Farmers have the opportunity to add a new revenue stream to their farms.
Gov. Gretchen Whitmer changed a policy that now allows landowners who are enrolled in the Farmland and Open Space Preservation Program (Public Act 116) to use their farmland for commercial solar array purposes.
“My administration understands and is committed to helping meet the growing demand for clean, renewable energy sources in our state,” she said. “By preparing for and investing in renewable energy, we're protecting our environment while diversifying revenue options for Michigan farmers and supporting economic development and job creation in a key Michigan industry. We want to ensure that the placement of commercial solar panel arrays is consistent with farming operations and the purposes of PA 116, while also providing opportunities for renewable energy."
About 3.4 million acres of farmland is enrolled in PA 116, which is about one-third of the state’s approximately 10 million acres of farmland. The Farmland and Open Space Preservation Program is designed to preserve farmland and open space through agreements that only allow farmlands to be used for agricultural purposes, and it provides tax incentives for those who participate in the program.
If farmers choose to lease a part of their land to solar panel developers, they must enroll that parcel of land in the Michigan Department of Agriculture and Rural Development’s preservation program.
Farmers can maintain their PA 116 agreement by deferring its continuation until after the solar energy agreement. There also must be a bond paid by the solar developer that ensures all the wires underground and other amenities related to the solar panels are removed from the farm once the project is completed so that the farm can be returned to its original state, allowing it to be only used for agriculture.
“This administrative decision will not result in a loss of useable farmland,” MDARD Director Gary McDowell said. “The change ensures that Michigan’s farmland is preserved so we can continue to feed our communities while also balancing the need to develop renewable energy sources. This is an exciting new opportunity for Michigan's farmers to diversify while they continue to face challenging circumstances.”
Although farmers will be exempt from the tax credit that the Farmland and Open Space Preservation Program provides, Jim Byrum, president of the Michigan Agri-business Association, said farms will have another revenue stream.
“Right now, commodity prices within the agri-world are not very good,” he said. “So, for a farmer, this will actually allow for an opportunity to generate revenue from their farms … from a completely different source. It might increase the sustainability of that farming operation so that grower can have multiple revenue sources in addition to what they are producing on the rest of their land.”
In addition to a new revenue source, Byrum said this opportunity allows for landowners to move away from coal-powered powerplants to other means of generating electricity.
“There is a great deal of interest in developing solar power as we go through the next 10 to 20 years when those coal power plants come offline,” he said. “We are going to need, in Michigan, new alternatives to that.”
The new policy allows for solar panels on farms, which Byrum said will sit on the ground and they will be hooked up to transmission lines, and the solar electricity will move right onto the grid; anyone hooked up to that grid benefits from the solar energy that is being generated.
Byrum said while there are some solar panels that will soon be operational, it takes about 18 months from when a developer contacts the farmer to when the solar panel is up and running.