Biogas plant optimization by increasing its exibility considering uncertain revenues

Stephan Fichtner and Herbert Meyr

No 07-2019, Hohenheim Discussion Papers in Business, Economics and Social Sciences from University of Hohenheim, Faculty of Business, Economics and Social Sciences

Abstract: Increasing shares of volatile energy resources like wind and solar energy will require flexibly schedulable energy resources to compensate for their volatility. Biogas plants can produce their energy flexibly and on demand, if their design is adjusted adequately. By doing so, the biogas plant operator has the opportunity to generate more earnings by producing and selling electricity in higher price periods. In order to achieve a flexibly schedulable biogas plant, the design of this plant has to be adjusted to decouple the biogas and electricity production. Therefore, biogas storage possibilities and additional electrical capacity are necessary. The investment decision about the size of the biogas storage and the additional electrical capacity depends on the fluctuation of energy market prices and the availability of governmental subsidies. This work presents an approach supporting investment decisions to increase the flexibility of a biogas plant by installing gas storages and additional electrical capacities under consideration of revenues out of direct marketing at the day-ahead market. In order to support the strategic, long-term investment decisions, an operative plant schedule for the future, considering different plant designs given as investment strategies, using a mixed-integer linear programming (MILP) model in an uncertain environment is optimized. The different designs can be evaluated by calculating the net present value (NPV). Moreover, an analysis concerning current dynamics and uncertainties within spot market prices is executed. Furthermore, the influences concerning the variation of spot market prices compared to the influence of governmental subsidies, in particular, the flexibility premium, are revealed by computational results for a fictional case example, which is based on a biogas plant in southern Germany. In addition, the robustness of the determined solution is analyzed with respect to uncertainties.

Date: 2019
New Economics Papers: this item is included in nep-ene
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