, so there is a bottleneck in delivering projects fast enough. The industry will continue to experience these growing pains, but I think will we eventually manage this growth rate.

Agri-PV is one element of the decarbonising process. It's not the only one, but I think it will have very fast growth rates. I assume that in 2035, Agri-PV will be on a similar level to ground-mounted and rooftop, given its strong current growth rates and the backing of the farming sector.