Agrivoltaic systems are characterized by the co-existence of photovoltaic panels on agricultural land, allowing simultaneous solar energy and food production without need for further land. Agrivoltaic installations alter the local microclimatic conditions of the land surface, impacting the performance of the agricultural systems embedded in them. In this study we develop an ecohydrological modeling framework combining a module that simulates changes in micrometeorology due to photovoltaic panel installations with a state-of-the-art model that resolves land surface water, energy, and vegetation dynamics (i.e., the terrestrial biosphere model T&C). We demonstrate that the modeling framework is capable of reproducing grassland dynamics across a broad range of climates and agrivoltaic architectures. With the use of the model we evaluated grassland performance across the Mediterranean for two most commonly used architectures, namely mixed mounted solar panels and rotating solar tracking panels. We found that C3 grassland yields can be significantly enhanced only in climates where annual potential evapotranspiration exceeds annual rainfall. Changes in grassland productivity were attributed primarily to changes in the light environment at the land surface, with changes in surface aerodynamic roughness and rainfall redistribution due to drainage on panels playing a smaller negative role of comparable magnitudes.