The Renewable Energy Land Squeeze: What Solar and Wind Mean for Midwest Farmland

When we discuss farmland values at Schrader, the conversation typically centers on agricultural fundamentals: commodity prices, yields, cash rents, and interest rates. These factors remain the primary drivers of farmland valuation across the Midwest. But a powerful new force is entering the equation, and landowners who ignore it risk misunderstanding the full picture of what their land is worth.

Renewable energy development — solar and wind in particular — is creating an entirely new class of demand for agricultural land. This is not a fringe trend or a policy experiment. It is a structural shift in how America produces electricity, and it requires an enormous amount of land. The implications for farmland values, especially in the Midwest, are significant and long-lasting.

The Scale of Land Demand

Research from Bloomberg New Energy Finance and Princeton University paints a striking picture of the land footprint required to meet America's renewable energy trajectory. To increase wind and solary energy by 10% annually through 2030, the land area required to meet that goal would have to be roughly the size of South Dakota.

That figure accounts for only the near-term buildout. If the United States pursues a carbon-free electricity grid by 2050 — a goal with growing bipartisan momentum driven by energy security concerns as much as environmental policy — the additional land required could be equivalent to up to four more South Dakotas. We are talking about tens of millions of acres that would have to transition from agricultural use to energy production over the coming decades.

For context, South Dakota encompasses approximately 49 million acres. The total U.S. cropland base is roughly 900 million acres. While the renewable footprint will be distributed across the country, the Midwest is disproportionately attractive for both wind and solar development due to its flat terrain, available transmission infrastructure, and — critically — its relatively affordable land base compared to coastal regions.

Why This Matters for Indiana Farmland

The Purdue Land Value Survey data from 2024 provides a real-time illustration of this effect. While traditional agricultural land experienced modest value declines — top-quality farmland dipped 0.5%, average-quality fell 1.9%, and poor-quality dropped 3.5% — transition land surged 21.6% year-over-year to $30,666 per acre.

Transition land, by definition, sits at the intersection of agricultural and non-agricultural demand. When renewable energy developers compete with farmers and investors for the same parcels, the result is a competitive dynamic that pushes values well beyond what agricultural fundamentals alone would support. The 21.6% jump in the Purdue data is not explained by corn prices or cash rents — it is explained by competing uses, and renewable energy is an increasingly large component of that competition.

The Electricity Demand Curve

Understanding why this trend has staying power requires looking at the demand side of the equation. U.S. electricity consumption has followed a remarkably steady upward trajectory since the government began tracking it in 1949. Despite efficiency gains in lighting, appliances, and industrial processes, total consumption continues to rise — driven by population growth, data center construction, electric vehicle adoption, and the electrification of heating and industrial processes.

What Types of Land Are Most Affected?

Not all farmland is equally attractive for renewable development. Solar and wind projects typically seek:

• Proximity to transmission infrastructure — existing power lines and substations are expensive to build, so sites near existing grid connections command premiums
• Flat to gently rolling terrain — particularly for solar installations, which require relatively level ground
• Lower-productivity agricultural land — developers can offer lease rates that far exceed agricultural cash rents, making marginal farmland particularly attractive for conversion
• Willing local jurisdictions — counties and townships with favorable zoning and permitting processes attract development dollars

Ironically, the farmland most vulnerable to agricultural value declines — poor-quality land with lower yields and declining cash rents — may be the most valuable to renewable energy developers. This creates a floor under land values that did not exist a decade ago.

Implications for Selling Farmland

For landowners considering a sale, the renewable energy dimension adds an important layer to property valuation. A parcel that appears to be average-quality agricultural land may carry significant additional value if it is located near transmission infrastructure or in a region targeted for solar or wind development.

At Schrader, our auction managers evaluate every property not just for its agricultural merits but for its full range of potential competing uses — including renewable energy. When we market a property, we reach beyond the traditional agricultural buyer pool to include energy developers, institutional investors, and other non-traditional bidders who may value the land on entirely different criteria.

The farmland market is not defined solely by bushels per acre. The energy transition is creating a new valuation framework, and landowners who understand this shift are better positioned to capture the full value of their property. Our broader analysis of forces shaping 2025 farmland values explores how renewable energy demand fits alongside other upward and downward pressures on the market.