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Energies 2016, 9(4), 252; doi:10.3390/en9040252

Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies

1
Institute for International Research on Sustainable Management and Renewable Energy (ISR), Nuertingen-Geislingen University, Neckarsteige 6–10, Nuertingen 72622, Germany
2
Faculty of Agriculture, Economics and Management (FAVM), Nuertingen-Geislingen University, Neckarsteige 6–10, Nuertingen 72622, Germany
These authors contributed equally to this work.
*
Author to whom correspondence should be addressed.
Academic Editor: Robert Lundmark
Received: 22 December 2015 / Revised: 29 February 2016 / Accepted: 18 March 2016 / Published: 30 March 2016
(This article belongs to the Special Issue Economics of Bioenergy 2015)
View Full-Text   |   Download PDF [881 KB, uploaded 30 March 2016]   |  

Abstract

In the effort to combat global warming, renewable energies play a key role. However, most efforts are still focused on the electricity market, so renewables remain underrepresented in the heat market. Biomethane derived from biogas is an intriguing option for using renewable energy to generate heat in residential homes. However, biomethane comes at a significantly higher cost than natural gas, meaning providers have to ask a price premium from consumers. Determining a pricing strategy is thus of crucial importance. Besides cost, providers have to consider consumers’ willingness-to-pay (WTP) for the product. We propose that they could draw on existing research on WTP for green electricity, albeit with some important modifications and scarce research on biomethane. To explore this proposition, we performed a first-of-its-kind analysis of providers’ pricing strategies for biomethane, using both providers’ published data and data provided in response to e-mail queries. Based on the features and prices of 165 biomethane-based gas products for private households in Germany, we find that features that could, according to existing research, elicit a higher WTP are not priced accordingly. As the consumer market for biomethane is still in its early development, our results suggest opportunities for providers to ask higher prices for certain biomethane-based gas products. View Full-Text
Keywords: biomethane; biogas; price; pricing; marketing; willingness-to-pay (WTP); consumer; renewable energy; Germany biomethane; biogas; price; pricing; marketing; willingness-to-pay (WTP); consumer; renewable energy; Germany
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Herbes, C.; Braun, L.; Rube, D. Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies. Energies 2016, 9, 252.

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