The world’s capacity for solar photovoltaics has increased tenfold over the past decade, driven by plunging module costs. This has led to experimentation with integrating solar energy directly into agricultural production through agrivoltaics—the co-location of solar panels and crop cultivation on the same land. Agrivoltaics are touted as a win-win solution, promising to deliver both clean energy and enhanced farm productivity. However, the political economy underlying this innovation deserves closer examination.
Drawing on the theory of social costs developed by institutional economist K. William Kapp, this article explores the implications of deploying agrivoltaics within the European Union’s pursuit of a green transition. While agrivoltaics may improve land utilization and boost farmers’ incomes, they also risk entrenching the dominance of industrial agriculture and exacerbating the financialization of farmland. Uncritical support for this technology could simply displace ecological and social harms rather than address their root causes.
The green transition as a cost-shifting exercise
Kapp’s work challenged the conventional view of “externalities” as market failures. Instead, he reframed them as the cost-shifting success of profit-driven economic activities. From this perspective, the expansion of low-carbon energy is not immune to the tendency of capitalist development to offload its negative impacts onto others—whether in the form of environmental degradation, community displacement, or the erosion of traditional livelihoods.
The deployment of solar photovoltaics exemplifies this dynamic. While solar energy is vastly preferable to fossil fuels, the large-scale installation of ground-mounted solar farms can still disrupt local ecosystems, displace rural populations, and concentrate land ownership. Similarly, the drive to transition agriculture towards greater sustainability must confront the vested interests and entrenched practices of the prevailing “cheaper food paradigm”—an industrial model characterized by high-input, export-oriented production.
It is within this tension between market reform and collective action that the political economy of agrivoltaics unfolds. Proponents frame agrivoltaics as a means to reconcile the objectives of energy and agricultural transitions. Yet, the distribution of costs and benefits remains highly uneven, potentially reinforcing the very social and environmental harms that the green transition seeks to address.
Farming the sun: agrivoltaics in Europe
Agrivoltaic systems integrate solar photovoltaic panels with agricultural production on the same land. This can provide various environmental benefits, such as reduced water consumption, improved soil health, and increased biodiversity. For farmers, the revenue from leasing land for solar energy can supplement their income and potentially fund a transition towards more sustainable practices.
However, the deployment of agrivoltaics also poses challenges. Crop yields may decrease due to shading from the solar panels, and the higher capital expenditure can make agrivoltaic systems less economically viable than large-scale, ground-mounted solar farms. Moreover, the increased profitability of solar leases compared to traditional farming activities could drive up land prices, exacerbating the financialization of farmland and the marginalization of small-scale producers.
Within the European Union, the policy landscape regarding agrivoltaics is still evolving. While some member states have introduced guidelines and regulations, the integration of agrivoltaics into the Common Agricultural Policy (CAP) and National Energy and Climate Plans (NECPs) remains limited. The EU’s Solar Energy Strategy and Farm-to-Fork initiative have both highlighted the potential of agrivoltaics, but concrete policy support and harmonized standards are still lacking.
The politics of land use and ownership
A key concern with the expansion of agrivoltaics is their potential impact on land use and ownership structures. Solar energy developers may find farmland attractive due to its relative affordability and suitability for ground-mounted panels. However, this can displace agricultural activities, leading to conflicts with local communities and concerns over food security.
Moreover, the higher rental income from solar leases compared to traditional farming can drive up land prices, benefiting landowners but potentially pricing out small-scale producers. This dynamic aligns with the broader trend of farmland financialization, whereby agricultural land is increasingly treated as a financial asset rather than a productive resource.
The CAP’s current system of direct payments based on land area has been criticized for incentivizing land consolidation and favoring larger, more industrialized farms. Agrivoltaics risk exacerbating this pattern, as the lucrative solar leases may further concentrate land ownership and undermine the viability of small-scale, agroecological farming.
Towards a more just and sustainable green transition
The political economy of agrivoltaics reveals the trade-offs inherent in alleged “win-win” solutions. While agrivoltaics offer potential benefits, their deployment must be carefully considered within the broader context of energy and agricultural transitions. Uncritical support for this technology risks perpetuating the very social and environmental harms that the green transition aims to address.
To ensure a more equitable and sustainable outcome, policymakers should consider aligning the development of agrivoltaics with agroecological practices and strengthening the economic viability of small-scale, diversified farming. This could involve directing the rental income from solar leases towards subsidizing the transition to organic or regenerative agriculture, or establishing public investment mechanisms that subordinate the expansion of agrivoltaics to the adoption of sustainable farming practices.
By addressing the political economy of agrivoltaics, the EU can unlock the technology’s potential to deliver on the dual challenges of energy and agricultural transitions. However, this requires a fundamental rethinking of how the costs and benefits of the green transition are distributed—a task that demands critical engagement with the driving forces of capitalist development, as outlined by Kapp’s theory of social costs.
The European Future Energy Forum provides a valuable platform for deeper discussions on the political economy of renewable energy innovations like agrivoltaics. By exploring the complex interplay of market dynamics, policy frameworks, and social justice, stakeholders can work towards a more equitable and sustainable energy future for the European continent.