Techno-economic viability of agrivoltaics for small-scale farmers under policy and market uncertainty

Agrivoltaics (AV) presents a viable strategy for mitigating land-use conflicts between food production and energy generation, particularly in agricultural communities with limited access to renewable energy infrastructure. This study assesses the economic viability of installing solar-based systems on small farms in Kentucky over a 25-year period. Techno-economic modeling was carried out on three land-use systems: crops only (tomatoes and strawberries), photovoltaics (PV) only (1100kW), and an AV system (900kW) under realistic market and policy conditions. We employed a cost-benefit analysis framework, combined with Monte Carlo (MC) simulation, to account for uncertainties in key input variables and their impact on economic outcomes. Findings indicate that AV systems (strawberry) had the strongest economic performance with a Net Present Value (NPV) of ($1,550,209) and a favorable Internal Rate of Return of 16.8%. Crops only (tomatoes) had the lowest NPV ($725,476) with the highest IRR 34.9%. Sensitivity analysis identified crop price and discount rate as the dominant drivers of profitability, while inverter replacement and annual electricity output had the least influence. The absence of incentives led to negative NPVs across all PV-integrated systems, underscoring the importance of favorable policy incentives. The net climate benefit assessment indicates that the AV system could offset approximately 1,069 t CO2e annually, and that the embodied emissions from PV development are recovered within approximately 8 months. Our results suggest that incorporating AV on small farms in Kentucky may enhance rural income stability, contribute to a more diversified energy mix, and potentially reduce emissions. However, broader implementation depends on stable policy incentives, affordable financing, and supportive market frameworks that will make AV more attractive to farmers and investors.