WIND TURBINES IN GERMAN AGRICULTURE – NO RISK, NO GAIN? CURRENT SITUATION AND ECONOMIC VIABILITY

Clemens Fuchs1, Karl Marquardt 1, Joachim Kasten 1 and Katharina Skau 1

1University of Applied Sciences Neubrandenburg, Germany

cfuchs@hs-nb.de

 

ABSTRACT

Only a small number of German farmers invest into wind turbines on the land they own. In contrast to that they tend to rather lease land for that purpose to investors. An explorative qualitative study on the reasons for this investment pattern was conducted.  Calculations of the economic efficiency (e.g. net present value, pay off) of wind turbines build the foundation of the study. In addition, farmers in the North-East Federal State Mecklenburg-Western Pomerania were interviewed for their motives of their capital expenditures. A considerable amount of equity capital is required for setting up a wind turbine. The capital invested frequently competes with the purchase of agricultural land.

Building wind turbines involves risks.  In advance substantial financial means for a planning permission and other examinations precede the construction of a wind turbine. Only in the very end of these costly investigations a construction permit will be issued, facing a farmer with a high level of uncertainty during the whole process.

Fluctuations in wind yield and therefor volatile revenues confront farmers additionally with financial uncertainties. Risk taking behaviour of farmers was assessed normatively by the Hurwicz criterion. Results showed, that only farmers, with the necessary funds at their disposal and a high level of optimism were more likely to take the risk to set up a wind turbine on their land. They take this decision despite the fact that leasing once own land to other investors is of predictable profit and clearly less risky.


BIOGRAPHY

Clemens Fuchs, born 1959 in Ellwangen/Jagst (Germany) and grown up on a farm, studied Agricultural Scienc-es at the University of Stuttgart-Hohenheim and graduated with Diploma (1983) and PhD (1988). He started as a teacher at the Academy for Agriculture in Nürtingen (1987-1989), was a visiting scholar at Michigan State University (1989-1990) and then became a research assistant at the University of Stuttgart-Hohenheim (1990-1995). In 1995 to 1996 he was leader of the project “Restructuring of Large Agricultural Farms in the Region of Vladimir, Russia” and since 1996 professor for Farm Management at the University of Applied Sci-ences in Neubrandenburg. Other activities: Delegated National Expert at the European Commission (2001-2002) and Agricultural Appraiser since 2008. He supports student exchange and research cooperation with universities in Argentina, Kazakhstan, Russian Federation and Ukraine.