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LAPSE:2018.0984
Published Article
LAPSE:2018.0984
Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies
Carsten Herbes, Lorenz Braun, Dennis Rube
November 27, 2018
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.
Keywords
biogas, biomethane, consumer, Germany, marketing, price, pricing, Renewable and Sustainable Energy, willingness-to-pay (WTP)
Suggested Citation
Herbes C, Braun L, Rube D. Pricing of Biomethane Products Targeted at Private Households in Germany—Product Attributes and Providers’ Pricing Strategies. (2018). LAPSE:2018.0984
Author Affiliations
Herbes C: Institute for International Research on Sustainable Management and Renewable Energy (ISR), Nuertingen-Geislingen University, Neckarsteige 6–10, Nuertingen 72622, Germany
Braun L: Faculty of Agriculture, Economics and Management (FAVM), Nuertingen-Geislingen University, Neckarsteige 6–10, Nuertingen 72622, Germany
Rube D: Institute for International Research on Sustainable Management and Renewable Energy (ISR), Nuertingen-Geislingen University, Neckarsteige 6–10, Nuertingen 72622, Germany
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Journal Name
Energies
Volume
9
Issue
4
Article Number
E252
Year
2016
Publication Date
2016-03-30
Published Version
ISSN
1996-1073
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Original Submission
Other Meta
PII: en9040252, Publication Type: Journal Article
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LAPSE:2018.0984
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doi:10.3390/en9040252
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Nov 27, 2018
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CC BY 4.0
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Nov 27, 2018
 
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Original Submitter
Calvin Tsay
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