Functioning of Agricultural Biogas Plants From the Perspective of Transaction Costs – A Case Study

Abstract

Agricultural biogas plants transform organic waste into a valuable source of renewable energy, necessary for the energy transition. The institutional environment of agricultural biogas plants shapes the specific operating conditions. It also influences several aspects of the operation, from ensuring the quality of the raw materials used for energy production to selling the energy produced. The main objective of this article is to present the transaction costs incurred by an exemplary agricultural biogas plant and to indicate their impact on the company’s operations. To collect primary data, a structured interview was conducted with the owner of an agricultural biogas plant located in the Lubelskie Province in July 2023. The investigated company generates electricity and heat from agricultural biogas in a cogeneration system. The study concludes that transaction costs influence the choices made within the agricultural biogas plant and translate into its operation. The relevance of the information provided and the level of trust between the different participants in the transaction is indicated. This avoids in most cases an increase in the level of transaction costs as well as negative consequences for the operation of the agricultural biogas plant. The transactions concluded indicate that agricultural biogas plants primarily operate within a region and a local community. The study is a contribution to further research into the area of transaction costs occurring in agricultural biogas plants.