Flexibilization or biomethane upgrading? Investment preference of German biogas plant operators for the follow-up of guaranteed feed-in tariffs

Abstract

This article reports the results of a discrete choice experiment with 183 German biogas plant operators designed to elicit the respondents' plans for biogas utilization pathways after the end of guaranteed feed-in tariffs. Participants could choose between ‘flexibilization’ for demand-based electricity generation and conversion to biomethane upgrading for direct feed-in into the natural gas grid. A binomial logit model revealed a 37% probability of switching to biomethane upgrading. These plants are characterized by higher capacities, several involved shareholders, secured succession, costly digestate disposal and belonging to the upper performance quartile. Mixed logit estimations conducted separately for the two investment concepts revealed a very high overall willingness to invest: 71% for flexibilization and 82% for biomethane upgrading. The respondents demand a return on investment of 19% for flexibilization and 26% for biomethane upgrading. Within the flexibilization, twofold overbuilding (installed capacity equals 2 times the rated power) is clearly preferred to fivefold overbuilding. For the biomethane upgrading, private ownership of the upgrading plant is preferred to a joint investment in a central upgrading facility. Limiting the use of energy crops reduces the propensity to invest in both models, while a longer utilization period enhances it. The respondents consider lack of planning reliability as the biggest obstacle to invest, followed by long approval procedures and high investment costs due to restrictive legal requirements.