Can European Farms Cover Their Energy Costs with Revenue from Renewable Energy Production? Evidence from FSDN Data

This study examines whether renewable energy production is capable of covering energy costs in European Union family farms and identifies the determinants of the Energy Cost Coverage Ratio across different economic size classes. The analysis was based on Farm Sustainability Data Network (FSDN) data for 2014–2023 and combined descriptive statistics with panel data models. The results indicate that the Energy Cost Coverage Ratio remained relatively stable, fluctuating between 30.9% and 39.2%, despite a substantial increase in revenue from energy production and other gainful activities from €1594 to €2999 per farm. This limited improvement resulted from a simultaneous rise in energy costs, which increased from €5162 to €8465 per farm over the analysed period. Considerable differences in the Energy Cost Coverage Ratio were observed between economic size classes, while panel data models showed that its determinants vary across farm classes, with no single factor being significant for all classes. The findings suggest that revenue from the production of renewable energy has strengthened the economic resilience of European farms, but its contribution remains insufficient to fully offset rising energy expenditures, highlighting the need for farm-size-specific policy support.