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Size, Subsidies and Technical Efficiency in Renewable Energy Production: The Case of Austrian Biogas Plants

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This study estimates the efficiency of biogas plants and identifies determinants of inefficiencies. Data Envelopment Analysis is applied on a sample of 86 Austrian biogas plants for the year 2014, covering about one third of the installed electric capacity of Austrian biogas plants. We decompose technical efficiency into scale efficiency and pure technical efficiency (managerial efficiency). In a second-stage regression analysis the effects of subsidies and other variables on managerial efficiency are investigated. The main results are: i) 34% of biogas plants in our sample are technically efficient, 40% are scale efficient and 50% are managerial efficient; ii) small biogas plants (≤100 kW) are scale inefficient exhibiting increasing returns to scale; iii) production subsidies show a significant, negative relationship to managerial efficiency. The results are consistent with the hypothesis that production subsidies provide a disincentive to managerial effort of plant operators.

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Energy Specializations: Renewables – Biofuels ; Renewables – R&D and Emerging Technologies; Renewables – Policy and Regulation

JEL Codes: Q42: Alternative Energy Sources, Q41: Energy: Demand and Supply; Prices, D24: Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity, Q16: Agricultural R&D; Agricultural Technology; Biofuels; Agricultural Extension Services

Keywords: Data Envelopment Analysis, pure technical efficiency, scale efficiency, returns to scale, feed-in tariffs

DOI: 10.5547/01956574.39.1.aede

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Published in Volume 39, Number 1 of the bi-monthly journal of the IAEE's Energy Economics Education Foundation.


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