The agrivoltaics market was valued at $3.6 billion in 2021 and is projected to reach $9.3 billion by 2031, growing at a 10.1% CAGR. Combining agriculture and solar power, agrivoltaics improves land use, crop resilience, and clean energy production.

According to a new report published by Allied Market Research, the global agrivoltaics market was valued at $3.6 billion in 2021 and is projected to reach $9.3 billion by 2031, growing at a CAGR of 10.1% from 2022 to 2031. This rapid growth highlights the increasing importance of integrating renewable energy production with agriculture to address land scarcity, food security, and climate challenges.

What Is Agrivoltaics?

Agrivoltaics is an innovative approach that combines agricultural activities with solar photovoltaic (PV) power generation on the same land area. Instead of competing for space, farming and solar energy coexist, enabling dual land use. Solar panels are installed above or between crops in a way that allows farming to continue while electricity is generated simultaneously.

This approach creates synergies between agriculture and renewable energy by improving land productivity, supporting rural economies, and promoting biodiversity. As pressure mounts on arable land and clean energy adoption accelerates, agrivoltaics is emerging as a practical and sustainable solution.

Key Drivers of the Agrivoltaics Market

One of the most significant drivers of the agrivoltaics market is land scarcity. Rapid urbanization, population growth, and expanding renewable energy infrastructure are placing increasing pressure on available farmland. Agrivoltaics enables optimal land utilization by producing food and energy from the same plot, reducing land-use conflicts.

Climate change is another major catalyst. Increasing droughts, heatwaves, and extreme weather events are threatening crop productivity worldwide. Agrivoltaic systems provide partial shading that protects crops from excessive sunlight, hail, and heavy rainfall. Shade reduces soil moisture evaporation and lowers air temperature, improving growing conditions for many crops—particularly cool-season varieties such as leafy greens and brassicas.

From an energy perspective, agrivoltaics supports the global transition to clean power. The installed global capacity of agrivoltaic systems increased dramatically from 5 MW in 2012 to nearly 2.9 GW in 2020, reflecting growing confidence in the technology. Large-scale projects, such as the 700 MW agrivoltaics installation in China near the Gobi Desert, demonstrate the scalability and commercial potential of this model.

Mutual Benefits for Crops and Solar Panels

Agrivoltaics creates a win-win relationship between crops and solar panels. While crops benefit from reduced heat stress and improved water retention, solar panels also gain advantages. Plants release water vapor through transpiration, which helps cool the panels from below, improving solar module efficiency during hot conditions.

This natural cooling effect can increase power output while extending the lifespan of PV systems. In addition, shaded working environments improve comfort and safety for farm workers during peak summer temperatures.

Challenges Hindering Market Growth

Despite its promise, the agrivoltaics market faces several challenges. One key concern is the potential reduction in crop yields if solar installations are poorly designed or improperly positioned. Not all crops respond positively to shading, making careful system design and crop selection essential.

Regulatory uncertainty is another barrier. Many regions lack clear policies or standardized guidelines for agrivoltaics, creating confusion around land-use classification, permitting, and eligibility for agricultural subsidies or renewable energy incentives. International standardization and harmonized regulations are needed to accelerate adoption.

Financial challenges also remain. Agrivoltaic projects often require higher upfront investments compared to conventional solar or farming systems. Support mechanisms such as subsidies, low-interest loans, lease agreements, and risk-sharing models will be crucial to encourage farmer participation and private investment.

Market Segmentation Overview

The agrivoltaics market is segmented by system design, cell type, crop type, and region.

By system design, the market is divided into fixed solar panels and dynamic systems. Fixed solar panels dominated the market in 2021 and are expected to maintain leadership throughout the forecast period. Their popularity is attributed to ease of installation, lower maintenance requirements, and high power generation efficiency. Dynamic systems, while flexible, involve moving or adjusting panels regularly, increasing operational complexity.

Based on cell type, the market is segmented into microcrystalline and polycrystalline cells. Microcrystalline solar cells dominated the market in 2021 and are projected to grow at a higher CAGR due to superior efficiency and performance in commercial agrivoltaic applications.

By crop type, the agrivoltaics market includes crops, vegetables, fruits, and others. The crop segment held the largest market share in 2021, driven by rising exposure to extreme weather conditions. Solar panels help shield staple crops from excessive sunlight and dehydration, improving resilience and yield stability.

Regional Analysis

Region-wise, the agrivoltaics market is analyzed across North America, Europe, Asia-Pacific, and LAMEA. North America dominated the market in 2021 and is expected to grow at a CAGR of 10.7% during the forecast period. This growth is fueled by declining arable land availability, increasing clean energy demand, and supportive renewable energy policies.

Europe follows closely, supported by sustainability-focused agricultural practices and renewable energy targets. Asia-Pacific is witnessing growing interest as countries seek to balance food security with rapid solar energy deployment.

Competitive Landscape

The agrivoltaics market features a mix of renewable energy developers, solar technology providers, and agritech innovators. Key players operating in the market include Next2Sun, Sun'Agri, Ombrea, Namaste Solar, Mirai Solar, SunSeed APV, Enel Green Power S.p.A., JA Solar Technology Co., Ltd., BayWa AG, and Insolight SA.

These companies are focusing on technological optimization, farmer collaboration, and pilot projects to improve economic viability and scalability.

Conclusion

The agrivoltaics market represents a powerful convergence of agriculture and renewable energy. By addressing land scarcity, climate resilience, and clean energy demand simultaneously, agrivoltaics offers a sustainable pathway for rural development and food security. With supportive policies, technological advancements, and greater farmer engagement, agrivoltaics is poised to play a vital role in the future of sustainable agriculture and energy systems.