Factors influencing prices for heat from biogas plants. (1st July 2018) - Herbes, Carsten
Highlights: We surveyed German biogas plants, yielding 1035 price points from 602 respondents. Owning or operating the heat grid as well as full supply security leads to higher heat prices. Delivering heat into agricultural drying processes leads to considerably lower prices. Macroeconomic characteristics of the plant's location do not affect prices. Business planners are advised to pre-negotiate heat prices for any biogas project. Abstract: Heat prices are crucial for the revenues that biogas plants can generate; they can make or break a plant's business. But little empirical price data exists. To remedy this and to identify factors influencing heat prices received by biogas plants, we surveyed 602 plant operators in Germany, yielding 1035 price points. We found a mean price of 1.91 EuroCt/kW h on the contract level, a mean revenue of 2.1 EuroCt/kW h on the plant level, and a wide variation in prices across utilization paths. Five factors were identified that together explain almost 50% of the price variance observed. The top three all contribute to higher prices: first, that the operator of the plant also operates the heat grid; second, that the heat contract offer full supply security; and third, that the heat be sold for heating buildings. Heat sold for agricultural drying processes commands significantly lower prices. Macroeconomic characteristics of a region do not affect prices; local factors seem to play the decisive role. This leads to wide price variations and the limited influence of any one factor on heat price. Companies and investors are thus advised to enter into pre-negotiations with prospective heat customers so that realistic site-specific numbers for off-heat prices can be used in planning; anything less puts a biogas venture at risk. Policy makers, when setting subsidies for biogas plants, also have to factor in revenues from heat; the results of this study can help them do so.