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An Economic Alternative to Replacing Centralized Gas Supply with Autonomous Biogas Facilities in Russian Cities

Author

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  • G.S. Chebotareva
  • A.A. Dvinayninov

Abstract

The main trend in energy development is to increase energy efficiency by reducing the use of limited natural resources, the spread of renewable energy, and reducing the negative impact on the environment. An effective response to these challenges is the use of biogas plants that produce clean energy and solve the environmental problems of waste disposal and recycling. The purpose of the article is to assess the economic efficiency of replacing district gas supply with autonomous biogas plants in public utilities. A hypothesis has been put forward that the feasibility of using such technologies depends on climatic features and the specific provisions of state regulation of prices and gas consumption rates. A cost approach was applied that assesses the overall structure of equipment costs, as well as a comparative assessment method according to the principle “with / without a biogas plant”, and a scenario analysis, the criterion of which is the size of the family owning the plant. An auxiliary method for forecasting retail and economically justified prices for natural gas for the population was used. The object of calculations is the “HomeBiogas” installation intended for home use. Three Russian cities were chosen as territorial subjects: Yekaterinburg, Irkutsk and Krasnodar. The cities which differ significantly in their natural characteristics and approaches to the formation of retail gas prices. It has been proved that although the average monthly temperatures differ significantly in the cities considered, none of them has a constant temperature exceeding the required standard value of 17°C. In each case, the initial capital investment is driven up by the cost of installing additional insulation and heating systems. This equalizes the costs of warmer and colder areas. Therefore, the climatic features of cities are not significant and do not affect the economic efficiency of using a biogas plant. In turn, state regulation of prices and norms of gas consumption by the population is of decisive importance. The findings are of theoretical and practical importance. The methodology can be applied to assess the efficiency of using biogas plants in industry and gasification projects in the remote areas of Russia.

Suggested Citation

  • G.S. Chebotareva & A.A. Dvinayninov, 2021. "An Economic Alternative to Replacing Centralized Gas Supply with Autonomous Biogas Facilities in Russian Cities," Journal of Applied Economic Research, Graduate School of Economics and Management, Ural Federal University, vol. 20(3), pages 582-612.
    • Handle: RePEc:aiy:jnjaer:v:20:y:2021:i:3:p:582-612
    DOI: http://dx.doi.org/10.15826/vestnik.2021.20.3.023
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    More about this item

    Keywords

    biogas; biogas facility; centralized gas supply; feasibility; economic effect; natural features; gas price; cost-based approach; comparative assessment; cities; Russia.;
    All these keywords.

    JEL classification:

    • O22 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Project Analysis
    • Q35 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Hydrocarbon Resources
    • Q42 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Alternative Energy Sources

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