WEINBOURG, France (Reuters) - Bright winter sun dissolves a blanket of snow on barn roofs to reveal a bold new sideline for Jean-Luc Westphal: besides producing eggs and grains, he is to generate solar power for thousands of homes.

French farmer Jean-Luc Westphal inspects solar panels, set up in what will be the biggest integrated solar panel roof of the world, at his farm in Weinbourg, Eastern France February 12, 2009. REUTERS/Vincent Kessler

Economic crisis has cast doubt on funding hopes for many big renewable energy projects, but the giant panels built into roofs on this sloping farm at the foot of the Vosges hills in eastern France are attracting attention from farmers to financiers.

Westphal is one of a small but growing band of farmers in the European Union’s biggest agricultural producer who are taking up new incentives for solar power to supplement farm incomes as well as help France meet renewable energy targets.

“We’re trying to go a bit beyond agriculture to earn our living in a different way,” said Jean-Luc Leonhart, an old classmate of Westphal’s visiting his friend’s project with a view to installing solar panels on his own farm.

In a mountainous region famed for Munster-Gerome cheeses and good quality white wines, Westphal is working on a grand scale.

His built-in panels form one of the largest integrated installations of photovoltaic systems -- which generate electricity direct from solar power -- yet built.

The 20 million euro ($26 million) investment means constructing five enormous sheds covered by 36,000 square meters of solar panels with a capacity to generate 4.5 megawatts (MW) of electricity, enough to power 4,000 homes.

“It’s quite a gamble,” said Westphal, who runs the farm with his brother.

The size, combined with a government guarantee of long-term electricity contracts at an inflation-linked “feed-in” tariff, helped win the scheme bank support.

Banque Populaire jointly financed Westphal’s project with Credit Agricole, France’s leading lender to farmers.

“It was the economies of scale that convinced them,” Westphal said. The farmer expects to generate 2 million euros a year in electricity sales from his solar site.

INTEGRATED SOLAR BOOM

The type of solar-panel roof Westphal is using -- known as “integrated” because the panels are built into the roof rather than superimposed -- is booming in France thanks to legislation creating 20-year contracts with strong incentives to sell electricity to the grid.

Slideshow ( 3 images )

At 0.55 euros per kWh, integrated solar photovoltaic panels generate nearly twice the revenue of ground-mounted and superimposed solar panels.

The built-in technology is encouraged by the authorities as aesthetically acceptable, in a country where wind farms have been sharply criticised as eyesores.

A key element of a government goal to have renewables make up 23 percent of French energy consumption in 2020, the feed-in tariffs show France imitating Germany, Europe’s leader in solar and wind power.

“France’s ambition is to play a leading role in the technological revolution which is about to happen in solar power,” Environment and Energy Minister Jean-Louis Borloo said in November.

France is heavily reliant on nuclear plants, whose capacity of 63,260 MW dwarfs the 25 MW of solar power switched to the French grid by late 2008.

But the country has already doubled its solar capacity annually since 2006, according to renewable energy producers’ group SER, and the government’s goal is to multiply this to 5,400 MW by 2020 by luring homeowners, farmers and businesses with attractive tariffs.

“There is a real bubble effect,” said Stephane Maureau, chief executive of Evasol, an installation firm that works in partnership with Tenesol, the solar panel maker jointly owned by electricity group EDF and oil major Total.

Adding to the incentives is a fall in the price of solar-grade silicon used in the panels -- it is forecast by some to decline by more than 30 percent this year.

Whereas in 2007 it was receiving a couple of requests a month from farmers to install solar panels, last year Evasol saw about 30 each month, Maureau said.

For his industrial-size installation, Jean-Luc Westphal is operating under his own company, Hanau Energies, and being supplied with panels by Japanese manufacturer MSK, part of China’s Suntech Power Holdings Co Ltd.

NO JACKPOT

With farmers’ incomes subject to increasing volatility -- linked to rising global demand, extreme weather and speculative interest in commodities -- and the European Union scaling back direct farm subsidies, renewable energies have emerged as a supplementary option.

After two years of healthy rises on the back of surging commodity prices, average farm income in France fell 15 percent in 2008, according to the French farm ministry, as producers faced falling prices coupled with increasing costs.

But even if banks were happy to fund Westphal’s project and Evasol’s Maureau says demand has inflated rapidly, the credit squeeze has made them more reluctant and apparently hurt big players like Suntech, which reported a fourth-quarter loss.

“There is not going to be as much money as before for this type of project,” said Arnaud Berger, head of sustainable development at Banque Populaire.

For other farmers considering solar energy, a cooperative would be a good way to create economies of scale without a huge individual investment, he added.

One example is a group of 77 cattle breeders in the Aveyron region of south-west France, who formed a company, SAS Adder, to manage the 17 million euro construction of 33,0000 square meters of integrated roof panels on their farms.

“It’s about minimizing the costs, spreading the risk and sharing the profits,” said Pierre Bastide, Adder’s president.

Adder’s project is one of 30 in the area of sustainable development that will receive a ministry award at the Paris Farm Show running to March 1.

Farmers remain characteristically cautious, however.

“The return on investment is decent enough but not extraordinary,” Evasol’s Maureau said. “The motivation for farmers is more like to have an extra retirement pension.”