Modern agriculture relies heavily on substantial energy inputs for irrigation, machinery operation, and greenhouse climate control. This demand for energy is likely to increase in future to mitigate against the effects of climate change such as temperature increases, rainfall pattern changes and extreme weather events. In fact, climate change and energy security have been identified as key risks for agriculture in Australia.1
Between 2022 to 2023, the value of Australian agriculture exports reached $79.9 billion.2 In this article we explore the symbiotic relationship that emerges between agriculture and Distributed Energy Resources (DERs).
DERs refer to small-scale power generation or storage technologies often located close to the point of use. Examples include solar panels, wind turbines, small-scale hydroelectric systems, and batteries. Many of these technologies have already been installed on farms by farmers who seek to be self-sufficient and generate their own electricity to meet local needs and safeguard the future of their farms.3
Regional areas are generally at a disadvantage when it comes to energy networks. This is because regional areas were often the last to be serviced by long transmission lines when early electrification efforts involving small, localised power plants evolved into large-scale centralised systems as the demand for electricity grew.
More recently, even with large-scale renewable infrastructure being built in regional areas, regional users continue to pay higher network charges. The intermittency of renewable energy (RE) has meant an ongoing reliance on transmission networks to ensure a continuous supply of energy. Regional customers are disproportionately affected by increasing electricity prices due to the high costs of maintaining extensive transmission and distribution networks for a limited number of customers.4
Fortunately, the advancements in energy storage technologies, particularly batteries, are reshaping the energy network to a more distributed network. Batteries are now more efficient due to improvements in energy density technology, have faster charging capacity, longer lifespans and are more affordable than ever.
Farmers can reduce their reliance on the grid and mitigate the impact of fluctuating energy costs by harnessing DERs on-site and storing excess energy in batteries to be released during periods of high demand or when renewable generation is low.
The availability of low-cost energy on demand enables farmers to rethink traditional practices and embrace innovative solutions. For example, farmers may leverage energy-efficient technologies, such as LED lighting or precision irrigation systems powered by RE, to optimise resource use and enhance crop yields. Additionally, DER installations can serve as multifunctional assets, providing shade for crops or shelter for livestock while generating electricity.
An Australian study found that solar panels and solar farm fences enhance sheep welfare, potentially reducing merino lamb mortality rates from 20% in open fields to 12% within panel-enclosed areas. Additionally, the quality of wool remained high even during drought conditions.5
Recently, the French National Research Institute for Agriculture, Food and the Environment (INRAE) carried out two agrivoltaic research projects and observed improved grass forage production under solar panels.6 Furthermore, several studies have also proven that crop yields increase when crops are partially shaded with solar panels as the soil below is protected from excess sun, wind, hail, and soil erosion.7
By strategically co-locating RE infrastructure with bee-friendly habitats, such as pollinator-friendly plants and nesting sites, DER projects can also contribute to bee restoration efforts while promoting sustainable energy production.8
The complementarity between solar panels and pumped hydro and agriculture is explored further in our Agrivoltaics: The Future of Australian Farming? and Floating Towards a Sustainable Future – Floating Solar Photovoltaics (FPV) articles.
Sundrop Farms is a good case study of a commercially successful Australian business that showcases the applicability of DERs in agriculture. Sundrop Farms contributes approximately 15% to Australia’s total tomato crop yield. As illustrated in the flowchart below, the Sundrop System operates by harnessing solar technology, particularly concentrated solar power. Sundrop Farms desalinates ocean water to produce freshwater for irrigation, enabling the cultivation of crops in greenhouses. This integration of RE and hydroponic farming not only promotes sustainable practices but also minimises the environmental footprint of both energy production and agriculture.
Figure 1: The Sundrop System. Source: Sundrop
Despite the overwhelming benefits of integrating DERs into agriculture, a report commissioned by the Australia Alliance for Energy Productivity (for the NSW Department of Primary Industries) found the upfront capital required for installation and lack of independent expertise and guidance remains a barrier for farmers wanting to explore DER options.9 We’re seeing this firsthand in the market, as many of our clients are seeking advice on co-location opportunities to leverage the full benefits of DERs.
The report also examined the potential for farmers to generate additional income by selling surplus energy to the national grid and found with current market conditions the primary value of DERs lies in installing generation capacity tailored to local energy demands.
However, the horizon looks promising for grid connected farms to export energy into the grid, especially with the anticipated regulatory and market updates that could bolster the scalability and effectiveness of large-scale virtual trading networks. This is good news for farmers, as a recent poll of almost 700 people in regional areas (Hunter and Illawarra regions in NSW and Central Queensland) revealed the majority of farmers support renewable infrastructure on their land as they view DERs as an essential source of additional income.10
The symbiotic relationship between agriculture and DERs exemplifies the potential for transformative change in both sectors. As the world seeks sustainable solutions to address energy and food security challenges, the integration of renewable energy into agricultural practices emerges as a win-win scenario.
The Hamilton Locke team advises across the energy project life cycle – from project development, grid connection, financing, and construction, including the buying and selling of development and operating projects. For more information, please contact Matt Baumgurtel.
1NSW Department of Primary Industries & Australian Alliance for Energy Productivity, ‘Distributed energy resources for primary industries – Exploring barriers to deployment’ (2021), Energetics.
2Australian Agricultural Exports 2022/23, Rural Bank (Web Page, 2023) <https://www.ruralbank.com.au/knowledge-and-insights/publications/agricultural-trade/>.
3Gabrielle Chan, ‘Rural Australia believes in self-sufficiency, so let’s set the terms of the renewable energy boom’, The Guardian (online, 13 February 2024) < https://www.theguardian.com/australia-news/2024/feb/12/rural-australia-believes-in-self-sufficiency-so-lets-set-the-terms-of-the-renewable-energy-boom>
4Ibid n 1.
5Tim Fookes, ‘Trial of sheep grazing under solar panels shows positive results’ ABC News (Web Page, 25 August 2020)
6Gwénaëlle Deboutte, ‘New Agrivoltaics date shows improved grass, forage production under solar panels’ (Web Page, 28 June 2024) PV Magazine < https://www.pv-magazine.com/2024/06/28/new-agrivoltaics-data-shows-improved-grass-forage-production-under-solar-panels/>
7Hélène Marrou et al, ‘Microclimate under agrivoltaic systems: Is crop growth rate affected in the partial shade of solar panels?’ (2013) Agricultural and Forest Meteorology 177, 117 – 132.
8National Renewable Energy Lab InSPIRE, ‘Suitable Agricultural Activities for Low-Impact-Solar Development’ (Web Page, 2020) <https://openei.org/wiki/ InSPIRE/low_impact/agricultural/agricultural_activities>.
9NSW Department of Primary industries & Australian Alliance for Energy productivity, ‘Distributed energy resources for primary industries: Exploring Barriers to deployment’ (Report, June 2021) Energetics.
10Farmers for Climate Action, ‘reality check: renewables make farmers money’, (Web page, 05 February 2024) <https://farmersforclimateaction.org.au/blog/2024/02/05/reality-check-renewables-make-farmers-money/>
