Recent trends in biogas value chains explained using cooperative game theory

Lise Skovsgaard and Ida Græsted Jensen

Energy Economics, 2018, vol. 74, issue C, 503-522

Abstract: In Denmark, since 2014, it has been possible to upgrade biogas to a gas grid and achieve support in line with biogas-based heat and power production. Since then, most new biogas production plants have chosen to upgrade their biogas. In this study, a mixed integer programming model is used to find the optimal biogas value chain, and cooperative game theory is used to understand real world observations compared to this study's results. Specifically, three profit allocation mechanisms are applied to allocate the profit between the heterogeneous owners in the value chain. It is found that Danish biogas plants should use large shares of manure combined with deep litter. Furthermore, it is found that input suppliers have relatively poor bargaining power in the profit allocation negotiations due to poor alternatives. This may explain why livestock farmers tend to receive little payment for their manure, and why they are hesitant to join biogas projects.

Keywords: Cooperative game theory; Profit allocation; Mixed integer programming; Biogas; Biomethane; Value chain (search for similar items in EconPapers)
JEL-codes: C6 C7 D4 D9 L1 Q4 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:eneeco:v:74:y:2018:i:c:p:503-522

DOI: 10.1016/j.eneco.2018.06.021

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