Optimizing Utility-Scale Solar Siting for Local Economic Benefits and Regional Decarbonization

Abstract

The Midwest, with its vast agricultural lands, is rapidly emerging as a key region for utility-scale solar expansion. However, traditional power planning has yet to integrate local economic impact directly into capacity expansion to guide optimal siting decisions. Moreover, existing economic assessments tend to emphasize local benefits while overlooking the opportunity costs of converting productive farmland for solar development. This study addresses these gaps by endogenously incorporating local economic metrics into a power system planning model to evaluate how economic impacts influence solar siting, accounting for the cost of lost agricultural output. We analyze all counties within the Great Lakes region, constructing localized supply and marginal benefit curves that are embedded within a multi-objective optimization framework aimed at minimizing system costs and maximizing community economic benefits. Our findings show that counties with larger economies and lower farmland productivity deliver the highest local economic benefit per megawatt (MW) of installed solar capacity. In Ohio, for example, large counties generate up to $34,500 per MW, driven in part by high property tax revenues, while smaller counties yield 31% less. Accounting for the opportunity cost of displaced agricultural output reduces local benefits by up to 16%, depending on farmland quality. A scenario prioritizing solar investment in counties with higher economic returns increases total economic benefits by $1 billion (or 11%) by 2040, with solar investment shifting away from Michigan and Wisconsin (down by 39%) toward Ohio and Indiana (up by 75%), with only a marginal increase of 0.5% in system-wide costs. These findings underscore the importance of integrating economic considerations into utility-scale solar planning to better align decarbonization goals with regional and local economic development.