Can Agribusiness Be A Growth Market for Solar?

Produce and solar, it turns out, have a lot in common.

Agribusiness has a number of characteristics that could make it aprime sub-market in the solar business, according to Mike Miskovsky,General Manager of Canadian Solar’s U.S. operations.

Typically, farmers grow their crops in relatively sunny areas withlots of open space and a lack of neighbors to complain about the sizeor site or a project. Many large Ag states like California have alsopassed renewable energy incentives. With organic remaining the fastestgrowing segment in food, many growers want to emphasize theirsustainable credentials.

The Minturn Huller Cooperative, a shelling operation for almondgrowers, this week unveiled a 540-kilowatt system from Canadian Solarand project developer Cenergy. The system, overall, should reduceMinturn’s annual electric bill by around 20 percent. A neighboringalmond packing facility also has a 400-kilowatt system in place.(Canadian will also speak at our 2010 Solar Summit taking place at the end of the month in Phoenix.)

Several wineries have also installed solar facilities.

Despite the geographic advantages for solar in agriculture, it is acustomer base with a few tricky nuances. First, says Cenergy’s BillPham, the consumption of power at many facilities remains lopsided. TheMinturn Cooperative has intense energy demands from August throughNovember. The nuts come in at the end of summer and the shellingmachines have to crank 24 hours a day.

The rest of the year, however, it only needs a little bit of powerfor maintaining equipment and a few other operations. Thus, for eightmonths a year, the panels are largely producing power for the grid andbanking up credits. (Some of the benefits and credits under theCalifornia Solar Initiative also tap out if the installation exceeds 1megawatt, so the system has to be sized accordingly.)

Land rights can also be an issue. Although a single farmer may ownseveral adjacent tracts of land, easements for transmission have to beestablished to prevent any potential problems with future real estatetransactions. Interconnections in many locations need to be upgraded.

Finally, farmers, at least in the San Joaquin Valley, tend to besomewhat conservative. They want to own the panels. Technically, theMinturn deal is a PPA arrangement: Cenergy owns the solar panelinstallation and sells power to the farmers. In reality, it operatesmore like a lease-to-own contract. After seven years, the farmers willget the option to buy the panels from Cenergy. (PPAs in typical casesmight last twenty years.) The PPA structure of the deal is mostly a wayto obtain financing.

"It is more of an ownership culture rather than a leasing culture," he said.

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