Agrivoltaics, the practice of integrating solar power generation with agriculture, continues to gain momentum in 2025 as a solution to balance land use between food production and renewable energy. By strategically placing solar panels above or between crops, agrivoltaic systems create a microclimate that can improve water retention and protect crops from extreme weather conditions. This synergy benefits both farmers and energy developers, ensuring that land serves a dual purpose.

One of the most significant advantages of agrivoltaics is enhanced land use efficiency. As urbanisation and climate change reduce the availability of arable land, agrivoltaic projects ensure that food production can continue alongside clean energy generation. In arid regions like the southwestern United States, parts of Africa, Southern Europe, the Middle East and other areas globally where water scarcity is a major concern, these systems can reduce evaporation and improve soil moisture retention, ultimately leading to better crop yields. Additionally, they help farmers diversify their revenue streams by leasing land for solar projects or directly utilising the generated electricity, which reduces operating costs and energy dependence.

Renewable energy developers also stand to gain from agrivoltaic investments, despite the increased upfront costs. One of the key incentives for developers is easier access to land and streamlined permitting processes. In regions where zoning laws restrict large-scale solar farms on agricultural land, agrivoltaic projects are often more readily approved. This is particularly relevant in countries like Japan, where strict land-use regulations make agrivoltaics a preferred option. Farmers in Japan are encouraged to integrate solar panels with certain crops, benefiting from government subsidies that reduce initial investment costs.

Financial incentives play a crucial role in making agrivoltaics a viable option. In the United States, the Inflation Reduction Act (IRA) of 2022 initially provided substantial incentives for renewable energy projects, and particularly agrivoltaics, through tax credits and grants. However, recent policy shifts under the Trump administration have introduced uncertainties regarding its future. While some IRA provisions may be repealed or modified, several states continue to support agrivoltaics independently. Additionally, lawsuits have emerged over the withholding of USDA grants, affecting conservation programs that fund agrivoltaic projects.

Italy has been particularly proactive in promoting agrivoltaics. The Italian energy agency Gestore dei Servizi Energetici (GSE) recently allocated 1.5 GW in its first agrivoltaics tender, supporting projects across Sicily, Campania, Lazio, and Emilia-Romagna. Moreover, Italy has dedicated €1.7 billion in funding to support new agrivoltaic capacity, ensuring stable incentives for farmers and developers alike.

Beyond Italy, other countries are prioritising agrivoltaics through targeted incentives. France has introduced subsidies for farmers adopting agrivoltaic solutions, recognising both the economic and environmental benefits. Germany supports agrivoltaic expansion through its Renewable Energy Sources Act (EEG), offering preferential financing options to incentivise such projects. These policies demonstrate a growing global recognition of agrivoltaics as a viable strategy for balancing renewable energy development with agricultural sustainability.

In addition to tax incentives, developers can leverage carbon credits and sustainability certifications to improve financial viability. Since agrivoltaic farms optimise land use and can promote biodiversity, they qualify for carbon offset programs, which can be monetised in markets like the European Union's Emissions Trading System. Additionally, corporate buyers with strong Environmental, Social, and Governance (ESG) commitments are increasingly willing to pay premium rates for agrivoltaic-generated electricity, creating a valuable market for these projects.

Another way developers mitigate costs is through partnerships with farmers and agricultural businesses. Instead of investing in vegetation management, some agrivoltaic projects utilise livestock grazing, particularly with sheep, to maintain the land beneath the panels. This practice has been successfully implemented in the United Kingdom, where developers and farmers collaborate to optimise land use while reducing maintenance expenses. In Italy, agrivoltaic designs have been optimised to grow vineyards beneath solar panels, demonstrating that even high-value crops can coexist with solar infrastructure. The Svolta Winery has even claimed it delays the ripening of grapes, improving the quality of the wine!

While agrivoltaics present a promising solution for sustainable energy and food production, challenges remain. The initial capital investment is often higher than that of traditional solar farms due to specialised infrastructure needs. Additionally, balancing energy efficiency with agricultural productivity requires careful planning, as shading from solar panels can reduce crop yields if not properly managed. However, with advancements in panel design, including adjustable tilt and vertical installations, these challenges are being addressed to maximise both energy generation and agricultural output.

Agrivoltaics is particularly well-suited for regions with high solar irradiance and limited arable land. In dry climates, the shading effect of solar panels not only conserves water but also prevents heat stress in crops, making agrivoltaics an essential strategy for climate adaptation. The continued rise of agrivoltaics reflects a shift towards smarter land use strategies that balance renewable energy development with agricultural sustainability. As more governments introduce incentives and as technology advances to optimise efficiency, agrivoltaics is set to play a critical role in the global transition to clean energy while ensuring that food production remains resilient in a changing climate.