Date of Graduation


Document Type


Degree Name

Master of Science in Agricultural Economics (MS)

Degree Level



Agricultural Economics and Agribusiness


Michael P. Popp

Committee Member

Anderson, John

Second Committee Member

Connor, Lawson


electricity usage, poultry producers, investment risk


Robust financial modelling is critical for evaluating solar investments in agricultural applications. Agricultural producers with electricity-intensive systems (especially poultry houses but also, for example, irrigation pumps) face monthly electricity bills in the thousands of dollars. Further, volatile electricity bills, because of uncertain electric rate inflation, add to financial risk as utility costs make up a large portion of operating costs. While solar panels reduce input cost risk with certain installation cost up front, producers are hesitant to invest given long payback periods, uncertainty about the future of net metering, and high financial leverage. To enable producers to accurately assess the feasibility of solar panels for their Arkansas operations, a macro-enabled, spreadsheet-based decision aid was created to serve as a benchmarking tool for bids from solar installers and an interface to help with breaking down electricity rate structures into variable rate components for electricity use (including fuel surcharges) vs. fixed access and demand charges. This delineation is important as utilities only reimburse variable rate components of the electricity bill and rate structures vary across the state’s 32 electricity providers. We used the decision aid across 35 different sets of producer electricity bills to evaluate 1) loan length and 2) whether financing with two loans of different maturity could lessen concern over both borrowing capacity and cashflow. This research also delves into two critical aspects beyond reimbursement rates for solar installations: electricity inflation price risk and solar production risk. The study measures the risks associated with long-term investments, specifically focusing on price and production risks. Previous work evaluated the financial feasibility of solar panels using one loan. Better cashflow matching of loan payments to cashflows from tax savings vs. those from utility bill savings improved financial feasibility and is expected to lead to greater producer adoption. Results demonstrate a 10-yr note to finance solar panels along with a second loan (with length of term dependent on time to realize income tax credits (ITC)) lead to superior net present value (NPV) and lower break-even electricity cost while also addressing cashflow concerns in comparison to using a single 10- or 20-yr loan for solar panels expected to remain operational for 30 yr. Using a 20-yr loan term and two loans allows the producer to face less negative after-tax cashflow implications of investing in solar compared to the status quo than with 10-yr loan terms at the cost of greater average financial leverage over the life of the project. With respect to electricity inflation price risk and production risk, results suggest electricity price inflation has a larger impact on NPV and break-even (B/E) electricity prices. A policy recommendation to contractually lock in electricity rate inflation at the onset of investment is encouraged. Future research recommendations and study limitations are offered to conclude this work.

Available for download on Friday, February 13, 2026