Germany’s energy transition is affecting its land market, driving investment and increasing concentration of land ownership. In this op-ed, Anne Neuber of Netzwerk Flächensicherung, an alliance working to secure land for ecological, regional and peasant agriculture in Germany, explores these dynamics and calls for stronger regulation to ensure solar expansion works in harmony with farming and environmental priorities. The piece highlights possible solutions presented in the position paper on energy transition and agriculture by the AbL (Arbeitsgemeinschaft bäuerliche Landwirtschaft).
By Anne Neuber, Netzwerk Flächensicherung
Germany’s energy transition plans are ambitious. With solar power at its centre, the 2023 German Renewable Energy Sources Act (EEG) sets out photovoltaic (PV) energy production targets of 215 gigawatts by 2030 and 400 gigawatts by 2040. The law permits up to half of this capacity to be installed as ground-mounted PV systems. Since large ground-mounted systems are often more lucrative than PV on roofs, walls and noise barriers, the full 50% limit may well be used – with agricultural land expected to host much of the development.
To reach these goals, approval procedures to install PV systems have been made easier. These simplifications, together with the prospect of profits from energy production, make land ownership much more attractive.
Land market pressures and legal loopholes
The biggest risk of using agricultural land for the energy transition in Germany isn’t so much the loss of farmland itself – though it may be an existential threat for some farms – but how the land market is developing.
There is currently no effective legal framework protecting against the selling off of land to investors.
Due to a legal loophole, so-called “share deals” enable investors who would otherwise be prevented from buying land directly by the German Land Transfer Act (Grundstückverkehrsgesetz) to buy land in the form of shares in a farm.
The result is not only the sale of land, but also an increase in lease and purchase prices, which can, in most cases, no longer be generated from primary agricultural production.
Under these conditions, the energy transition accelerates the ongoing concentration of land ownership in the hands of a few agricultural and non-agricultural stakeholders and the associated demise of farms. For farmers, it is increasingly difficult to gain access to land or to retain their leased land.
As share deals including land transfers don’t have to be reported to the authorities, it is not clear whether land market statistics include all ongoing ownership changes. In 2022, 2,919 corporate groups comprising a total of 4,810 individual agricultural holdings and 2.1 million hectares of cultivated land were identified, managing 13 percent of the farmland in Germany, according to figures from the German Federal Statistical Office.
In 2023, the largest share deal to date in Germany was completed, the potential installation of PV on the land being assessed as a key factor in closing the deal. Deutsche Agrarholding (DAH), managing 20,000 hectares of land and operating biogas plants with a capacity of 55 MWp, was sold to the Australian investor Igneo Infrastructure Partners. DAH is planning to convert around 1,400 hectares into PV areas.
Another prominent example dates back to spring 2023, when the Leipzig-based real estate company Quarterback purchased a 2500 hectare farm, outbidding a farmer by two million euros. Again, the prospect of building a large PV system was a factor in the purchase, as the location of the farm along motorways and railway lines enables PV construction without the need for complex authorisation procedures. The German Federal Building Code defines land within 200 metres of motorways and double-track railways as a “privileged zone”, simplifying the approval process for the construction of PV systems.
Privileged zones and municipal planning authority
Indeed, privileged zones are one important tool for accelerated PV expansion. In these areas, PV systems are more easily eligible for approval and do not require a land-use planning procedure or public participation as they otherwise would. Thus, municipalities have very little scope to intervene with PV development in privileged zones.
At the same time, these zones are often arable land or grassland, which means the regulation affects many farms.
In Germany, planning authority is constitutionally vested in the municipalities. While municipalities receive guidelines from the federal states and the national government, they must not be overly restricted. The government therefore granted renewable energies high priority in municipal land-use consideration, enshrining in the EEG the construction and operation of renewable energy installations as being in the overarching public interest.
What about farmers?
Agricultural land does not have high priority status in German national law, and its share of total land-use is shrinking. Every day, 51 hectares of land in Germany are developed for housing and transport. Mandatory compensatory and substitute measures – such as renaturalisation or reforestation – to offset environmental damage caused by development projects often fail to alleviate this loss, and can contribute further to the loss of agricultural land.
Moreover, the use of agricultural land is not determined by aims of food sovereignty or increasing self-sufficiency. Due to the funding of biogas plants since the early 2000s, today, according to a Thünen Institut working paper, 21% of arable land in Germany is used for the production of renewable resources, primarily energy crops.
In total, 107 hectares of agricultural land are converted every day.
For the average farmer, the decrease in available land and the consequences of the accelerated PV expansion are most noticeable on the lease market. Farmers are competing with project developers or investors who are prepared to pay annual rents of 3,000 to 5,000 euros per hectare – ten times the amount of an agricultural lease.
As 60% of agricultural land in Germany is leased and around three quarters of all farms operate on leased land, these developments affect many farmers.
AbL proposals for PV Expansion Compatible with Agriculture and the Environment
In its Position Paper on Agriculture & Energy Transition, German small and medium-sized farmers association AbL calls for a PV expansion that is in harmony with agriculture and environmental sustainability, and that preserves a large number of diverse farms. Most needed is effective legislation governing the agrarian structure, including lease and purchase price caps as well as the recording and regulation of share deals.
Committing to the expansion of PV on roofing and sealed areas, making PV installations mandatory for new buildings and major renovations would reduce pressure on the land market.
Prioritising the installation of agrivoltaics that combine energy and food production on the same area, would have the same effect.
Furthermore, there are numerous land-use planning tools to protect agricultural land or to channel investor interests, but municipalities need guidance and financial resources to revise their land-use plans.
On the national level, precise monitoring and impact assessment of ongoing developments is urgently needed. The AbL Position Paper lists many more measures which can contribute to a transition, where the goal of a climate-neutral energy supply is not pitted against food production, and does not incentivise the selling off of agricultural land.
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