
In an era of high inflation and increasing environmental awareness, feed mills across the United States can look to a new alternative energy solution that addresses both: solar power. According to Solential, an energy ecosystem engineering firm, solar panel installation can combat rising energy costs and ensure uninterrupted power and optimal feed production.
With the added incentive of federal tax credits for businesses that install solar panels, the option becomes even more attractive.
While examples of feed mills investing in solar projects are rare, it’s likely to become more prevalent, as solar panel installations are on the rise nationwide. More than 5 million solar systems have been installed in the United States, including residential, commercial and utility scale systems, according to the Solar Energy Industries Association (SEIA).
SEIA reported 2024 saw a significant uptick in solar installations, with a 29% increase in the second quarter compared with the previous year. While this represents a slight decline from the first quarter, the commercial solar segment has shown resilience, installing 6% more in the second quarter of 2024 than the same quarter in 2023. Including residential, commercial and utility scale projects, Texas leads the charge, bringing nearly twice as much capacity online as Florida, the second-ranked state.
Shifting toward renewable energy is a strategic move that can provide feed mills, which require significant energy demands to produce feed, more financial and environmental sustainability benefits than staying 100% reliant on traditional utility companies for energy.
Even if a feed mill can’t produce enough solar energy to independently supply its entire energy needs, it’s advisable to depend on a combination of the power grid and solar energy, according to Jeff Haarmann, managing director, Affordable Gas & Electric. He said solar production is extremely reliable and predictable and that feed mills can determine the amount of energy that can be produced based on their geography.
At a glance: Why consider solar panel installation?
- Rising energy costs: Traditional energy prices have been climbing for years, eating into profit margins.
- Rural challenges: Mills in rural areas served by small electrical co-ops often face higher rates due to limited negotiating power.
- Peak demand alignment: Many feed mills experience peak power demand during daylight hours, aligning perfectly with solar energy generation.
- Environmental stewardship: Solar farming emphasizes sustainability, aligning with corporate environmental goals.
- Government incentives: Substantial federal and state tax incentives make solar installations more affordable than ever.
Financial incentive: federal tax credits
The solar investment tax credit (ITC) stands as a beacon for businesses looking to invest in solar energy. While the upfront costs of installing solar panels at a feed mill are significant, the federal ITC “is a tax credit that reduces the federal income tax liability for a percentage of the cost of a solar system that is installed during the tax year,” according to the U.S. Department of Energy.
Energy.gov states that solar systems placed in service in 2022 or later and begin construction before 2033 are eligible for a 30% ITC.
Since the ITC was enacted in 2006, the U.S. solar industry has grown by more than 200 times, according to SEIA.
Challenges of solar adoption
Despite progress, solar energy still only represents roughly 3% of energy production in the United States, partially because companies, such as feed producers, must navigate some challenges:
- Land requirements: A solar array large enough to power a feed mill requires substantial land, potentially competing with productive farmland.
- Initial costs: While long-term savings are significant, up-front costs can be substantial.
- Efficiency first: Mills should optimize their energy efficiency before sizing a solar installation to avoid unnecessary costs.
- Planning and permitting: The process from conception to installation can be lengthy, involving multiple stakeholders and regulatory hurdles.
- Supply chain and labor: Solar installers face labor shortages and supply chain difficulties, potentially causing delays.
Agri-PV and virtual power purchase agreements
For mills facing land constraints, innovative solutions are emerging, like Agri-PV, where solar installations coexist with agricultural activities, offering a dual-use approach. This method can increase crop yields, provide shade for livestock, and even reduce water usage through decreased evaporation.
Another option is virtual power purchase agreements, allowing mills to contract with independent solar farms for their electricity needs without requiring on-site installations.
With the potential for significant cost savings, environmental benefits, and innovative land-use solutions, solar energy is poised to become an integral part of the feed mill industry.
For mill operators considering the switch to solar, planning should start early. The transition may take time, but the long-term benefits can be significant. As the sun rises on this new era of energy production, feed mills that harness its power may find themselves not just surviving, but thriving in the changing landscape of agribusiness.