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Cost efficiency and economies of diversification of biogas-fuelled cogeneration plants in Austria: a nonparametric approach

Andreas Eder

MPRA Paper from University Library of Munich, Germany

Abstract: This paper investigates the existence and the degree of economies of diversification for small-scaled, renewable-fuelled cogeneration systems using 2014 cross-sectional data from 67 Austrian biogas plants. In addition, cost efficiency of those biogas plants is estimated with a non-parametric linear programming technique, known as Data Envelopment Analysis. This is the first study applying the methodology proposed by Chavas and Kim (2010). Economies of diversification are decomposed into three additive parts: a part measuring complementarity among outputs; a part reflecting economies of scale; a part reflecting convexity. Furthermore, this paper extends the decomposition introduced by Chavas and Kim (2010) in such a way that the contribution of each input to economies of diversification and its components can be investigated. The results indicate substantial cost savings from diversification. For very-small scaled plants ( 250 kWel) positive complementarity and convexity effects are the main source of economies of diversification and outweigh the negative effect from scale diseconomies. In addition to substantial fuel/feedstock cost reductions, significant costs saving effects from the jointness in labour and other inputs positively contribute to the complementarity effect. While on average capital and labour costs positively contribute to economies of scale, feedstock costs work in the direction of diseconomies of scale.

Keywords: Data Envelopment Analysis; Economies Scale; Economies of Scope; Renewable Energy Sources; Energy Efficiency (search for similar items in EconPapers)
JEL-codes: C61 D22 D24 Q16 Q42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-eff, nep-ene and nep-eur
Date: 2017-07
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Handle: RePEc:pra:mprapa:80369