Land Use Tax Policy Considerations for Agrisolar

Policy
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Utility-scale solar energy projects require considerable land use. To meet rising energy demand, the U.S. Energy Information Administration forecasts solar to lead new generation growth, with an estimated 69 gigawatts of new capacity added between 2026 and 2027 and total solar generation increasing by 21%. Meeting that demand will require 5 to 7 acres of land per megawatt, often the same type of flat, open land with sunshine used for agriculture. That means farmland may be eyed for solar development.

With so much solar development on the horizon, consider how land use might be maximized to allow agriculture and solar arrays to coexist. Dual-use and agrisolar practices can provide opportunities for farmers and landowners to keep land in agricultural use while meeting the growing demand for solar energy. 

State land use policies influence where solar development can occur, and the extent to which agrisolar or dual-use practices are feasible. Approaches vary by state, with some restricting solar development on prime farmland or within designated agricultural zones. Other states have developed policies that allow for development on farmland provided certain management practices are maintained to ensure continued agricultural production alongside solar energy generation.

One policy lever states can use to incentivize dual use practices is the structure of land use tax. For example, allowing landowners to integrate solar development into their farming operations without a land use tax change is financially beneficial, providing landowners with an additional, stable income stream while retaining their land for agricultural production.

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