THE IMPORTANCE OF RENEWABLE ENERGY PRODUCTION IN EUROPEAN UNION FARMS, 2004-2023

Abstract

The growing importance of renewable energy sources in the European economy has increased interest in the role of farms as energy producers. The aim of this study was to assess the scale of renewable energy production in farms across the European Union and to identify the factors affecting its level. The analysis covers the period 2004-2023 and is based on data from the Farm Sustainability Data Network (FSDN), formerly the Farm Accountancy Data Network (FADN). The study examined the value of renewable energy production and other gainful activities directly related to the holding (SE730), the share of this category in total farm output, and the extent to which energy costs were covered. In addition, differences in the analysed indicators among EU Member States were assessed. Panel data models were applied to identify the determinants of renewable energy production. The findings highlight the importance of renewable energy production within the overall economic activity of EU farms and identify the main factors fostering its development. These include utilised agricultural area, total output, and total assets. The direction and magnitude of these effects varied according to farm size. The results indicate a gradual increase in the importance of energy-related activities in EU farms; however, their overall scale remains relatively limited.