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Design of substrate supply contracts for biogas plants

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  • Reise, Christian
  • Liebe, Ulf
  • Musshoff, Oliver

Abstract

For a sustainable development of energy production in biogas plants, the continuous supply with substrates is essential. To the authors’ knowledge, there have not been carried out any quantitative investigations of farmers’ choices with regard to supply contracts for biogas plants. Thus, it has been only possible to a limited extent to make predictions for a targeted design of supply contracts. We therefore investigated different factors, which might be relevant for the conclusion of substrate supply contracts, by conducting a survey with 178 German farmers. The survey included a choice experiment, in which participants were confronted with different contract attributes (features). These attributes were varied systematically and thus revealed the influence of each individual feature on the probability of contract conclusion. It becomes clear that the farmers interviewed prefer to conclude contracts with other farmers or with a bioenergy village to non-agricultural investors. The probability of contract conclusion decreases with an increasing lifetime of the contract. However, a contract with a higher sales price is more attractive for the farmers. The investigation of the characteristics of respondents shows that the amount of the premium for one additional year of contractual lifetime depends on the individual valuation of the entrepreneurial freedom of the respective farm manager. It cannot be established that risk-averse farmers tend to prefer contracts with fixed prices over contracts with price adjustment clauses. In addition, there are no great differences in the choice behaviour of farmers who have signed a substrate supply contract and farmers without this experience. Regarding the expansion of renewable energies, these findings are meaningful for a target-aimed design of supply contracts.

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Bibliographic Info

Paper provided by Australian Agricultural and Resource Economics Society in its series 2012 Conference (56th), February 7-10, 2012, Freemantle, Australia with number 124428.

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Date of creation: Feb 2012
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Handle: RePEc:ags:aare12:124428

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Keywords: Renewable energy; bioenergy; substrate supply contract; contract design; (labeled) choice experiment; Resource /Energy Economics and Policy;

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