Harnessing sunshine that stays on the farm

Benjamin Barnett’s grandfather started a dairy farm in Pennsylvania in 1952 with $1,200 and 14 cows. Today the farm is 700 acres and 200 cows.

“It still wasn’t big enough for me to stay when I graduated college,” said Barnett, who operates the farm today with his wife Kelsey. “I went to work as a manager of Mason-Dixon Dairy and bought a share of the herd. I kept the cows as healthy as possible and production up. Then I had an opportunity to be a consultant in nutrition and crops, and saw opportunities on different dairies, beef and row crop farms.”

When it comes to improving the farm’s financial bottom line, Barnett said when farmers work on cash flow projections, there’s room for improvement.

“We can always use some help – either lower costs or increased revenue,” said Barnett. “When guys are looking to retire, they want to know how to transition their farms and how to pass along benefits to adult children without losing the farm.”

Barnett and his family reviewed several options to increase farm profitability, including solar. “To make sure it was legitimate, I tried it on my farm,” he said. “It worked out well. We put in a 58 kW system on our farm, which eliminated purchased electric. We financed it with a 30% tax credit and the 40% Resource Enhancement and Protection (REAP) grant, and we financed the balance.”

The solar company projected a fiveyear break even, which Barnett said made it an asset the farmer can own. Farmers can continue to own their land, and the land provides a new asset – power. However, many landowners remain skeptical of any solar company approaching them for either on-farm solar or utility-scale solar.

“There are plenty of ‘go solar, get rich’ companies out there,” said Barnett. “I had a couple of them on my farm. We sat down with them, and my wife gave them the hook. We compared apples to apples and found that a lot of these power purchase agreements are smoke and mirrors. We chose to own our system. I had to get a loan and pay for it up front. I took the risk, but the power is an asset from our farm. That was a choice I made, and my developer told me straight. It wasn’t a sales pitch so I trusted him.”

The Barnetts’ developer, Paradise Energy Solutions, was very conservative and projected that the Solar Renewable Energy Credits (SREC) would go down in value over time.

“My payback projections are holding strong because they were expecting the credits to go down,” said Barnett. “It would be a barrier if the farmer could no longer depend on the SREC credits, so it’s down to state programs and the depreciation of assets for their balance sheets.”

One major consideration for roof-mounted panels on a farm is the age of the roof and what it can handle. On the Barnett farm, the roof where the solar panels would be placed was about 40 years old. Prior to construction, the contractor conducted an engineering assessment.

For those concerned about conflict of interest when the contractor does the assessment, consult a third party to conduct an independent assessment. Barnett said their contractor did a truss load calculation and found the weight of the panels was minimal, even with projected normal snow load. Barnett is confident the roof and panels will hold up in a hard winter.

A solar project isn’t without obstacles. Barnett said if a farmer wants to “go big” with solar, three-phase power is a challenge because the farmer doesn’t have any control over that aspect. However, solar companies are improving in that area and know how to manage projects.

Another challenge is that the public doesn’t understand the concept of net metering, which is the billing system that allows owners of solar panels to receive credit for any excess electricity in their system that goes back to the grid.

“They assume that solar is disconnected from the grid, so I explain that to them,” said Barnett. “They appreciate that because they see it isn’t just a ‘me vs. them’ scenario. On our farm, we put it on the best roof angle, which was preexisting. It wasn’t the best location for transmitting the power, so we had to pay for extra line footage to get power to the main meter on the farm.”

During planning, Barnett’s solar developer told him that direct current (DC) travels in one direction and is more efficient than alternating current (AC). Because there wasn’t sufficient roof space close to the meter, they converted the power from AC to DC at another building.

Barnett explained that a loan for onfarm solar is considered equipment. His banker told him that because he had equity, the bank would put a lien on the farm and a Uniform Commercial Code (UCC) 5 on the solar system, with a 20-year note on it.

“If I want to pay it off sooner, I can when cash flow is available,” said Barnett. “If not, it’s at or less than my power bill was at the time. For me, it was a no-brainer, and we used the tax credits this year to offset our taxes – we paid zero.”

One important strength the farmer should have is a good banker. “We had a first mortgage then we had a line of credit as a second,” said Barnett. “My solar loan was a third position mortgage on my farm. A lot of farmers may have the same scenario. My relationship with the bank is key.”

by Sally Colby