Scientists have analyzed the competition between solar photovoltaics and agriculture for land use in Spain by studying 134 different crops in 15 regions. Using a real options framework, they found that falling solar costs and high irradiance in southern Spain could make solar more profitable than agriculture by the mid-2040s, highlighting growing land use competition.
According to data from the Spanish Ministry of Agriculture for 2024, photovoltaic parks cover an area equivalent to 0.2% of the country’s usable agricultural land and 0.12% of the total land area. In the same period, the area of olive groves increased by 2.6% compared to 2018.
Although the availability of land for photovoltaic installations is not currently a constraint in Spain, it is becoming an issue in other countries, where large-scale implementation plans are intensifying competition for land use. SolarPower Europe estimates that global installations could reach 1 TW per year between 2025 and 2030. In the European Union, more than 160 GW of new capacity is expected to be added before 2029, led by Germany, Spain and Italy.
Agricultural land is a very attractive location for solar power plants due to its favorable topography, high solar radiation and limited physical obstacles. However, concerns about the possible displacement of food production have led to responses from regulators. Italy and Spain have introduced measures limiting or banning large-scale solar power plants on valuable agricultural land, especially in irrigated areas, and have amended the Common Agricultural Policy (CAP) to discourage farm abandonment. In Spain, agrivoltaic projects have been eligible for CAP subsidies since October 2024. At the same time, many farmers see solar photovoltaics as an opportunity to stabilize their income amid volatile agricultural prices.
Scientists from Chile and Spain examined land use competition in Spain in a study titled “Land use dilemma: evaluating the transition of crops to solar PV installations using a real options approach,” which will appear in the newspaper next week Magazine for cleaner production.
The study introduces a real options framework to assess the installation of photovoltaic power plants on agricultural land, taking into account the uncertainty in electricity prices and technology costs. Previous research shows that decisions to convert agricultural land to solar energy are complex and influenced by multiple factors. Empirical studies highlight the role of crop type, water consumption, labor requirements and market prices in determining farmers’ willingness to install PV systems. From an economic perspective, several analyzes suggest that falling PV costs are making it increasingly difficult for many crops to remain competitive in the medium term.
Applying the framework to a case study covering 134 crops in 15 regions of Spain, the researchers found that the cost of PV technology is the main driver of land use change. The model suggests that the transition of agricultural land to solar energy use could occur within 16 to 21 years, and could start earlier in southern regions due to higher solar radiation. In less than twenty years, solar energy is expected to outperform traditional agriculture in terms of profitability, especially in southern Spain.
Unlike the conventional net present value (NPV) method, the real options approach takes into account the value of flexibility, including the ability to delay or adjust investment decisions, providing a more realistic view of decision-making under uncertainty.
The research also shows that the NPV approach will accelerate the expected land use transition by approximately four years compared to the real options model, as it does not fully account for uncertainty.
The findings are relevant to farmers and policymakers as they provide insights for investment planning and policy design aimed at balancing the expansion of solar energy with the protection of agricultural activities.
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