Agrivoltaics business model analysis shows 16% to 43% return on investment

An analysis of sheep-raising and grazing costs indicates that breeding flocks yield higher overall profits, while purchasing and reselling a new flock each year may result in a higher return on investment due to reduced off-season upkeep costs.

January 29, 2025 John Fitzgerald Weaver

Resident flock of sheep at Silicon Ranch's Snipesville Ranch project in Jeff Davis County, Georgia.

Image: Nick de Vries

Agrivoltaic business models for raising and grazing sheep suggest returns on investment ranging from 16% to 43%.

This is important for several reasons. First, sheep raising and grazing can be a profitable business that complements solar installations and keeps farmland in active use. Second, preserving farmland while installing solar is critical, especially given the political dynamics surrounding land and energy. Third, grazing sheep can be less expensive than traditional mowing on solar farms. Finally, because sheep rearing can be financially challenging, the consistent revenue from solar sheep grazing can improve profitability—and viability—in certain regions.

Research from Western University in Ontario, Canada, and vegetation control management firm Lara Costa led to the publication of Financial analysis of agrivoltaic sheep: Breeding and auction lamb business models in Applied Energy. The paper explores two approaches to sheep husbandry: breeding ewes from birth and buying lambs at auction before grazing them on solar facilities, then reselling at heavier weights.

From Financial analysis of agrivoltaic sheep: Breeding and auction lamb business models

In both models, key sources of income include selling lamb meat and providing grazing services. According to researchers, sheep farmers providing solar-grazing services typically earn a median of $194 per acre per year. Pasture-related costs, including crop insurance, herbicides and other sales expenses, are broadly similar in both models.

The primary distinction is that the breeding model requires caring for mature ewes year-round, which involves feeding, sheltering and shearing roughly 48% of the flock over winter. In contrast, the auction model must purchase, grow and sell a full flock annually but avoids off-season expenses.

The analysis focused on solar plants ranging from 200 kW, which typically covers about one acre, to 465 MW, spanning over 2,000 acres. Overall, sheep breeding was found to be more profitable, delivering an 11% higher EBITDA margin. The difference stems largely from the higher cost of capital when purchasing an entire flock at the start of each season.

Yet the auction model shows a higher return on investment. Although the upfront cost of buying new sheep each season is significant, that outlay is fully recouped by the end of the grazing period, and there are no related expenses in the off-season.

Agrivoltaic sheep raising and grazing demonstrate a higher return on investment compared to traditional sheep farming alone. Research also shows that solar installations can increase available grass by up to 90% in arid regions, offering significant potential to produce more food on underutilized land. As climate change continues to impact farmland viability worldwide, this approach is gaining traction.

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