BioChain – First Project partners workshop

Lise SkovsgaardEconomic Ph.d. within WP1Title: Biogas Value Chain – Microeconomic Incentives and Policy regulation

DTU Management EngineeringJanuary, 2014

2 DTU Management Engineering, Technical University of Denmark

Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – my Ph.d. project within WP1

3 DTU Management Engineering, Technical University of Denmark

Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – my Ph.d. project within WP1

Input markets

Output markets

Regulation

Risk

4 DTU Management Engineering, Technical University of Denmark

Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – my Ph.d. project within WP1

Areas of concern from study plan:• Risk: Which risk issues are more determining for the investment decision,

and can tools be found to reduce this risk?• Mix of market- and ownership structures: How does this mix

influence the biogas production and could a change in structure change the chances for profit?

• Regulation: How does the existing regulation in the energy- and agricultural sectors affect the biogas production? And can changed regulation improve chances for profit?

Input markets

Output markets

Regulation

Risk

Regulation: How does the existing regulation in the energy- and agricultural sectors affect the biogas production? And can changed regulation improve chances for profit?

5 DTU Management Engineering, Technical University of Denmark

In international competition, high environmental regulation – high risk need for high risk premium

Examples, for my choice of focus, General example Regulation: Risk, ownership structures, regulation on natural monopoly, regulation on subsidies, regulation on input- Until November 2013, support for biogas came through the Combined Heat and Power production clear limitations on scale

Local farmer Biogas production

Local CHP

Monopoly regulated and low risk regulated input price low biogas price

Not always allowed to own biogas plant

Who should produce the biogas?

- who can?

- who will?

6 DTU Management Engineering, Technical University of Denmark

Capital was too expensive closed potential for ownership

Examples, for my choice of focus, Måbjerg Bioenergy Regulation and risk: Capital - ownership structures, environmental/planning regulation long delays/further insecurity/risk

Local farmer Biogas production

Local CHP

Probably too small, not interested or not allowed by regulator

Who should own the biogas facility?

- The local municipality

7 DTU Management Engineering, Technical University of Denmark

Owned by the local municipality

- Regulated as natural monopoly – low risk

Examples, where the areas of concern are relevant, Fredericia Waste water Regulation and risk: Regulation, costs, synergy

Biogas production

Own CHP

Ownership and investments are minor problems

Waste water treatment

Monopoly regulated and low risk regulated input price low biogas price

Not always allowed to own biogas plant

Upgradet biogas – private owner

Busses for the

municipality

- What happens when new investments and synergy opportunities appear….???

8 DTU Management Engineering, Technical University of Denmark

Examples, where the areas of concern are relevant, Foulum Input mix and costs

Already now some inputs are not tested, as they are too expensive as input ® ® the significance of

prices in our work

Manure

Biomass..?Local farmer Biogas

production

Other input

- Maize, beats….

- Fish waste

- Waste from dairy or slaughterhouses

- Glycerin

9 DTU Management Engineering, Technical University of Denmark

Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – my Ph.d. project within WP1

Plant level model optimising at plant level

• National level model optimising at national level

• Linking to Balmorel – Energy Systems Model

Soon – input to Ida

Price methods

Later – but focus

already

10 DTU Management Engineering, Technical University of Denmark

WP12013 Aug-13 2014 Aug-14 2015 Aug-15 2016 Aug-16

q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4

WP2WP3 D

WP4 M D

WP5 DLise

2013 Aug-13 2014 Aug-14 2015 Aug-15 2016 Aug-16q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4 q1 q2 q3 q4

Economic analysis D + Input for VCModel

Price methods M Finishing PhD

Attending Data collection M VCModel development, National level

Linking to Balmorel

Gas production and organinc pool modelCarbon storage simulations

Cost of Logistics

Value Chain D Description

Value Chain Model, D National level

Linking to D Balmorel

Value Chain Model, D Plant level

Price methods M

Data collection D Decision support model D

Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – Time schedule

11 DTU Management Engineering, Technical University of Denmark

Price methods

Manure

Biogas production

Other input

- Mais, beats….

- Fish waste

- Waste from dairy or slaughterhouses

Treated manure

- fertilizer

- improved environment

- phosphorus, NH4, CO2, Nitrate…?

- more animals?...

Waste water

Waste?...

What is focus? – What will determine the price(s)?

- Demand? (which?)

- Renewable energy?

- Treated manure improved environment

- Supply?

- Waste treatment?

- Excess biomass?

Energy

- Heat (and power?)

- Biogas

- for CHP

- for industry

- for transport

Relevant issues

- Supply/demand

- regulation

- Logistics

- Substitutability

Relevant issues

- Regulation

- Environment

- Agriculture

- CO2/RES

- Competing markets/substitution

- Gas

- Heat

- Power

12 DTU Management Engineering, Technical University of Denmark

What I would like from you!!

Input on - Regulation – particularly agriculture- Costs- Relevant chemical/physical issue, needed to be taken into account…

- Data on potential biogas plants