BioChain – First Project partners workshop Lise Skovsgaard Economic Ph.d. within WP1 Title: Biogas Value Chain – Microeconomic Incentives and Policy regulation DTU Management Engineering January, 2014

2DTU Management Engineering, Technical University of Denmark Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – my Ph.d. project within WP1

3DTU 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

4DTU 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?

5DTU 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?

6DTU 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

7DTU 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….???

8DTU 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

9DTU 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

10DTU Management Engineering, Technical University of Denmark Lise Skovsgaard – "Biogas Value Chain – Microeconomic Incentives and Policy regulation" – Time schedule

11DTU 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

12DTU 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