Success factors for agricultural biogas production in Sweden: A case study of business model innovation

As government officials, policymakers, and the general public increasingly express their concern about global warming caused by greenhouse gas emissions, scientists search for alternative sources of vehicle fuel and electric power. One sustainable energy source that shows considerable promise is biogas produced from organic waste. For various reasons, biogas plants in Sweden struggle with profitability. This is especially true for agricultural biogas plants. Suggestions on how to deal with this problem include the use of business model innovation (BMI) to develop agricultural networks and to implement new strategies for arranging, producing, and marketing farm-produced biogas. This qualitative study, influenced by grounded theory, identifies and examines the success factors in an agricultural network in which biogas is produced at four farms in Sweden with distribution by pipeline to a refinery for purification and conversion to vehicle fuel. Fourteen interviews were conducted with various individuals in this network: farmers, a local politician, municipal employees, and external consultants. Of the six success factors identified in the network for farm-produced biogas, the long-term perspective on profitability was found most important. The six factors were used to create a conceptual business model framework for such networks that adds new value propositions while retaining the original value propositions. We propose that long-term government subsidies and other incentives can make farm-produced biogas profitable, not only in social and environmental terms but also in economic terms. Our main conclusion is that BMI can be used to create public-private networks that invest in farm-based biogas production. Such investments can stimulate rural development and provide new business possibilities for SMEs in the agricultural sector. This study also shows that BMI that takes a long-term perspective can result in high value environmental and social benefits as well as financial profitability. (C) 2016 Elsevier Ltd. All rights reserved.