Should Farmers Plant Solar Panels or Corn?
Corn occupies more land than any other crop in the US. A third of the corn harvest is used to make ethanol, which is an ingredient in the gasoline that powers our cars. Now that the transition to electric vehicles is in full swing, would that land would be better used to generate electricity?
Last year, Iowa's largest solar farm commenced operation. According to regulatory filings, the Wapello Solar project occupies 1000 acres, 900 of which had previously been used to grow row crops such as corn and soybeans. If all the electricity generated by these panels were used to power a Nissan Leaf, it could travel 900,000 miles per year per acre of lost cropland.
If that land were instead used to grow corn for ethanol, it would propel a Nissan Sentra 12,382 miles per year.
If we want to maximize car miles driven, then solar panels are 73 times better than corn. However, there are a lot of other uses of energy. Solar electricity could power homes rather than cars. In addition to producing ethanol for cars, corn also produces fuel for cattle.
What if we instead compare the two crops based on energy produced?
Solar panels generate 12 times as much energy as corn kernels. The gap has closed for two reasons. First, internal combustion engines are about 3.5 times less energy efficient than electric motors. Most of the energy burned in an internal combustion engine is turned into heat rather than motion. Second, corn gets credit in this calculation for by-products of ethanol production that are used to feed animals.
Yet, we still are not comparing like with like. You cannot feed electricity to people, cattle, or internal combustion engines. You also cannot feed ethanol to electric cars or air conditioners.
Dollars give us a consistent way to compare dissimilar products. How valuable is the energy generated by these two crops?
Solar panels generate about 13 times as much revenue per acre. For corn, I use the projected 2022/23 price in today's WASDE report ($6.75). For electricity, I use the average middle-of-the-day energy price at the Illinois MISO hub for the past year ($70).
But, costs also matter. You can only make money on a crop if your revenue exceeds your costs. The Illinois crop budget produced by farmdocdaily estimates non-land costs of $850 per acre for corn next year. A 100MW-AC plant like Wapello costs $122m to build and $7/MWh to operate. Using these numbers and a 10% cost of capital, solar panels produce 3.5 times the profit of corn.
So, should we put solar panels on all the corn land?
If we were to do that, then we would flood the market with electricity and push its price down. A 10% decline in the electricity price would push solar returns down to $52 per acre, much less than the returns from growing corn.
This analysis excludes a lot of relevant and important factors. Growing corn contributes to water pollution and greenhouse gas emissions, which tilts the scale towards solar panels. Solar farms are more expensive to connect to the grid from locations far from transmission lines, which tilts the scale towards corn. There's also the "why not both?" potential of growing corn underneath and next to the solar panels.
In summary, it looks on the surface like solar panels are the better crop because they produce vastly more energy and revenue per acre. However, once we account for costs, it only takes a small price change to completely reverse that appearance.
The United States used 3.93 billion MWh of electricity in 2021. Generating that much electricity from solar farms would require only 20% of current corn acres. The realistic ceiling for solar generation is much lower than that. So, we should expect more cropland to be converted to solar panels, but don't expect it to make a big dent in corn acres.
Postscript: Two items hit the news recently that I had written about in previous Ag Data News articles. Here they are if you are interested.
1. New Zealand Agriculture Proposes To Tax Itself, But How Much? On New Zealand's world-first plan to regulate greenhouse gas emissions from agriculture.
2. What They’ve Done in California is Just Crazy. Or is it? On California's plan that by 2035 all new cars and passenger trucks sold in the state should be zero-emission vehicles.
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