An empirical investigation into the uptake, motivations and constraints and the factors affecting farmers’ renewable energy investment intentions

Abstract

The rate of adoption of renewable energy (RE) production and associated enterprises onfarms in the UK has been lower than expected suggesting that the UK government’s energy, agricultural and climate change objectives may not be achieved. The aim of this research is to investigate why this is the case by assessing the uptake, motivations, constraints and the factors affecting farmers’ RE investment intentions. Building on extant research literature (institutional theory, social cognition theory, theory of planned behaviour and the resource based view) a novel comprehensive and multidimensional model of entrepreneurial intentions was developed and tested using principal component, path and multivariate regression analysis techniques. Data were collected to test the model through a sample of 2000 farmers in the West Midlands Region of the UK. Of the 393 farmers who responded, 14% adopted RE enterprises, with half of adopters reporting slight to significant improvements in farm business performance in 2009. Solar panels were the most popular of the RE technologies available to farmers, compared to biomass related technologies. The study found that the most influential personal level factors contributing to the adoption of RE and associated technologies were cognitive such as the level of education. Of current 338 non-adopters, 66% might decide to invest in RE technologies over the next five years. For these potential adopters, the study shows that the type of tenure, educational attainment and the type of farm business diversification activity in which a farmer is engaged are the most significant personal and farm business situational factors which influence farmers’ RE investment intentions though contrary to expectation current non-adopters assessed the policy support framework more favourably than current adopters. The explanation of this seems to be connected with timing, in that two very positive and encouraging signals in relation to ii Feed in Tariffs (2010) and the Renewable Heat Incentive (2011) were underway or near introduction before this research took place. The study provides the first empirical evidence of the effects of the multidimensional measures of the country’s institutional profile on farmers’ RE investment intentions. Secondly, it clarifies the distinct role played by national formal and informal institutions on farmers’ investment intentions showing that informal institutions and not formal regulatory factors have a direct effect on farmers’ intentions to invest in RE enterprises. Thirdly, the investigation reveals that social acceptability of entrepreneurship in the RE sector is negatively related to investment intentions and moderates the efficacy of formal government policies in influencing entrepreneurial behaviour in the RE sector. The study concludes that any study that relies only on one type of institution will be making significant prediction mistakes. This study provides further support for cognitive based process models of intentions by showing strong significant positive effects of perceived self-efficacy and perceived desirability of RE enterprises on investment intentions. In fact, the study shows that farmers’ attitudes towards RE explain the highest amount of variance in investment intentions over and above the combined effect of external resource and institutional factors. The study illustrates that perceived self-efficacy and perceived desirability of RE enterprises mediate the effect of the rich set of exogenous variables investigated in this study on investment intentions and argues that policy makers need to focus on improving the regulatory, cognitive and normative institutional environments as a way to improve attitudes towards RE and consequently their intentions to invest in these enterprises.