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Mobilizing Finance for Land Conservation at the Energy-Land-Agriculture Nexus

Solar panels and flowers

Can Ecosystem Services Valuation Bring Additional Value Streams to Minnesota’s Pollinator-Friendly Solar Industry?



Siting solar projects is often complicated by land use tensions and trade-offs. At seven acres of land per megawatt of generating capacity, solar has a sizable land footprint — one that is only expected to grow as solar and renewables meet a larger share of U.S. energy needs. Given the climate imperative to transition to a zero-carbon energy mix, accommodating the land use requirements of large-scale solar projects is a critical component of renewable energy policy development. From a land use impact perspective, solar installations are relatively benign compared to other forms of development, and importantly, they can be designed to provide net benefits to surrounding ecosystems and communities. A growing body of research is exploring co-location opportunities on solar sites — from planting pollinator habitat to growing crops among the panels.

Pollinator-friendly solar development has taken root as one such co-location opportunity for solar projects. By planting deep-rooted perennial vegetation in and around solar panels, pollinator-friendly solar projects can provide a host of ecosystem services, including habitat for wild insect pollinators, groundwater recharge, reduced erosion, soil carbon sequestration and improved crop yields from the increase in pollination services. These benefits offer real value for a range of stakeholders and yet are currently unmonetized by the traditional market forces that drive solar project development. Without guidance on how to fully account for the value of ecosystem service generation, uptake of pollinator-friendly solar projects lags behind what stakeholders might want or expect.

This financing gap is symptomatic of a broader theme across environmental markets: ecosystem services, or “environmental externalities,” are challenging to internalize and are rarely monetized. Developing market mechanisms that value ecosystem services and unlock conservation finance could also bring unique sources of capital to pollinator-friendly solar development, helping to spur industry growth. In addition, the ecosystem service monetization strategies discussed in subsequent sections may have broader application for other types of conservation projects.

This paper begins by reviewing the background and current status of pollinator-friendly solar development with a focus on progress in Minnesota. We then discuss the potential for ecosystem services valuation to incentivize pollinator-friendly solar projects by monetizing the environmental benefits that projects generate. Next, we review the potential of an ecosystem services market in Minnesota to meet the dual goals of improving the efficiency of statewide conservation spending and promoting pollinator-friendly solar development. Finally, we present financial structures to advance land use best practices on solar sites. Our hypothesis is that efficiently integrating the value of ecosystem services with conventional solar project finance is the missing link for expanding pollinator-friendly solar development for the benefit of all stakeholders.

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