Wind Turbines on German Farms—An Economic Analysis

Abstract

Only a small number of German farmers invest in wind turbines on the land they own; rather, they tend to lease land for that purpose to external investors. In this study, an explorative qualitative analysis of the reasons for this investment pattern was conducted. Calculations of the economic efficiency (e.g., net present value, payoff) of wind turbines built the foundation of the study. In addition, farmers in the northeastern federal state of Mecklenburg-Western Pomerania were interviewed to assess their motives for capital expenditure. A considerable amount of equity capital is required to set up a wind turbine. The capital invested frequently competes with the purchase of agricultural land. Erecting wind turbines involves risks. Substantial financial means for planning permission and other examinations precede the construction of a wind turbine. Only at the very end of these costly investigations will a construction permit be issued; as such, farmers face a high level of uncertainty during the whole process. Fluctuations in wind yield resulting in volatile revenues confront farmers with additional financial uncertainties. The risk-taking behavior of farmers was assessed normatively by the Hurwicz criterion. The results showed that 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 own land. They make this decision despite the fact that leasing one’s own land to external investors is predictably profitable and clearly less risky.

The Challenges of Poland’s Energy Transition

“…When analysing the costs of developing hydrogen-based energy, two types of energy sources were taken into account, which, according to the government's plans, are to replace energy based on fossil resources-wind and nuclear power plants. Conclusions and results from the research conducted in the field of obtaining energy in wind farms [91][92][93] clearly indicate that despite the existing difficulties, the unit cost of obtaining electricity has been decreasing in the last ten years, allows for a high return on investment and is competitive in relation to other energy sources. In the case of nuclear energy, the costs of acquiring electricity are also competitive in relation to energy from fossil fuels.…”

Reclaiming the Windy Commons: Landownership, Wind Rights, and the Assetization of Renewable Resources

“…For example, Sutherland and Holstead found that 'farmers undertake wind energy production primarily to 'future proof' their farms' [111] (p. 102). In a German study, Fuchs et al found that most farmers prefer to rent their land for wind energy rather than investing themselves due to the comparably favourable risk profile [112]. They found that '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 own land' [112] (p. 1).…”

The Assignment Problem in Human Resource Project Management under Uncertainty

“…These parameters enable us to describe the decision maker's (project manager's) nature, i.e., his/her expectations, predictions, attitude towards risk, and his/her state of mind/soul. These parameters have already been applied to other issues in numerous papers (Ciullo et al 2019;Ellsberg 1961Ellsberg , 2001Fuchs et al 2019;Hernández et al 2018;Hurwicz 1952;Jagodziński 2014;Liu and Ma 2020;Perez et al 2015). Hence, the gap identified in the literature consists of the lack of methods designed for AP under uncertainty, which would be easy to use for managers, -would not require such data that are too difficult to estimate in the case of projects with a high degree of novelty and a fast-evolving environment (like fuzzy numbers, probabilities), -would be useful for any kind of decision-maker (pessimists, moderate decisionmakers, and optimists)…”